Retail profits plummet amid soft U.S. economy
September 23, 2002,
First buffeted by a tumultuous economy, then whiplashed in the wake of terrorist attacks last year, American retailers endured a second straight year of sputtering sales and falling profits during 2001, as anxious consumers shied away from full-price department stores and sought out bargains.
Underlining the breadth and depth of the retail trough, more than a fourth of the retailers measured last year lost money, nine of the 33.
Putting it into perspective, the 33 retailers in the 2001 survey watched more than $1.5 billion in profits go up in smoke. Over the past two years, profits have fallen by almost 30 percent, to $8.9 billion from $12.4 billion, a drop of $3.5 billion.
At the same time, sales growth was stunted, climbing by just 7.2 percent last year, way off the 10.1 percent increase recorded in 2000 and far behind the 13.1 percent growth put up in 1999. And sales last year would have been far worse, virtually hitting the wall, were it not for the hardy double-digit gains put up by specialty retailers and the nation's mass merchants and off-pricers. As it was, a full third of the merchants in this year's Retail Report Card recorded sales declines, 11 of the 33.
But even there, the results were spotty, and rising sales for the mass merchant channel were nowhere near matched by profits. The mass merchant channel drove its profits higher by 10.3 percent last year, but profits tumbled down by almost 28 percent, weighed down by crushing losses at a handful of weakened players, notably Kmart, Ames and Value City.
Notably and predictably hard hit were the big full-price merchants like Federated, May, Dillard's, Belk, Saks and Gottschalks, where sales slid back and profits went into free fall. As consumers continued to shun the full-price channel, sales skidded down by 4.2 percent last years, and profits dropped by more than 30 percent.
The year's biggest winners, overall, were off-pricers like TJX, Stein Mart, Ross Stores, Big Lots and Factory 2-U, where profits raced ahead by 73.0 percent, and sales climbed higher by almost 10 percent.
Not far behind were the specialty players like Bed Bath & Beyond, Linens 'n Things, Williams-Sonoma and Pier 1 Imports, where sales rose at a near double-digit pace of 9.4 percent, while profits jumped up by 16.3 percent.
Composite sales and earnings
Home textiles retailers
|2001 (x$000s)||2000 (x$000s)||% change|
Composite results by retail format
Ranked by percentage of sales gain
(dollar figures in 000s)
|Fabric & Decorating|
Sales and profit productivity
|Rank by sales||Rank by income||Company||Sales per employee ($000s)||Income per employee ($000s)|
|8||1||Bed Bath & Beyond||154.1||11.6|
|14||28||Federated Dept. Stores||136.1||(2.4)|
|18||17||Linens 'n Things||124.1||2.0|
|19||27||Factory 2-U Stores||121.4||(2.3)|
|23||8||May Dept. Stores||111.9||5.5|
|28||6||Pier 1 Imports||90.6||5.9|