This thesis concentrates on shareholder value analysis in retail companies as the final link between consumers and manufacturers therefore, retailers are a vital part of the business world. The research reviews methods for measuring shareholder value and applies SPM method to the US Discount, Variety Stores as a sample of the retail industry. Such an analysis would enable firms in this industry to know their competitive advantages and disadvantages, and provide focus on the key area of improvement of shareholder value.
Six sample companies were chosen among 14 companies in U.S. retail industry. These six companies were analyzed using the Strategic Profit Model (SPM) and then recommendations were given to improve the shareholder value focusing on logistics functions and strategies.
The result most common to all companies examined in this research is the direct or indirect impact of inventory and cost of sales on net profit, asset turnover, return on assets, financial leverage, and return on net worth. The results reinforce the importance of logistics and Supply Chain Management can have on firm’s financial performance.
The role of logistics on inventory decision-making has been a major factor in the operational performance of the firms examined.
The results of the research indicate that the financial and operational performances of firms in retail sector are heavily affected by inventory and cost of sales (COS) related issues.
This investigation illustrates the direct or indirect impact of inventory on ROA, financial leverage, and RONW. Logistics decisions can influence the financing decisions through impacting the financial leverage which can affect positively or negatively the desired level of RONW (shareholder value).
Finally, this thesis aims to study inventory performance. There is a large variation in inventory turnover performance of retailers across firms as well over time. This thesis aims to analyze this variation and factors affecting this variation. This thesis finds that inventory turnover increase as cost of sales and capital intensity increase. The results are useful in helping managers make inventory decisions, employing inventory turnover in performance analysis, and identifying the causes of performance differences among firms and over time.