Walmart vs Target Financial Analysis

The companies I am studying are Wal-Mart and Target. Both are major discount retailers, general merchandisers who compete as cost leaders. These companies both very large, big enough to execute on their strategies effectively. Yet one has chosen the path of international growth and the other has not yet, pending expansion into Canada in 2013.

As shown in Table 4 on the next page, Walgreens was able to improve its gross margin by a total of 1.4% from 26.5% during 2002 to a record high of 27.9% during fiscal 2005. On the other hand, although CVS achieves lower gross margins than Walgreens, CVS was also able to improve its gross margins by a total of

Profit Margin (Return on sales) is a steady 24% for both 2011 and 2012. This value is above the average, typical or normal ratio for the grocery industry of 20%. This average value comes from a study by Paul Weyland, communications strategist (Weyland, 2009, PDF file). Competition keeps prices at a

experiences a drop of 4.1% while Wal-Mart enjoyed a 5.1% jump, which resulted in a drop of 2.3% to $2.2, as well as a 40.7% collapse in the fourth quarter, whereas, Walmart rose 5.9% to $13.5 billion (Kessler, 2009).

In terms of industry profitability, it appears that profit margins have a tendency to fall. This is because competition is high and customers tend to buy low-priced high-value items. The average gross margin and net profit margin is 37.1% and 14.3%, respectively (MSN Money, 2010).

For the past 5 years, Kroger is making profits every year; however, compared to Publix and Safeway’s 5-year-average figures, Kroger has the lowest profit ratios based on the gross profit margin, operating profit margin and net profit margin. Gross profit margin figures are relatively stable for the past 5 years while operating profit margin shows improvements: 1.4% in 2010 and 2011 while the figure has jumped to 2.8% to 2.9% during the year, 2012 to 2014. The net profit margin shows relatively stable making 1.4% to 1.6% range except for the year, 2011 of 0.7% which is more than half less than the other yearsFor the past 5 years, Kroger is making profits every year; however, compared to Publix and Safeway’s 5-year-average figures, Kroger has

(Lichtenstein 331-38).. The actual profit margin for major corporation like Walmart wouldn’t be affected to a major concern, but it is more about control of the workers, as better pay and benefits led to more full time workers, an attitude changes of long term goals, retirement, pensions, advancement etc. (Lichtenstein 331-38). Competition from companies like Target, Costco’s, Best Buy, Walgreens, who have adopted many of the business templates has cut into Walmart’s market share, with Costco being the “anti-Walmart,” with its higher wages and benefits, lower turnover, and a better employee satisfaction level. (Lichtenstein 331-38). The future of Walmart’s long-term prognosis is uncertain, factors include, but not limited to economic uncertainty of its major supplier China, price increases due to rising wages overseas, the reevaluation of the Chinese monetary system, the retail market saturation in America, and a resurgence of labor and progressive initiatives. (Lichtenstein

I have chosen Wal-Mart as my company to do a financial analysis on. In my financial analysis I will look will be reviewing Wal-Marts financial ratios for years 2010 and 2005. I will also be looking at Target’s financial ratios for the same years to determine how Wal-Mart is doing within its industry.

which gives a net profit margin of 2.22%. The net profit margin for the previous accounting period was 1.92%. This indicates that the company has produced an increase in profit per dollar from one accounting period to the next. The competitors had a net loss for the accounting period ending 2010.

If you glance at the financial ratios in the income statement you would see that Walmart is operating at a high capacity. The company’s profit margins although high are declining at time passes by. After looking at Walmart’s liquidity, the company is in a great position, it can pay off its debts without much trouble. Liquidity ratios include current ratio and quick ratio. If you look at the financial records you would see that current ratio has been on the rise since 2013. The liquidity position that Walmart is currently in indicates that company has not enough money to meet its current obligations. This means that Walmart is ideal with a company its size, if you look at the total debt ratio it shows that Walmart

Profit margin ratio is the ratio of the business's gross profit in relation to sales. Kirkland`s net profit margin 0.03 percent, which is above the peer average of -0.27 percent and is interpreted to mean that the company is earning 0.57 percent more on each dollar of sales than the average firm.

The change in dollars of Walmart’s net income from 2013 is 16,999,000 and from 2012 it is only a million dollar difference of 15,999,000.

Overall profitability is slightly lower when comparing net profit margins. For fiscal year end 2004, Google reported a net profit margin of 12.52%, slightly lower than the industry 's 13.45%. It appears that this is largely due to the elevated effective tax rate that pertains to Google, as the company 's operating margin is actually superior to the industry average (Exhibit 5).

Ever since the takeover, Kmart has seen a steady rise in net income from a negative $2418 million in 2002 to a positive $1106 million in 2005. At this time, it may not seem like a lot compared to their top competitors, Wal-Mart which had a net income of $6671 million in 2003 and $10267 million in 2005 and Target with their $1368 million in 2003 and their $3198 million in 2005. From 2002 to 2005 Kmart saw a steady decline in annual sales. They went from $36151 million to $19701 million between those years. Their competitors on the other hand had major growth in annual sales. Wal-Mart went from $217799 in 2002 to $285222 in 2005. Target saw a rise in annual sales from $39888 in 2002 to $48163 in 2004 and a decline of $1324 in 2005 making it $46839. In

The meaning of Net profit margin is the percentage of profit that already deducted all the expenses divided by total sales. Depends on net profit margin of each Product Line, Product Line A, Product Line B