Financial Performance Analysis of U.S. Grocery Retailers Using DuPont Model

Abstract

This paper applies the DuPont analysis framework to evaluate the financial performance of three leading U.S. grocery retailers—Walmart, Costco, and Target—from to. By decomposing Return on Equity (ROE) into net profit margin, total asset turnover, and equity multiplier, the study identifies significant differences in profitability, operational efficiency, and financial leverage among the firms. The analysis reveals that while Walmart maintains scale-driven consistency, it operates with relatively thin margins. Costco demonstrates strong asset efficiency and stable leverage, suggesting robust financial discipline. Target, however, exhibits volatility in both profitability and capital structure, reflecting ongoing strategic adjustments. Based on these findings, the paper proposes three development recommendations: optimizing profit margins through product-level strategies, maintaining prudent financial leverage, and accelerating digital transformation—particularly in real-time supply chain management. These strategies aim to improve resilience and long-term competitiveness in a dynamic and margin-sensitive retail environment. The study offers insights for both academic research and industry practitioners seeking to understand financial health through an applied DuPont lens.