Joseph Wang Financial - Analyzing the Results of the Distribution Companies (Fashion, Supermarkets,
The balance sheets of these companies (and accessories chains, supermarkets, consumer electronics, etc..) Have the following characteristics:
Comparable store: They are the stores that were open during the last 2 full years. Such chains typically open new stores every year. When comparing the income of a year with the previous year is important to know what has been the increase due to higher sales of existing stores and which is due to new openings. For example, a revenues increase of 5% in comparable stores in 2007 means that all those stores that were open for 365 days of 2006 sold a 5% increase in 2007. The comparable store concept is applied in addition to income, other variables such as profit margins, costs, etc.. The evolution of the results indicates comparable store growth that would stop the chain if open stores, important information when assessing the company in terms of their ability to grow in the future. It should be noted that when a company like this expansion phase ends and begins its phase of maturity is very likely that the pace of earnings growth will slow, and this is very important in setting the valuation of the company.
Net new stores: The number of stores that have opened up minus the number of shops have closed. If a chain opened 50 stores a year and close another 10 stores net opening is 40.
Owned and franchised stores: The growth of these companies can be done in 2 ways, by opening its own stores or using the franchise system. The stores themselves have a higher profit margin, but its disadvantage is that they need a higher initial investment. Franchising is the opposite side, its profit margin is lower but the initial investment for the company that licenses the franchise is minimal, since it is the franchisee who takes care of it. Each company combines both possibilities at their discretion, opting for a more rapid expansion with lower margins per store (franchise) or a slower growth with higher margins per store (owned stores). Importantly, lower margins per store obtained a franchise does not mean less profit growth of the company, because with the resources needed to open own shop can open multiple franchise. Despite fewer financial resources require the opening of franchise requires coordination and allocation of human resources by the firm granting the franchise, so the number of franchised stores that open is higher than its own stores but also has its limits.
Sales area: The total square meters totaling all company stores. It gives an idea of âEUR
Comparable store: They are the stores that were open during the last 2 full years. Such chains typically open new stores every year. When comparing the income of a year with the previous year is important to know what has been the increase due to higher sales of existing stores and which is due to new openings. For example, a revenues increase of 5% in comparable stores in 2007 means that all those stores that were open for 365 days of 2006 sold a 5% increase in 2007. The comparable store concept is applied in addition to income, other variables such as profit margins, costs, etc.. The evolution of the results indicates comparable store growth that would stop the chain if open stores, important information when assessing the company in terms of their ability to grow in the future. It should be noted that when a company like this expansion phase ends and begins its phase of maturity is very likely that the pace of earnings growth will slow, and this is very important in setting the valuation of the company.
Net new stores: The number of stores that have opened up minus the number of shops have closed. If a chain opened 50 stores a year and close another 10 stores net opening is 40.
Owned and franchised stores: The growth of these companies can be done in 2 ways, by opening its own stores or using the franchise system. The stores themselves have a higher profit margin, but its disadvantage is that they need a higher initial investment. Franchising is the opposite side, its profit margin is lower but the initial investment for the company that licenses the franchise is minimal, since it is the franchisee who takes care of it. Each company combines both possibilities at their discretion, opting for a more rapid expansion with lower margins per store (franchise) or a slower growth with higher margins per store (owned stores). Importantly, lower margins per store obtained a franchise does not mean less profit growth of the company, because with the resources needed to open own shop can open multiple franchise. Despite fewer financial resources require the opening of franchise requires coordination and allocation of human resources by the firm granting the franchise, so the number of franchised stores that open is higher than its own stores but also has its limits.
Sales area: The total square meters totaling all company stores. It gives an idea of âEUR
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