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selection than did Renier and included such stores as Wards, Wal-
Mart, K-Mart, Target, Radio Shack, and Sears. Additional
competition came from local independent businesses in Dubuque
that sold consumer electronic products.
The Dubuque area retail environment became more competitive
in the 1980's and early 1990's as large discount stores, chain
stores, and warehouse clubs increased product offerings and
offered low prices to gain market share. These larger businesses
purchased inventory at low prices due to volume purchases,
utilized sophisticated inventory control systems to manage
inventory, and effectively leveraged advertising expenditures due
to the operation of numerous retail outlets.
Although Renier could not purchase inventory at the prices
available to the chains and discount stores, it was able to
achieve some discounts through participation in a buying
cooperative made up of independent retailers. In addition,
because Renier was not highly leveraged and maintained ample
working capital, it was further able to reduce its inventory
costs by taking advantage of prompt payment discounts offered by
many vendors.
Renier computed its income for tax and financial reporting
purposes on the basis of a fiscal year ending June 30. Renier’s
pretax profit margin from July 1, 1988, through the valuation
date substantially exceeded the national industry average for
retailers of consumer electronics. However, no meaningful growth
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