Creating value in a retail business. Evidence from the Russian food retail market

Teimuraz Vashakmadze, Martirosyan Emil and Sergeeva Anastasia
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Sergeeva Anastasia: The Russian Presidential Academy of National Economy and Public Administration

Journal of Corporate Finance Research Корпоративные финансы, 2015, issue 1 (33), 48-58

Abstract: In the post crisis years, the Russian food retail market has skyrocketed and run ahead of the market in general. Our research reveals major value drivers and explores the value creation of companies by comparison based on P/B ratio. The analysis of performance indicators of three biggest Russian food retailers provides evidence that ROE can explain the difference and positive relationship of P/B ratio. Our findings suggest that retail companies are increasing ROE through the net profit margin improvement. In addition, we have found out that a higher Store/DC ratio has a strong correlation to ROE of a company. The key question of the paper is identifying a combination of factors that drive performance and value creation in the post-crisis period in the non-consolidated Russian food retail market. Thus, our research is aimed at providing a broader picture of factors that influence value creation in the retail market, such as cross-docking, franchising, recognition of the product matrix, management decision decentralization, focusing on core activity and commercial conditions with suppliers.

Keywords: return on equity (ROE); the price-to-book ratio (P/B ratio) (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:scn:026790:15740034

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