The most profitable apparel retailers of fiscal 2002, in descending order of net income, based on actual reported results, including all charges and credits.
This story first appeared in the April 17, 2003 issue of WWD. Subscribe Today.
Drumroll, please. That Wal-Mart topped the list of most profitable apparel retailers in 2002 is hardly a surprise. The company’s value message resonated with consumers who continue to be preoccupied with the dismal U.S. economy and a host of global ills. The Bentonville, Ark.-based behemoth dwarfs its nearest competition by nearly five to one. What’s more, Wal-Mart’s share accounts for more than half — 51 percent — of the total from the group of 15.
WAL-MART STORES INC. $8.04 billion
Wal-Mart is in a retail league all its own. The Bentonville, Ark.-based discount titan grew profits faster than sales in 2002. Revenues reached nearly $250 billion aided by strong performances from Wal-Mart stores and the international division. The weak link in the company chain was Sam’s Club, the warehouse club division.
TARGET CORP. $1.65 billion
The Target discount division’s designer apparel offerings include Mossimo, Cherokee, Stephen Sprouse and Liz Lange for maternity. There are also home furnishings lines by Philippe Stark, Michael Graves and one called Swell, by Cynthia Rowley. The Minneapolis-based retailer managed to post double-digit gains for the year, but Target remains under pressure from Wal-Mart and Kohl’s.
SEARS, ROEBUCK & CO. $1.37 billion
While its credit card operations accounted for 15.4 percent of the company’s pre-tax profits, Sears nonetheless decided in March to sell the division and focus on its ailing stores. Revenues for 2002 were ahead 10.3 percent to $43.92 billion, from $39.83 billion during the preceding year.
FEDERATED DEPARTMENT STORES $818 million
Federated’s strategy of boosting private label assortments and consolidating some operations seems to be working to some extent. For 2002, reported net income rose to $4.12 a diluted share, from a loss of $276 million, or $1.38, in 2001. (The big swing was due to one-time charges related to consolidation and the sell-off of Fingerhut.) Sales slid 1.4 percent to $15.44 billion from $15.65 billion in 2001, while comps were off 3 percent.
KOHL’S CORP. $643.4 million
Kohl’s impressed Wall Street with a 29.8 percent rise in net income, to about $1.87 a diluted share, from $495.7 million, or $1.45, in 2001. Sales for the year grew by 21.8 percent to $9.12 billion from $7.49 billion in 2001 and comps climbed 5.3 percent. But analysts are wondering what Kohl’s will do for its second act now that other chains are copying its promotional strategy.
TJX COS. $578.4 million
TJX Cos.’ Marmaxx unit, which includes Marshalls and T.J. Maxx, saw operating profits decline 15.8 percent to $208 million for the fourth quarter, which pushed TJX’s profits into decline. The division’s sales inched up 4.1 percent to $2.7 billion, but comps were off 1 percent.
MAY DEPARTMENT STORES CO. $542 million
It was a brutal year for department stores. May has tried to compete by focusing on younger customers with in-house brands, its bridal group and new store designs. Despite these efforts, May’s fourth-quarter profits dropped, bringing its string of quarterly declines to eight. Profits for 2002 fell 22.9 percent, to about $1.76 a diluted share, from $703 million, or $2.21, in 2001. Sales declined 2.8 percent to $13.49 billion and comps were off 5.3 percent.
LIMITED BRANDS INC. $501.7 million
Bras and bikini briefs did better than apparel for Limited Brands in the fourth quarter. For 2002, net income sank 3.3 percent, to 96 cents a diluted share, versus income of $518.9 million, or $1.19, in 2001. This year, the company will optimize its existing real estate rather than open new stores.
GAP INC. $477.5 million
Now under the stewardship of Paul Pressler, Gap raised waistlines in the fourth quarter and got a rise out of its earnings. For 2002, Gap reported earnings of 54 cents a diluted share, compared with a loss in the prior year of $7.8 million, or 1 cent. Sales rose 4.4 percent to $14.45 billion, versus sales of $13.85 billion in 2001, but fell 3 percent on a comp basis.
J.C. PENNEY CO. $405 million
Allen Questrom’s golden touch worked well for Penney’s last year, and he received high marks from Wall Street for improving the chain’s assortments and marketing, and instituting cost savings. For the fiscal year, Penney’s net income rose a stunning 313.3 percent, to $1.25 a diluted share. Total company sales rose 1.1 percent to $32.35 billion from $32 billion a year ago. Penney’s still faces challenges with its Eckerd drugstore division and certain merchandising issues.
ROSS STORES $201.2 million
Benefiting from consumers’ preoccupation with value, Newark, Calif.-based off-pricer Ross Stores’ 2002 income jumped 29.8 percent, to $2.52 a diluted share, versus income of $155 million, or $1.91, in 2001. Sales rose 18.2 percent to $3.53 billion over 2001 sales of $2.99 billion, with comps up 7 percent.
ABERCROMBIE & FITCH $194 million
Attention to expense detail allowed Abercrombie & Fitch to report double-digit earnings increases and stellar margins for the fourth quarter and year, despite nearly three years of decreasing same-store sales. For 2002, income rose 15.6 percent, to $1.94 a diluted share, versus 2001 earnings of $168.7 million, or $1.65. Sales rose 16.9 percent to $1.60 billion from sales of $1.37 billion in 2001, but slipped 5 percent on a comp basis.
TALBOTS $120.8 million
Talbots has the unenviable task of updating its fashion without alienating its core customer, who is nothing if not traditional. For 2002, income tapered off 4.9 percent, to $2.01 a diluted share, versus income of $127 million in 2001. Sales fell 1.1 percent to $1.59 billion from $1.61 billion, while comps declined 6.6 percent.
NEIMAN MARCUS GROUP $99.6 million
The anemic economy and inclement weather prompted NMG to lower its comp-store sales increases for the third quarter to be in a range of down 1 percent to up 1 percent. It originally called for increases of 2 to 4 percent. NMG is postponing new store openings until 2005. For the most recent six months, income increased 29 percent to $61 million, or $1.28 a share, versus income in 2001 of $47.3 million, or $1. Sales grew 5.2 percent to $1.67 billion, compared with $1.59 billion. (NMG is on a fiscal calendar that ends in August.)
NORDSTROM INC. $90.2 million
Nordstrom regained lost ground in sales by focusing on its core merchandise strategy of providing a balanced and differentiated wardrobe organized by lifestyle, not brands. Excluding charges, fiscal 2002 earnings were $161.3 million, or $1.19, respectively, against 2001 earnings of $124.7 million, or 93 cents. Sales rose 6.1 percent to $5.98 billion over 2001 sales of $5.63 billion and increased 1.4 percent on a comp basis.
SOURCE: Company Reports