Report to a potential investor, comparing and analyzing two companies' Essay

Report to a potential investor, comparing and analyzing two companies' current and previous years group figures in the annual report for the year ended 2012 - Essay Example It is the parent company of Sainsbury Supermarkets Ltd involved in the retailing business in UK and other parts of the world. With a market share of over 16.5%, it is one of the leading chains in the market catering to the various needs of the customers. Tesco Ltd is the market leader in the retailing industry in UK with major share in the market. It is also the third largest retailer in the world in terms of revenue and has its operations outside United Kingdom also. Over the period of time, Tesco has served the diversified needs of its customers in UK as well as other global markets. As compared to 2011, there has been a positive growth in the revenue of Sainsbury of 5.3%. Revenue for the year 2011 was  £21,102(M) whereas for 2012, it was  £22,294(M). As compared to Sainsbury, Tesco’s revenue however grew by 6.8% indicating that Tesco has been better at improving its turnover for the year. There could be different factors resulting into this higher growth of Tesco because it is a global firm with presence in more international markets as compared to Sainsbury. Tesco is present in countries like India and China thus offering it much needed leverage against the difficult economic situations prevailing in UK and other developed world. In order to effectively shield itself against market movements, Sainsbury therefore needs to diversify its market presence to generate more value for its shareholders. Gross Profit margin for Sainsbury has declined from 5.5% to 5.4% however this reduction may not be large. Tesco’s gross profit margin has declined too from 8.5% to 8.2% showing a relatively larger reduction in the gross profit margin as compared to Sainsbury. It may therefore be a result of higher level of inflation prevailing in United Kingdom and other global markets. Profit margin of Sainsbury has declined from 3.0% to 2.7% whereas the