Weis Markets, Inc. Company Analysis

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of how well Weis was performing in the market. Especially when compared to Whole Foods. In food retail, it is normal to have high inventory turnover. Grocery stores usually have perishable items which sell fast and would need replenished frequently. The industry average is about 18.56. Weis shows an average of around 8 for their inventory. Meaning they replenish their inventory about 8 times per year. This is not great for the company net income and profit. Whole foods has operated at an average of just about 21. They replenish their inventory far more frequently which usually correlates with high net income and profit.

When looking at the company trends, the net income significantly dropped in 2014. A 30% decrease is shown from end of 2013 to end of 2014.This continued into 2015 with the company bouncing back to their net income before 2014 with an increase of about 32% from 2015 to 2016. This made creating a pro-forma analysis strictly from the 5 year data for the company income difficult with such a decline and bounce back. However, trends for the third quarter of FY2017 shows a major decline in net income. A 25% decline is shown in comparison to how the company was performing at the end of quarter 3 2016 compared to 2017. Therefore, my pro forma analysis reflected the decline respectively for end of year 2017.

Net sales have increased since 2014. In fact, sales almost doubles from 2015 to 2016 with an increase from 3.48% to 8.29%. Trends so far for the end of quarter 3 reflect the same increase of doubling in percentage from 2016. My pro forma analysis shows an increase of 16% increase for net sales in 2017.

Analysis for the decline of net income for 2017 is similar to their decline in 2014. Weis market has been aggressive in their promotions and pricing in order to keep up the with industry competition which leads to price deflation. Also, new stores have displayed challenges in inventory management. Weis maybe trying to create the same boost in performance seen from 2014 to 2016 by their aggressive strategies in promotions and marketing. This may seem very risky if the industry does not react the way the company is hoping it will in order to provide the financial boost it needs. However, the company sales is positively reflected so far this year with a 16% increase from 2016. In order for the company to truly see if their aggressive strategy has worked in the long run, profitability will need to be analyzed for another 1-2 years.

Weis Markets is proving to show determination in becoming a major addition to the food retail industry. However, their financial history shows some struggle in their journey to remain competitive in the market. Especially when compared to competition such as Whole Foods. The company displays great aggression in keeping up with their competition by becoming comparable in the cost of their goods in relation to other food retailers. This is reflected in the history of their net income over the past 5 years and their performance thus far in 2017.

Their sales are showing a positive impact in their aggressive strategy, nonetheless, it will take some more years of a continued increase of sales to positively reflect the company’s profitability. Their aggressive strategy may seem extremely risky, especially to stockholders. However, it may serve as the company’s only reasonable approach with so much competition in the industry. As time goes on and expansion continues, Weis Market’s strategically approach to remain relevant in the food retail industry may be shown as