1 / 9

Forecasting Sales Growth for Costco: A Comprehensive Analysis of Key Drivers and Trends

This report presents a detailed sales forecast for Costco, highlighting the 5.6% growth rate projected based on various key drivers, including economic trends and consumer behavior patterns. With a focus on the impact of per capita disposable income and strategic expansion through 30-36 new warehouses, the analysis integrates Costco's unique business model focused on high sales volume and superior inventory management. Moreover, the study examines dynamic shifts in product selection and the profitability of private-label items, aiming to improve overall operational efficiency and customer satisfaction.

baakir
Télécharger la présentation

Forecasting Sales Growth for Costco: A Comprehensive Analysis of Key Drivers and Trends

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Parsimonious Forecasting Discount, Variety Store - Costco Aileen Huang

  2. Sales • Comparable firms’ 2013 financial information not available

  3. Sales Forecast • Higher than Industry average • Averages 2.3% for Warehouse Clubs and Supercenters from 2014-2018 • Key drivers • Economy • Per capita disposable income increase by 2.5% during the next five years • Retain a large portion of customers gained during the recession by continuing to offer a diverse, comprehensive product range • New warehouses • Plan to open 30 to 36 new warehouses in 2014; 26 new in 2013 • Competition • Convenient, a mix of general merchandise, a more enjoyable shopping experience • Forecasting sales growth rate: 5.6%

  4. EPM and EPM from Sales • EPM from sales: more stable • Become more profitable in general

  5. EPM from Sales Forecast • Key drivers • Private-label items • 15% gross margin for private-label items • 12%-13% add-on for brand-name merchandise • Increase the penetration • Selection change • Decrease in fresh foods (higher margin) • Increase in optical and hearing aid (higher margin) • Management efficiency • 2013: Net sale 6% up; Gross margin 7 points up; SG&A 1 point up • Forecasting EPM from sales: 2.2%

  6. EATO • Different business model • Costco driven by high sales volume • Consistent better trend

  7. EATO Forecast • Key drivers • Inventory management • Cross-docking consolidation point, 22 • Higher inventory turnover • Hours of operation: not 24/7 • Forecasting EATO: 10.2

  8. Parsimonious Forecasting

  9. DCF Model • Assumption • Rate of return: 10% • Perpetual Growth rate: 4% • Higher than inflation rate; more favorable business model; mature in life cycle • Long-term objectives: reducing employee turnover and enhancing customer satisfaction

More Related