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Whole foods market

Whole foods market. Module 4 & 5 Ewa Nelip. Sales growth. Sales growth. Average sales growth for Whole Foods 2010-2013 is 12.8% Average sales growth for the four competitors is 8.84% Both numbers greatly exceed the average growth in the grocery stores industry

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Whole foods market

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  1. Whole foods market Module 4 & 5 Ewa Nelip

  2. Sales growth

  3. Sales growth • Average sales growth for Whole Foods 2010-2013 is 12.8% • Average sales growth for the four competitors is 8.84% • Both numbers greatly exceed the average growth in the grocery stores industry • Whole Foods’ sales growth is similar to the growth in the organic stores industry • Expected growth in the organic foods industry is 12% • Based on the following information I assume changing growth rates in the future years

  4. Sales growth • Growth in the years 2014-2016 is expected to stay at 10% • Growth will decrease to 8% in 2017-2018 • Long-term growth is expected to be 4% assuming that organic stores industry will become more mature after 2020

  5. Epat and epm CALCULATIONS

  6. Epat and epm calculations • Average EPM for Whole Foods is 3.61% • Industry average EPM is 2.81% • Whole Foods’ higher EPM comes from the higher premium that the store charges

  7. EATO • Average EATO for Whole Foods is 3.83 • Average EATO for the industry is 5.94

  8. RNEA

  9. Organic foods industry • $ 63 bn revenue worldwide • $ 31.5 bn revenue in the United States up from $ 1 bn in 1990 • 2002-2011 average growth was 19% per year • 12% expected growth for 2014

  10. Parsimonious assumptions • Enterprise profit margin (EPM) 4.5% • Enterprise asset turnover (EATO) 5 • Changing growth rates

  11. Free cash flow valuation • Due to decreasing growth the cash flow are calculated through 2020 and the terminal value • Long-term growth expected to be 6% (still higher the the growth of the grocery stores industry)

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