Prepare an equity research report comparing the financial performance Assignment

Prepare an equity research report comparing the financial performance of your chosen retail company with the financial performan - Assignment Example Through prudent risk management and optimum allocation of resources and assets, the company has been able to withstand financial difficulties and turmoil and has been able to portray sound and stable financial outlook. Today the company now has over 900 stores worldwide which cater to wide demography of customers across the globe. The company was founded by the name of John David stores in 1981 with one shop in bury. In the financial year of 1989 the first London store was opened in Oxford Street. One of the most important landmarks in the history of the company was the floatation of its equity stock in the year 1996. At this point of time, the company had around 56 stores. Subsequent to the issuance of equity in the market, the revenue growth of the company started increasing with rapid pace. The company acquired affiliations with international sports brands such as Addidas, Nike and Reebok and thus it was able to establish substantial present in the retail industry. The company not only focused on organic growth but it also expanded through merger and acquisitions. In the financial year 2002, JD sports acquired nearly 200 stores and the highlight among them the acquisition of first sport, a renowned sport retailer. In the financial year 2005, the company was also able to purchase more than 70 stores from Allstores which further established its position as the leading UK retailer in sports wear merchandise. The primary operations of the company reside in UK, Ireland and in France. 1.2 Overview of the current operations In the financial year 2012, the company acquired Blacks, another leading sports retailer in the industry. With the acquisition of Blacks, the JD group comprises of four divisions being Sport Fascias, Fashion Fascias, Outdoor and Distribution. The current primary business of the company is retail and the other businesses of the company acts as support activities. JD Sports have made substantial investment in brands, business, multi-channel and ot her infrastructure to improve and enhance the financial outlook of the company. The company has also made substantial investment in the current year for expanding its business to greater horizons such as Spain, Ireland and France. The company was able to open its first store in Spain in March 2012. The following is a brief financial analysis of various operational segment of the company: 1.3 Sports Fascias The Sport Fascias of JD sports plc comprises of JD, Size, Chausport, Sprinter and Champion sports. During the financial year of 2012, the revenue of the company increased by 16.3% and its market share also hiked as compared to the prior years. The gross margin of the company, however, experienced a marginal decrease from 51% (2011) to 50.8% (2012). This decrease was primarily due to the lower margin business of Champion and Sprinter. The operating profit of the segment experienced a hike of about ?1 million. 1.4 Fashion Fascias The fashion fascias comprises of Bank, Scotts and Gec il Gee. During the current financial year, the total revenue of the company increased by 13.2% and the gross margin of the segment decreased by marginally from 49% to 48.5%. 1.5 Outdoor After the acquisition of Blacks, a new reporting segment by the name of Outdoor has been created. At the time of the acquisition, the operations of Blacks were in adverse position and it required a considerable efforts and time of the managements to bring them to a reasonable position. The acquisition took place three months

Critical evalluation of the extent to which institutional factors Essay

Critical evalluation of the extent to which institutional factors influence inward and outward FDI - Essay Example However, it is difficult to measure the various institutional factors and therefore the extent to which it influences inward and outward FDI is a subjective issue. The issue of â€Å"institutional distance† has been found to have an influence on both the inward and the outward FDI. Institutional distance is the difference in the quality of institutions between two or more countries. Quere et al. (2007) studied the determinants of FDI and concluded that â€Å"raising the quality of institutions and making them converge towards those of source countries may help developing countries to receive more FDI, hence help them to catch up, independently of the indirect impact of higher GDP per capita†. It is widely known that good quality institutions have a positive impact on the inflow and outflow of FDI. Some scholars suggest that institutional differences may be a source of comparative advantages, some sectors being more ‘institution-intensive’ than others, and t hat this could be a source of more trade flows. To the extent that trade and FDI are complements, this could raise FDI too. Good governance is one of the institutional qualities which are thought to positively affect the flow of FDI. Globerman and Shapiro (2002) studied the impact of the main components of the governance indicators on both inflows and outflows of a country’s FDI. They concluded that good governance encouraged both FDI inflows and outflows; although the impact of good governance on the outflow of FDI only applies to relatively large and developed countries. However, measuring governance is a subjective task which varies from one research to another. Some studies concentrates on one country yet trade flow involves at least two countries. Since FDI flows can move on either direction, governance of all the countries involved should be scrutinized in order to determine the actual impact of governance on both in-flows and out-flows of FDI. The tax system of a host country is another determinant of FDI. If a tax system of a country is set in a manner that the products and services of foreign firms are more taxed than those of the local firms, the inward flow of FDI is likely to be reduced. This is because the foreign firms would have a challenge in setting the prices of their goods and services; in order to make profits, they might be forced to set their prices above those of the local firms thus leading to lower than expected sales. On the other hand, imposing heavy taxes on the products and services of the local firms may hamper their growth. For this reason, the local firms may not grow to become MNEs and thus affecting the outward FDI. However, heavy taxes on the local firms may lead to investment in other countries where the tax rates of taxation is relatively lower. This will lead to increased out-flow of FDI. Corruption is also another institutional factor which is known to determine the flow of FDI. Many researchers have found that cor ruption increases the cost of investment and lead to reduced expected revenues. Taking corruption to mean â€Å"paying certain individuals in order to get an investment opportunity in the host country†, it would negatively affect the inward flow of FDI. In addition, the misuse of public funds and resources by