Barney Kroger Case Study

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Company Background It began with one man, Barney Kroger, taking his entire life savings of $372.00 to open his first grocery store in Cincinnati, in 1883. Barney grew up around his father, who happened to run his own business. His motto was “Be particular. Never sell anything you would not want yourself.” Barney grew his business using this very same motto. Over the next 130 years, Barney’s one little store grew into over 2,600 stores in 34 states. In addition, Kroger is ranked as one of the world’s largest retailers. Mr. Kroger created many first, while growing his company. Being a pioneer in the food and retail industry, Mr. Kroger had real innovation. Realizing that if he could bake his own breads, opposed to purchasing from an…show more content…
This amount is based off of the 2014 $3.52 per diluted share. In addition they are budgeting for an increase in identical supermarket sales growth. They are budgeting an increase of 3 to 4% for the 2015 year. This increase excludes the fuel sales, since the price of fuel in an uncontrollable…show more content…
This increase is attributable to the FIFO non-fuel gross profit. The Harris Teeter merger was excluded from this. The 2013 operating profit decrease from 2012, however it was mainly due to the extra week that was included in the 2012 fiscal year, where it had 53 weeks opposed to 52 weeks. Due to the repurchase of common shares, the Kroger net earnings per diluted share have continued to increase over the last 3 years. It is mentioned how Kroger tries to manage their exposure to interest rate fluctuations. Kroger manages interest rates and the market value of their debt by using a commercial paper funding program. Commercial paper funding means that they issue market securities to obtain low interest short term loans without collateral. Since these are short term, the interest rates are very low. As of the January 31, 2015 financials, Kroger has 11 of these that total to approximately $700 million. They lock into these interest rates to avoid substantial change in future interest rates. Kroger also has quite a few cost concerns, especially when it comes to unforeseen circumstances. If Kroger is unsuccessful at finding new site locations for new stores, then their capital investment would not be the same as budgeted. If new sites go into development and the projects are not completed timely or the cost is more than allotted for, then that could be a potential area of concern. The most

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