FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis and Comparison

Purpose of the Analysis

This report provides a comprehensive financial and company analysis of two firms operating in the UK's retail sector. Supermarkets associated with retailing in UK are referred as the most competitive markets all around the world. The state of profit margin between companies operating in this industry is very thin, but, requires for their overall progress. The UK market is dominated by ASDA and Greggs, two giants of the supermarket industry in UK and all over the world. Though, there are a number of companies operating in the region, which makes the market more saturated, however, Greggs and ASDA are in a race to capture the large share of the market. Thus, it can be said that in UK's supermarket industry, ASDA is competing with many retail giants of the world. In order to maintain the competitive advantage companies in this industry introduce new offers for their customers to ensure their loyalty. The report covers an overview of operations and strategies (through strategic review) of each of the firms, based on their core competencies and industry standing. Following this, the report provides a financial and accounting analysis for the firms, highlighting any financial issues and areas for improvement.

Strategic Review of the Firms

Greggs is engaged in the retailing of sandwiches, savories and other bakery related products. Co. specializes in sandwiches, savories and other freshly baked food on the go. Greggs Plc was founded by Mr. John Gregg as a Tyneside Bakery in the year 1939. The first retails outlet of the company opened in Gosforth, Newcastle in the year 1951. The company witnessed major expansion after taken over by Mr. Ian son of Mr. John Gregg. Mr. Ian started the expansion of the company by acquiring other bakeries such as Leeds based Thurston's in the year 1972. Gregg's Plc is planning to open around 600 more stores in the near future and it will create around 6,000 new retail jobs. More over the company is planning to extend the serving capacity of the existing retails outlets (Chiron 2001 33-58).

On June 19, 1994, Co. acquired Baker's Oven business with 424 outlets at a net cost of £12,000,000 from Associated British Foods plc. On Feb. 27, 1995, Co. incorporated a new division, Greggs of Twickenham, based on the Baker's Oven bakery in Twickenham comprising 91 shops in South and West London and the adjoining countries. On July 30, 1995, Co. acquired 100% share capital of Oliver's (U.K.) Limited.

ASDA is the leading mall-based family department store operator, with over 1000 ASDA stores in all over UK. We think the company is also adeptly addressing the needs of time-strapped shoppers with the shopping convenience afforded by its direct business, comprised of ASDA specialty catalogs and the ASDA.com web site, as well as its growing off-mall retail presence. Since 2001 to 2006, ASDA executed a turnaround plan to improve the profitability of its stores.

Position within the industry: Greggs versus ASDA

Gregg's Plc is the leading bakery ...