US Supermarkets & Grocery Stores Industry Report July 2018 Supermarkets & Grocery Stores Washington,Industry Report D.C. 2018 SourcesMexico: City Monterrey US Grocery Stores & Supermarkets Industry Overview • The supermarkets and grocery stores industry represents the largest food retail channel in the United States. Establishments in this industry offer a wide array of food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables and various dairy product • Stores are ranked according to size (e.g. megamarkets, hypermarkets, supermarkets, clubs, warehouses, convenience stores, and other) • In 2017, total sales of the industry reached US$1,116 billion, with a CAGR (2012-2017) of 2.7% • Number of outlets (as of 2017) of 385,100 units, showing a CAGR (2012-2017) of 1.4% • Selling space (as of 2017) of 228.5 million m², showing a CAGR (2012-2017) of 1.2% • By 2022, total sales of the industry are expected to reach US$1,142 billion with a CAGR (2017-2022) of 0.5% • Number of outlets will increase to 403,500 units, a total growth (2017 / 2022) of 4.8% • From 2017 to 2022, grocery discounters are expected to grow the most in sales and outlets, with 9.1% and 7.5% respectively • Key players in the industry include, Wal-Mart Inc with a market share (retail value) of 25.6%, Kroger Co with a 9%, Albertsons Cos Inc with a 5% and Ahold Delhaize with a 3.7%. Other competitors include, Publix Super Markets Inc, HE Butt Grocery Co, Meijer Inc, Wakefern Food Corp, among others • By number of outlets in 2017, 7-Eleven led with 9,242 units, Circle K (Couche-Tard) with 5,758 and Walmart Supercenter with 3,560 • By selling space in 2017, Walmart Supercenter led with 58,735 million m², Kroger with 5,397 million m² and Publix with 5,117 million m² • Industry is experimenting intensifying retail competition from alternative options, as consumer migration online has grocers racing to increase their online presence and moving toward blended models (e.g. click and collect); meanwhile online giants are, venturing to traditional physical stores (e.g. Amazon buying Whole Foods) • Discount stores (e.g. Lidl and Aldi) account for 27% of the grocery stores recently built or in progress, being the main threat to traditional grocers forcing them to drop prices Industry Sales Sales by Category US$ Billion 1,142 Independent Small Others Grocers 5% 1,135 3% Food/Drink/Tobacco 1,129 Specialists 7% 1,124 1,120 Forecourt 1,116 Retailers 10% Supermarkets 47% Hypermarkets 28% 2017 2018 2019 2020 2021 2022 Historical Forecast Supermarkets & Grocery Stores Industry Report 2018 Sources: IBISWorld, Euromonitor, DB Hoovers Top 3 US Players by Market Share Company Share: 25.6% • 4,672 Units in the US • 2017 Annual sales in the US of US$308 billion, • Sales growth CAGR of 3.28% (2014-2017) Company Share: 9% • 2,782 Units in the US • 2017 Annual sales in the US of US$123 billion • Sales growth CAGR of 4.19% (2014-2017) • Company banners: Kroger, Ralphs, Fry’s Food Stores, King Scoopers, Food 4 Less, Smith’s, among others Company Share: 5% • 2,318 Units in the US • 2017 Annual sales in the US of US$60 billion • Sales growth CAGR of 1.33% (2014-2017) • Company banners: Albertsons, Safeway, Vons, Amigos, Jewel Osco, Acme, United, Tom Thumb, among others. Other Representative US Companies by Market Share 3.1% 3.7% 1.9% 1.5% 1.4% 1.4% 1.3% 1.3% 0.9% 1.2% 1% 0.9% Supermarkets & Grocery Stores Industry Report 2018 Sources: Companies’ reports, Euromonitor Supermarkets & Grocery Stores Industry – Current Market Situation The following section presents financial information of publicly traded companies in the food retail industry in the world and in the US Comparable Public Companies – Global Average EV / EBITDA 2018-07-20 Price Revenue EBITDA Market Cap. Enterprise Company Country US$M Margin US$M Value EV / EV / 2018-07-20 2014 2015 2016 2017 EBITDA Revenue Walmart Inc. USA $88.06 $505,491 6.5% $259,851 $301,347 8.5x 7.8x 7.8x (Invalid8.6x End Date)9.2x 0.6x Costco Wholesale Corporation USA $218.69 $139,465 4.3% $95,905 $95,657 12.5x 13.9x 14.0x 14.0x 16.1x 0.7x Wal-Mart de México, S.A.B. de C.V. MEX $2.92 $32,207 9.8% $51,074 $50,046 13.8x 14.7x 15.2x 14.0x 16.7x 1.6x The Kroger Co. USA $28.14 $123,907 4.3% $22,418 $35,999 7.6x 8.9x 7.8x 6.6x 6.7x 0.3x Aeon Co., Ltd. JPN $19.93 $77,482 5.6% $16,736 $35,457 6.6x 8.2x 7.8x 7.8x 8.4x 0.5x Koninklijke Ahold Delhaize N.V. NLD $25.18 $76,325 6.5% $29,647 $32,531 5.4x 7.4x 8.7x 7.6x 6.8x 0.4x Woolworths Group Limited AUS $22.91 $44,339 6.3% $30,013 $31,108 10.1x 8.1x 8.8x 10.5x 11.8x 0.7x Carrefour SA FRA $15.82 $96,651 4.5% $12,299 $25,584 7.6x 8.6x 7.6x 7.4x 6.0x 0.3x Dairy Farm Int. Holdings Limited HKG $9.28 $11,289 5.1% $12,552 $13,220 16.6x 13.7x 13.0x 15.2x NR 1.2x J Sainsbury plc GBR $4.27 $39,472 4.1% $9,394 $11,893 5.0x 5.1x 5.4x 6.6x 7.7x 0.3x Sun Art Retail Group Limited HKG $1.28 $15,725 7.1% $12,178 $10,761 10.8x 7.3x 6.2x 7.9x 9.7x 0.7x Wm Morrison Supermarkets PLC GBR $3.35 $24,372 4.7% $7,877 $9,193 6.5x 10.7x 11.7x 9.2x 8.7x 0.4x Shoprite Holdings Limited RSA $15.42 $11,761 7.2% $8,552 $8,659 11.3x 10.7x 10.4x 11.3x 11.0x 0.8x Public Joint Stock Company Magnit RUS $67.74 $19,593 7.4% $6,903 $8,600 14.3x 10.6x 9.5x 10.2x 6.6x 0.5x Companhia Brasileira de Distribuição BRA $20.51 $13,745 6.3% $5,464 $7,250 7.6x 5.5x 7.1x 10.5x 9.9x 0.6x NR: Not Relevant Mean 9.7x 0.6x Median 8.9x 0.6x Comparable Public Companies – USA Average EV / EBITDA 2018-07-20 Price Revenue EBITDA Market Cap. Enterprise Company State US$M Margin US$M Value EV / EV / 2018-07-20 2014 2015 2016 2017 EBITDA Revenue Walmart Inc. AR $88.06 $505,491 6.5% $259,851 $301,347 8.5x 7.8x 7.8x 8.6x 9.2x 0.6x Costco Wholesale Corporation WA $218.69 $139,465 4.3% $95,905 $95,657 12.5x 13.9x 14.0x 14.0x 16.1x 0.7x The Kroger Co. OH $28.14 $123,907 4.3% $22,418 $35,999 7.6x 8.9x 7.8x 6.6x 6.7x 0.3x BJ's Wholesale Club Holdings, Inc. MA $25.91 $12,869 3.8% $3,418 $6,075 0.0x 0.0x 0.0x 0.0x 12.4x 0.5x Casey's General Stores, Inc. IA $109.67 $7,472 6.5% $4,013 $5,306 9.3x 10.1x 9.7x 9.9x 10.9x 0.7x Sprouts Farmers Market, Inc. AZ $22.15 $4,821 7.0% $2,920 $3,402 24.2x 17.2x 12.1x 11.2x 10.1x 0.7x SUPERVALU INC. MN $20.61 $14,157 3.1% $796 $2,664 6.5x 6.3x 4.9x 4.6x 5.9x 0.2x PriceSmart, Inc. CA $80.40 $3,122 5.9% $2,444(Invalid Identifier)$2,411 17.1x 14.5x 13.6x 13.9x 13.0x 0.8x Ingles Markets, Incorporated NC $29.55 $4,072 5.9% $599 $1,481 7.0x 8.0x 7.1x 6.8x 6.1x 0.4x Weis Markets, Inc. PA $52.63 $3,491 4.8% $1,416 $1,322 6.8x 7.1x 7.3x 7.8x 8.0x 0.4x Smart & Final Stores, Inc. CA $5.55 $4,620 3.4% $413 $1,045 10.4x 10.8x 10.4x 9.9x 6.6x 0.2x Village Super Market, Inc. NJ $29.69 $1,609 3.8% $427 $396 5.8x 6.1x 5.7x 5.0x 6.5x 0.2x Natural Grocers by Vitamin Cottage, CO $14.65 $812 5.2% $328 $377 16.9x 12.7x 7.5x 5.6x 8.9x 0.5x Inc. iFresh Inc. NY $4.17 $137 0.2% $60 $76 0.0x 0.0x 0.0x 57.9x NR 0.6x NR: Not Relevant Mean 9.3x 0.5x Median 8.9x 0.5x Supermarkets & Grocery Stores Industry Report 2018 Sources: Capital IQ Supermarkets & Grocery Stores Industry – US Transactions Size EV/ EV/ Date Target State Description Buyer (US$M) EBITDA Revenue May-18 BJ's Wholesale Club in Fort Myers, Florida FL A wholesale club in Florida Cole Credit Property Trust V, Inc. $26 - - Mar-18 Fiesta Mart, L.L.C. TX Hispanic supermarkets Bodega Latina Corporation $265 - - The Kroger Co.; Harris Teeter, Inc.; Food Mar-18 21 Farm Fresh Stores of SUPERVALU Inc. USA Grocery stores $43 - - Lion, LLC Oct-17 Honey Farms, Inc. MA Convenience stores Global Partners LP $36 - - Oct-17 Liquor Stores USA South Inc.