The Kroger Co. was founded in 1883 and is one of the largest retailers in the world, based on annual sales. Whole Foods Market claims to be the world’s largest retailer of natural and organic foods. Whole Foods offers specialty products to customers with sufficient disposable income to spend on such goods. The following data were taken from these companies’ 2016 annual reports. All dollar amounts are in millions.

Required
a. Before performing any calculations, speculate as to which company will have the highest gross margin and return-on-sales percentage. Explain the rationale for your decision.
b. Calculate the gross margin percentages for Kroger and Whole Foods Market.
c. Calculate the return-on-sales percentages for Kroger and Whole Foods Market.
d. Do the calculations from Requirements b and c confirm your speculations in Requirement a?

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Kroger Co. January 30, 2016 Whole Foods September 25, 2016 Sales Cost of goods sold Net income $109,830 85,496 2,039 $15,724 10,313 507