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Retail Report Card

CHANGES

For the third year, the HTT Retail Report Card uses new terminology to describe the channels of distribution, reflecting retailing in the 21st century and organizing formats in a hierarchy based on pricing. In place of the traditional discounter category, you'll find all-the-time-low price, reflecting what so-called discounters really do. Then there are off-price retailers, that actually discount the goods seen at full-price department stores. In place of department stores are full-price retailers, followed by mid-price retailers, like Sears, Penney and Kohl's, replacing what used to be called national chains. A new direct-to-consumer category reflects that mail-order has been supplanted by the Internet. Specialty stores, fabric and decorating chains, and warehouse clubs retain their titles. Within these categories, a number of changes have taken place. Lillian Vernon, under new ownership, is no longer a publicly reporting company, and has been dropped from the direct-to-consumer category. Value City Department Stores has been succeeded in the all-the-time-low-price category by its parent company, Retail Ventures. A relatively new channel of distribution to the Report Card is home improvement, reflecting the importance of this channel to home textiles. Included are Home Depot and Lowe's.

METHODOLOGY

This year's edition of the HTT Retail Report Card is based on data from public documents and was computed by senior research specialist Janice Chamberlain and database coordinator Cynthia Myers.

Formulas used include:

— Profit margin: also known as net return on sales, it is figured by dividing net income by net sales.

— Return on equity: net income divided by shareholder equity.

— Gross margin: net sales minus cost of goods sold divided by net sales.

— SG&A as a percentage of sales: selling, general and administrative expenses divided by net sales.

— Net debt coverage: net interest expense divided by operating income.

— Operating income: net sales minus cost of goods sold and selling, general and administrative expenses.

— Inventory turns: cost of goods sold divided by the average of beginning and ending inventories.

— Operating return on sales: also known as operating margin, it is calculated by dividing operating income by net sales.

The HTT Retail Report Card was compiled under the direction of business editor Don Hogsett and director of market research Kay Anderson.

Sales per square foot

2003 2002
1. Williams-Sonoma $1,050 $1,002
2. Restoration Hardware 646 581
3. The Bombay Company 322 296
4. TJX 280 282
5. Target 248 242
6. Bed Bath & Beyond 219 212
7. Factory 2-U Stores 166 167
8. Dollar General 152 148
9. Gottschalks 149 148
10. Big Lots 144 NA
11. The Bon Ton 132 NA
12. Hancock Fabrics 87 88


Retail sales fly, profits soar, in 2003

STORE FISCAL YEAR END NET INCOME ($000) % CHANGE '02-'03 % CHANGE '99-'03 PROFIT MARGIN RETURN ON EQUITY NET SALES ($000) % CHANGE '02-'03 % CHANGE '99-'03 SAME-STORE SALES % CHG GROSS MARGIN % SG&A/SALES NET DEBT COVERAGE INVENTORY TURNS
PROFITABILITY MEASURES SALES OPERATIONS
Source: Home Textiles Today market research and company reports
Figures in parentheses represent losses of calculations based on net or operating losses.
1. Includes net income from discontinued operations of $193 million in 2003 and $137 million in 2002.
2. Excludes non-sales revenues of $2.4 billion in 2003 and $2 billion in 2002.
3. Excludes net credit revenues of $1.4 billion in 2003, $1.2 billion in 2002 and $490 million in 1999.
4. Emerged from Chapter 11 bankrupcty in May 2003. Year 2003 figures represent the combined figures for the successor company for the 39 weeks ended Jan. 28, 2004 and the predecessor company for the 13 weeks ended April 30, 2003.
5. Includes a $37 million pretax charge for restructuring, impairment and other charges, an $89 million net loss on the sale of assets, a $768 million net reorganization charge and a $10 million net loss from discontinued operations.
6. Includes a $574 million pretax charge for restructuring, impairment and other charges, a $5 million net gain on the sale of assets, a $363 million net reorganization charge, a $24 million income tax benefit and a $448 million net loss from discontinued operations.
7. Includes a $193 million net loss from discontinued operations.
8. Includes a $10 million pretax gain from litigation settlement expense and other related proceeds.
9. Includes a $29.5 million pretax loss from litigation settlement expense and other related proceeds.
10.Includes a $6 million pretax restructuring charge and a $186.1 million extraordinary charge, the cumulative effect of an accounting change.
11. Includes an $8.1 million pretax special charge and $43 million in income from discontinued operations.
12. Excludes licensed department rentals and other income of $12.8 million in 2003, $12.6 million in 2002 and $13.6 million in 1999.
13. Includes license fees from affiliates of $5.6 million in 2003 and $7.4 million in 2002 and income tax benefits of $1.7 million in 2003 and $325,000 in 2002. 2002 also includes a $2.1 million extraordinary charge for the cumulative effect of an accounting change.
14. Excludes licensed department sales.
15. Includes $180 million in net income from the disposal of discontinued operations.
16. Includes $30 million net losses from discontinued operations.
17. Includes pretax restructuring charges of $322 million in 2003 and $91 million in 2002.
18. Includes pretax charges for asset impairment and store closing costs of $43.7 million in 2003 and $52.2 million in 2002. 2002 also includes a $530.3 million extraordinary loss, the cumulative effect of an accounting change.
19. Excludes service charges, interest and other income of $264.7 million in 2003, $322.9 million in 2002 and $244.5 million in 1999.
20. Excludes $244.5 million in service charges, interest and other income.
21. Includes an $8.2 million pretax charge for losses from long-lived assets, a $62,000 pretax integration credit and a $10.5 million pretax loss on the early extinguishment of debt.
22. Includes a $19.5 million pretax charge for losses from long-lived assets, a $10 million pretax integration charge, a $709,000 pretax gain on the early extinguishment of debt and a $45.6 million extraordinary charge, the cumulative effect of an accounting change.
23. Includes a $12.5 million pretax loss from long-lived assets, a $41.6 million pretax integration charge and a $15.2 million extraordinary loss on the early extinguishment of debt.
24. Includes a $14.8 million pretax gain on the sale of property, equipment and investments and a $2 million pretax restructuring charge.
25. Includes a $402,000 pretax loss on the sale of property, equipment and investments, a $8.1 million pretax restructuring charge and a $561,000 pretax asset impairment and store closing charge.
26. Includes a $1.5 million net loss from discontinued operations.
27. Includes a $2.7 million pretax unusual expense and $2.5 million in pretax restructuring income
28. Excludes net non-sales income of $3.6 million in 2003 and $2.7 million in 2002.
29. Includes an $882,000 net loss on discontinued operations.
30. Includes a $9.5 million pretax asset impairment charge, a $3.7 million pretax loss on the early extinguishment of debt, a $6.5 million income tax benefit and a $4.5 million loss on discontinued operations.
31. Includes a $1.9 million pretax asset impairment charge.
32. Excludes net credit revenues of $3.7 million in 2003, $8.2 million in 2002 and $8.7 million in 1999 and net leased department revenues of $3.5 million in 2003, $3.6 million in 2002 and $.2 million in 1999.
33. Includes a $791 million net loss on the early retirement of debt, a $112 million pretax charge for special charges and impairments and a $4.2 billion pretax gain on the sale of businesses.
34.Includes a $111 million pretax charge for special and impairment losses and a $208 million extraordinary charge, the cumulative effect of an accounting change.
35. Excludes credit and financial products revenues of $4.8 billion in 2003 and $5.7 billion in 2002.
36. Total revenues.
37. Reflects the reclassification of Ekerd Drugs as discontinued operations.
38.After preferred dividends of $25 milion; includes a $1.3 billion net loss from discontinued operations.
39. After preferred dividends of $27 milion; includes $120 million in net income from discontinued operations.
40. Retail sales, excludes $1.1 billion in direct marketing revenue.
41. 2003 is 53 weeks; 2002 and 1999 are 52 weeks.
42.Includes a $5.2 million extraordinary charge, the cumulative effect of an accounting change.
43. Includes a $9.7 million net loss from discontinued operations.
44. Includes $3.4 million in net income from discontinued operations.
45. Includes net losses from discontinued operations of $1.7 million in 2003, $286,000 in 2002 and $317,000 in 1999.
46. Includes a $3.9 million pretax loss on the early extinquishment of debt.
47.After preferred dividend charges of $8.1 million; includes a $4.7 million pretax loss on the early extinguishment of debt.
48. Filed for Chapter 11 bankruptcy in Jan., 2004.
49. Includes a $1.5 million net restructuring charge and a $31.7 million pretax reorganization charge.
50. Includes an $9.9 million pretax restructuring charge and an $18.2 million income tax benefit.
51. After preferred dividends.
52. Includes a $4 million pretax gain on the sales of assets.
53. Includes a $1.8 million income tax benefit.
54. After preferred shareholder dividends of $358,000; includes a $278,000 pretax charge for the change in fair value of warrants and an $8.5 million income tax benefit.
55. Includes a $1.7 million income tax benefit.
56. Includes pretax provisions for impaired assets and store closing costs of $19.5 million in 2003, $21 million in 2002 and $56.5 million in 1999. 1999 also includes a $118 million extraordinary charge, the cumulative effect of an accounting change.
57. Excludes membership fees and other revenue of $852.9 million in 2003, $769.4 million in 2002 and $479.6 million in 1999.
58. Includes pretax gains on contingent lease obligations of $4.5 million in 2003 and $15.6 million in 2002 and net losses from discontinued operations of $676,000 in 2003 and $14.9 million in 2002. 2003 also includes a $1.3 million extraordinary charge, the cumulative effect of an accounting change .
59. Includes a $1.4 million net loss from discontinued operations.
60. Excludes membership fees and other revenue of $139.4 million in 2003, $130.7 million in 2002 and $89.1 million in 1999.
61. Includes a $5.7 million pretax charge for stock option compensation expense and a $5.5 million pretax charge for debt repurchase and share reclassification expenses.
62.Includes a $1.9 million pretax charge for debt repurchase and share reclassification expenses.
63. After preferred dividends of $7.9 million in 2003 and $15.6 million in 2002; includes pretax special charges of $1.3 million in 2003 and $4.4 million in 2002 and pretax gains on the sale of Improvements business of $1.9 million in 2003 and $570,000 in 2002.
64. 1999 net loss, after preferred dividends of $634,000 was $16.9 million, including a $144,000 pretax special charge, a $4.3 million pretax gain on the sales of The Shopper's Edge and a $967,000 pretax gain on the sale of Austad's.
65. Includes net earnings from discontinued operations of $15 million in 2003, $12 million in 2002 and $15 million in 1999.
ALL-THE-TIME-LOW-PRICE
Wal-Mart 1/31/2004 $9,054,000¹ 13.8%¹ 70.1% 3.5% 20.8% 256,329,0002 11.6%² 64.1% 4.0% 22.5% 17.5% 6.6% 7.8x
Target 1/31/2004 1,841,000 11.3 60.9 3.9 16.6 46,781,0003 9.5³ 40.9³ -2.9 32.0 22.9 13.0 6.3x
Kmart4 1/28/2004 (614,000)5 6 7 -2.6 -28.0 23,253,000 -20.8 -31.5 -9.5 23.3 21.5 39.6 4.4x
Dollar General 1/30/2004 301,0008 13.69 61.2 4.4 19.1 6,871,992 12.6 76.8 4.0 29.4 21.8 6.0 4.3x
Family Dollar 8/30/2003 247,475 14.1 76.7 5.2 18.9 4,750,171 14.1 72.7 3.8 33.8 25.6 3.9x
ShopKo Stores 1/31/2004 39,120 10 -61.711 1.2 6.6 3,184,08812 -1.712 4.512 -1.6 25.7 20.3 22.0 4.2x
Retail Ventures 1/31/2004 (4,446)13 13 -0.2 -2.1 2,594,20614 5.914 55.314 1.2 38.6 37.7 151.7 3.9x
MEDIAN 13.7 61.2 9.5 55.3 1.2 29.4 21.8 17.5 4.3x
FULL-PRICE
Federated Dept. Stores 1/31/2004 $693,000 -15.3%15 -12.8%16 4.5% 11.7% $15,264,000 -1.1% -4.8% -0.9% 40.4% 31.6% 19.2% 2.8x
May Dept. Stores 1/31/2004 434,00017 -19.917 -53.2 3.3 10.4 13,343,000 -1.1 -1.6 -2.8 29.7 20.1 24.9 3.4x
Dillard's 1/31/2004 9,34418 —18 -94.3 0.1 0.4 7,598,93419 -3.919 -12.420 -4.0 32.0 27.6 54.7 5.9x
Saks 1/31/2004 82,82721 241.622 -56.323 1.4 3.6 6,055,055 2.4 -5.9 1.6 37.9 24.4 13.5 2.7x
Belk 1/31/2004 111,54724 32.825 56.726 4.9 11.5 2,264,907 1.0 5.9 -0.9 33.5 24.9 19.1 3.1x
The Bon Ton 1/31/2004 20,601 114.5 112.1217 2.2 8.6 926,40928 29.928 30.3 -2.0 36.4 29.7 14.5 2.9x
Gottschalks 1/31/2004 1,87029 30 -71.831 0.3 1.7 660,57432 -0.832 22.032 -0.7 34.1 30.9 62.6 2.7x
MEDIAN 32.8 -53.2 1.0 -1.6 -0.9 34.1 27.6 19.2 2.9x
MID-PRICE
Sears, Roebuck 1/3/2004 $3,397,00033 146.9%34 133.8% 9.3% 53.1% $36,372,00035 1.9%35 7.8%36 -2.7% 27.9% 25.0% 99.5% 5.0x
J.C.Penney37 1/31/2004 (953,000)38 39 -5.4 -17.6 17,786,000 0.9 -7.740 0.9 37.2 32.8 33.0 3.6x
Kohl's 1/31/2004 591,152 -8.1 129.0 5.7 14.1 10,282,094 12.7 125.6 -1.6 33.0 20.3 5.6 4.3x
MEDIAN 69.4 131.4 1.9 125.6 -1.6 33.0 25.0 33.0 4.3x
OFF-PRICE
TJX41 1/31/2004 $658,365 13.8% 26.2%402 4.9% 42.4% $13,327,938 11.2% 51.5% 1.0% 24.4% 16.2% 2.5% 5.7x
Big Lots 1/31/2004 81,17543 6.0 -15.544 1.9 7.3 4,174,383 7.9 42.3 3.4 41.8 38.7 11.8 3.0x
Ross Stores 1/31/2004 228,102 13.4 52.0 5.8 30.2 3,920,583 11.0 58.8 1.0 25.6 16.0 3.7x
Stein Mart 1/31/2004 2,20145 -89.445 -81.445 0.2 1.0 1,355,457 -3.3 31.8 -4.7 25.1 25.5 -33.1 3.5x
Tuesday Morning 12/31/2003 53,66146 21.7 213.547 6.5 40.6 822,646 12.9 68.3 2.9 37.6 25.5 9.2 3.7x
Factory 2-U Stores48 1/31/2004 (85,859)49 50 51 -17.4 344.4 493,297 -7.8 17.1 -4.4 31.1 36.7 -13.4 9.7x
MEDIAN 13.4 26.2 9.5 46.9 1.0 28.4 25.5 2.5 3.7x
SPECIALTY STORE
Bed Bath & Beyond 2/28/2004 $399,470 32.2% 204.4% 8.9% 20.1% $4,477,981 22.2% 141.1% 6.3% 41.9% 27.6% —% 2.7x
Williams-Sonoma 2/1/2004 157,211 26.4 130.952 5.7 19.5 2,754,368 16.7 88.7 4.0 40.3 31.1 4.5x
Linens 'n Things 1/3/2004 74,825 8.1 43.8 3.1 9.8 2,395,272 9.6 84.2 1.3 40.3 35.2 0.7 2.2x
Pier 1 Imports 2/28/2004 118,001 -8.8 15.9 6.3 17.3 1,868,243 6.5 51.8 0.0 41.8 29.1 6.5x
The Bombay Company 1/31/2004 9,951 37.9 35.5 1.7 5.2 596,435 20.7 51.9 13.0 29.4 26.6 2.7 3.5x
Restoration Hardware 1/31/2004 (2,941)53 54 55 -0.7 -2.9 438,508 9.5 46.7 5.2 30.2 30.8 -83.2 3.1x
MEDIAN 26.4 43.8 13.2 68.1 4.6 40.3 30.0 0.7 3.3x
WAREHOUSE CLUB
Costco 8/31/2003 $721,00056 3.0%56 81.5%56 1.7% 11.0% $41,692,69957 9.7%57 54.6%57 5.0% 10.7% 9.8% —% 11.5x
BJ's 1/31/2004 102,86658 -21.458 -7.559 1.6 12.1 6,584,80860 14.960 62.460 7.8 8.1 7.6 0.2 9.0x
MEDIAN -9.2 37.0 12.3 58.5 6.4 9.4 8.7 0.2 10.3x
FABRIC & DECORATING
Jo-Ann Stores 1/31/2004 $41,00061 -8.7%62 60.2% 2.4% 11.8% $1,743,100 3.6% 26.2% 3.6% 47.0% 38.2% 11.8% 2.4x
Hancock Fabrics 2/1/2004 17,428 -11.7 159.6 3.9 13.2 443,605 1.2 16.3 1.2 51.5 43.8 1.5 1.4x
MEDIAN -10.2 109.9 2.4 21.3 2.4 49.3 41.0 6.7 1.9x
DIRECT-TO-CONSUMER
Hanover Direct 12/27/2003 ($23,321)63 63 64 -5.6% 49.1% $414,874 -9.3% -24.5% —% 37.1% 34.1% 99.6% 5.5x
MEDIAN -9.3 -24.5 37.1 34.1 99.6 5.5x
HOME IMPROVEMENT
Home Depot 2/1/2004 $4,304,000 17.5% 85.5% 6.6% 19.2% $64,816,000 11.3% 68.6% 3.8% 31.8% 21.2% —% 5.1x
Lowe's 1/30/2004 1,877,00065 27.665 178.965 6.1 18.2 30,838,000 18.1 99.7 6.7 31.2 18.0 4.4 5.0x
MEDIAN 22.6 132.2 14.7 84.2 5.3 31.5 19.6 4.4 5.1x


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