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Publix Company and Financial Analysis

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Autor:   •  May 14, 2018  •  Research Paper  •  8,926 Words (36 Pages)  •  96 Views

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Publix Company and Financial Analysis

 

 

 

Yolanda Christophe

Florida Memorial University

MBA Program

 

 

 

 

 

 

 

 

 

 

 

Publix is one of the largest regional grocery store chains based in the United States.

This grocery store ranges as far South as Key West, Florida to as far Virginia. With

Florida holding most store locations, the headquarter sits in Lakeland of the state. Publix has locations totaling 781 store chains. Publix considers itself the largest employee-owned company in the world. The concept of allowing employees to own shares of their companies dates to the 1800s -- where many retirees would no longer receive pay. Because of this, employers who felt compassion for such ex-employees decided to put shares aside for these employees. This in turn created an incentive to work and encouraged workers to be engaged in the workplace over the long term.  Currently, there are about 11,300 companies in the U.S. that are structured under the employee stock-ownership plan (ESOP), according to the National Center for Employee Ownership, Publix being the

largest.  

Each store gives specific items and managements in its basic supply, shop, bread kitchen, flower, meat, and fish divisions. A few stores have valet parking, bistros, sushi bars, drug store offices, as well as an liquor store. This management incorporates a few items that are ordinarily just found at stores, including natural meats, organic products, and vegetables, including veggie lover and vegetarian items; hypoallergenic foods, and other popular nourishment things. This administration can be utilized at any Publix customer service counter.  

The customer service counter likewise gives check changing, cash orders,

Western Union administrations, Rug Doctor rentals, and lottery tickets. A few stores likewise give DVD rental administrations. In December 2005, Publix ended its photograph handling administration, supplanting it with an on the web or mailarrange benefit through the Snapfish program. The Snapfish agreement has since been ended, and Publix never again offers photograph administrations. The first strength of the company is its perfect locations and the number of stores at varied demographic locations. Second to the company’s locations is the customer service provided. Publix states that their customer service begins with the “Publix Guarantee: a philosophy of pleasing our customers” that was established by their founder, George W. Jenkins. Additionally, Publix has held positions of the Forbes list and Fortune 100 list in 8th and 86th places respectively. Publix has industrial units for dairy, baking, deli and other eatables. A wide number of locations are based in five main states according to population concentration. Publix enjoys high returns from its investing activities.

 On the contrary, the company has had law suits involving gender discrimination. Even more so, although the company has locations in saturated places, their locations are only limited to five states. Additionally, Publix has had to conciliate product quality which has led to customer distrust. The company also has a strict dress code and receive infractions if not adhered by. Furthermore, Publix a similar store format for every store which can become monotonous to the eye.

Similarly, in the grocery market, Publix’s competitor Winn Dixie exits. Winn-Dixie

Stores, Inc. is an American grocery store chain headquartered in Jacksonville, Florida. Winn-Dixie has placed in the 2010 "Best 75 North American Food Retailers" in view of FY2009 assessed offers of $7.3 billion by Supermarket News. Additionally, Winn Dixie received the 45th biggest retailer award in the United States in terms of income by Stores magazine in 2012. Winn-Dixie has roughly 600 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The organization has had its present name since 1955 and follows its underlying foundations back to 1925.  

Winn-Dixie is known for its private Chek mark soda pops, which are produced in more than 20 unique flavors in addition to diet and caffeine-free assortments— one of their largest collections. Winn-Dixie has been known as "The Beef People" all through its lifetime.  

When considering the strengths of the company, Winn Dixie has over 600 stores in eight states and more than 63000 employees. Winn Dixie has joined forces with USDA to teach patrons about healthy eating habits. Furthermore, Winn Dixie has an exceptional loyalty and rewards package that helps capture useful information on buyer behavior More importantly, the company partners with nonprofits to make an impression in society and further product responsiveness. On the other hand, Publix has suffered financial difficulties in the past that still linger on today. Even more so, lack of a booming digital sales platform Additionally, Winn Dixie has private labels that are not so widespread in other segments of the United States.  

 

 

According to Investopedia, DuPont analysis is a method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value to produce a higher return on equity (ROE). It is also known as DuPont

identity.  

When analyzing Publix’s performance with the Dupont Model, their ROE for the year end of 2011 is .18.

 

  1. Component Du Pont Model

ROE= ROA*EM

ROE= .18

  1. Component Du Pont Model

ROE=NPM*TATO*EM

ROE= .18

When analyzing Winn Dixie’s performance with the Dupont Model, their ROE for the year end of 2011 is .08.

  1. Component Du Pont Model

ROE= ROA*EM

ROE= .08

  1. Component Du Pont Model

ROE=NPM*TATO*EM

ROE= .08

Asset Efficiency Ratios

Publix TATO=9.55

Winn Dixie TATO= 3.82

 

Profitability Ratios

Publix NPM= .055

Winn Dixie= .01

Leverage Ratios

Publix Debt Equity= .48

Winn Dixie Debt Equity= 1.08

 

Liquidity Ratios

Publix Current Ratio= 1.37

Winn Dixie Current Ratio= 1.33

 

 

 

 

 

 

 

 

Recommendations and Limitations  

Publix is obviously the leading company of the two grocery-supermarket chains.

When researching which company was more affordable for consumers, Winn Dixie seem to be the best choice which is reflective in their in their NPM. Currently, Winn Dixie is closing 200 store chain locations to be able to file for bankruptcy by the end of March. This is an a part of an initiative to restructure the company. The company has been suffering financial woes since the early 2000’s and have not been able to recover since. Furthermore, their loss is visible based on such a low ROE compared to Publix. Low ROE means low return for investors. Even more so, their debt to equity ratio is extremely high considering it is over 1. While researching Winn Dixie’s Financials, it was clear that no other statements were released after 2011. As a result, I was forced to use outdated financials for both companies especially Publix, whose financial were up to date. My recommendations include Publix changing its store dynamics in terms of structure. Winn Dixie on the other hand, should lower prices since Publix services a more affluent crowd. This would bring more clientele to the store.

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