Retailers up profits as Kmart, others, rebound
August 9, 2004,
New York — Driven by turnaround stories and big earnings rebounds at a handful of the nation's biggest merchants — most notably at Kmart as it emerged from Chapter 11 — the 36 retailers ranked in this year's HTT Retail Report Card drove profits up more than a third, far exceeding a sales gain of 8 percent.
Accounting for most of the big swing in earnings for the group — and offsetting weakness elsewhere — was just one company, Kmart, which narrowed its loss last year more than 80 percent, to $614 million from a staggering $3.2 billion in 2002.
But underlying the volatility of the American retailing scene last year, the good cheer didn't get spread very far. Indeed, six of the 36 retailers in the ranking, more than 17 percent, lost money, if less of it, like Kmart.
Another eight, more than 22 percent of the total, recorded a drop in profits.
And sales were sometimes tough to come by. The 36 players measured this year drove their top line up 8 percent, to $637.5 billion from $590 billion last year. But not all retailers are created equal, and nine of the 36 — a full 25 percent—lost ground during 2002.
The strongest channel of distribution in terms of earnings growth was the all-the-time-low-price group, where profits soared more than 60 percent — again, the Kmart effect, as the big chain slashed its losses, improving the picture for the entire class of trade. But sales in the channel rose at a slower pace of 8.2 percent.
Second, surprisingly, were the nation's full-price retailers, where profits surged 26.8 percent, with big gains at Saks, Belk and The Bon Ton offsetting weakness at Federated, May, Dillard's and Gottschalks. But that big gain in profits certainly wasn't matched by sales, which fell 4.1 percent.
In terms of sales, the biggest gain — 15.4 percent — was recorded at the burgeoning specialty channel, fueled by a robust 32.2 percent increase at Bed Bath & Beyond.
The second biggest gain came from an unexpected source — home improvement centers in the form of Home Depot and Lowe's, which pushed their top line up 134 percent. In third place were warehouse clubs, with sales up 10.4 percent.
The weak links in terms of sales were full-price retailers, down 0.6 percent, and mid-pricers Sears, Penney and Kohl's, up just 3.2 percent.
Related Content By Author
The Countdown to the ICON Honors Continues featuring Christophe Pourny