Although in some markets we have moderated our rate of growth in space, overall we have chosen
Question:
Although in some markets we have moderated our rate of growth in space, overall we have chosen to sustain strong growth in selling area – and this will continue. With reductions in site, build and fitting costs for stores – these have fallen substantially since last year – we are able to use our capital more efficiently, and this should be helpful to long-term returns. At the end of February, our operations in Asia and Europe were trading from 1,911 stores, including 608 hypermarkets, with a total of 55.0m sq ft of selling space. This year, we plan to open 320 new stores with a total of 5.4m square feet of sales area in these markets and a further 0.6m sq ft is planned to open in the USA.. . .
In our fast moving business, trading is tracked on a daily and weekly basis financial performance is reviewed weekly and monthly, and the Steering Wheel is reviewed quarterly. Steering Wheels are operated in business units across the Group, and reports are prepared of performance against target KPI s on a quarterly basis enabling management to measure performance. All major initiatives require business cases normally covering a minimum period of five years. Post-investment appraisals, carried out by management, determine the reasons for any significant variance from expected performance.
Questions
1 What are the benefits expected from the capital expenditure on growth in store space?
2 How does the company monitor the outcome of its investment appraisal?
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