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Recommendation for Investment in Retail Grocery Industry Essay

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Below is an essay on "Recommendation for Investment in Retail Grocery Industry" from Anti Essays, your source for research papers, essays, and term paper examples.

After we discussed about that you were interested in investing in retail grocery industry, you asked me to evaluate and analyze the potential investments in the retail grocery business and make recommendations to you whether or not you should invest in Kroger, Safeway, and/or Supervalu. At your request, I read two articles “Kroger, Safeway, and Supervalu, The Impact of Change in the Retail Grocery Market Environments on the Development and Success of Company Operating and Growth Strategies:1999-2009” and “Changing Strategies in the Retail Grocery Industry, Kroger, Safeway, and Supervalu 2003-2008” in 1 October, 2010 both written by Steven C. Isberg.
As we all know that Wal-Mart is the most significantly dominant force in the retail grocery industry, Kroger, Safeway, and Supervalu are the next three largest grocery business following Wal-Mart in the industry. “When the industry was in a state of overinvestment and consolidation, Kroger, Safeway, and Supervalu were among the larger competitors on the buy side of many of those acquisition.” Even though all these three businesses are companies with larger market share, Kroger actually was in the second place.
Based on Kroger’s Income Statement, we can indicate that Kroger has an increasing Net Income from 1999 to 2009. It was mainly because of two reasons: sales of existing stores increase over time and sales increase as a result of the development or acquisition of additional stores. An increasing Net Income means Kroger can make good profit in the past 10 years. Moreover, Kroger has a relevant stable Profit Margin which shows Kroger’s ability to generate profit.   Another important data we can look up to when considering investment is Altman’s Z-score. Altman’s Z-score measures the probability that a company become bankruptcy. Altman’s Z-score is greater than 3 indicating a very low probability of bankruptcy. From 1999 to 2009, Kroger’s Z-score was always greater than 3 which indicate a good sign of investment....

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