J Sainsbury - Financial Performance of Last 5 Years Essay Example
1. EXECUTIVE SUMMARY
J Sainsbury plc is a UK based company, into grocery, related retailing an financial services business. The study is primarily to do financial assessment of this company and its performance relative to its peers and industry. Seeing the last 5 years report, it is evident that company was in a bad share 3 years ago, and now its in the stage of recovery.
Starting 2004, there has been a major change in the board, as well as management. Since then company has taken several large and aggressive approach. This can be summarised as renovating/ ex-panding retail space, re-engineering of supply chain, and improvement in IT system. Also there has been focus on brand repositioning through quality improvement, cost reduction through increasing volume, etc. This has resulted into good numbers for its sales and profit margin. The first thing the new CEO Justin King did was to reduce price by 5% in most of the items, so that they re-gain custom-ers confidence.
If we see from a year’s perspective, company is highly squeezed in terms of cash flow, very less net profit margin compared to industry. They have a high pressure on improving their margins. Comparing them with their peers Tesco, Wm Morrison, and others, we found that Tesco is obviously market leader, so have a very high profit margin. If compare with the closest competitor Wm Morri-son, even though they relatively smaller in size of business, but they have much better profit margin and revenue per sq ft, with less number of stores.
In terms of investors point of view also they have tried to compensate it with higher dividend of 9.75p compared to last years’ 8p. They have also ensured to keep the dividend cover to 1.5. Ana-lysts and investors are not very upbeat about this stock, seeing the bad performance in last 3 years and would be very conscious in investing.
Seeing the last year’s growth pattern and the achievement of some of the set targets (sales, cost cutting, quality growth) one should
J Sainsbury plc is a UK based company, into grocery, related retailing an financial services business. The study is primarily to do financial assessment of this company and its performance relative to its peers and industry. Seeing the last 5 years report, it is evident that company was in a bad share 3 years ago, and now its in the stage of recovery.
Starting 2004, there has been a major change in the board, as well as management. Since then company has taken several large and aggressive approach. This can be summarised as renovating/ ex-panding retail space, re-engineering of supply chain, and improvement in IT system. Also there has been focus on brand repositioning through quality improvement, cost reduction through increasing volume, etc. This has resulted into good numbers for its sales and profit margin. The first thing the new CEO Justin King did was to reduce price by 5% in most of the items, so that they re-gain custom-ers confidence.
If we see from a year’s perspective, company is highly squeezed in terms of cash flow, very less net profit margin compared to industry. They have a high pressure on improving their margins. Comparing them with their peers Tesco, Wm Morrison, and others, we found that Tesco is obviously market leader, so have a very high profit margin. If compare with the closest competitor Wm Morri-son, even though they relatively smaller in size of business, but they have much better profit margin and revenue per sq ft, with less number of stores.
In terms of investors point of view also they have tried to compensate it with higher dividend of 9.75p compared to last years’ 8p. They have also ensured to keep the dividend cover to 1.5. Ana-lysts and investors are not very upbeat about this stock, seeing the bad performance in last 3 years and would be very conscious in investing.
Seeing the last year’s growth pattern and the achievement of some of the set targets (sales, cost cutting, quality growth) one should