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Rating the Retailers: If Wal-Mart’s a Six, What Rank Are You?

NEW YORK -- Wal-Mart recently rated itself only a six out of 10 for performance, which can only lead one to wonder what other retailers would rank.<P>Given Wal-Mart's impressive track record and its place as the benchmark of retail success, it came as...

NEW YORK — Wal-Mart recently rated itself only a six out of 10 for performance, which can only lead one to wonder what other retailers would rank.

Given Wal-Mart’s impressive track record and its place as the benchmark of retail success, it came as something of a shock when its president and chief executive officer, H. Lee Scott Jr., recently gave his company such a mediocre mark. As reported, Scott believes that if Wal-Mart works really hard “we could be really successful one day.”

Bemused by the world’s largest company’s humility, WWD queried other retailers as to how they would rate themselves — as well as analysts about how they would grade various retailers.

While some retail executives declined or were unavailable for comment, others magnanimously took a crack at it. Here are their responses:

Charles J. Kleman, chief financial officer of Chico’s: “If Wal-Mart is not a 10, who is? I’m not rating us a six, we’re doing better than that, but I don’t know that we’re a 10 either. We’ve had a lot of good yearswe’re probably a 7 1/2 maybe. I think Wal-Mart is more like a nine.”

Allen Questrom, chairman and chief executive officer of J.C. Penney’s : “Wal-Mart is the best company in terms of organization, nobody is better than that. He has to rate them a 10….We’re not anywhere near the same level of experience that many companies have because we just changed the company around from a decentralized to a centralized one, so everybody’s learning a new job.” Shunning the numeric grading system, Questrom opted to rate himself instead of the company, with letter grades.

“I don’t want to rate the company, but I will rate myself. Overall I’d give myself a C+/B-.”

Gene Kahn, chairman and ceo of May Department Stores Co: “I’d give us a six on a scale of one to 10. We’re definitely above a five, and we think we can pull way ahead of a six when we fully implement our five-point growth initiative plan that we announced at the shareholders’ meeting.”

Michael Gould, chairman and chief executive officer of Bloomingdale’s: “I don’t do ratings. We know we are nowhere near where we need to be. But we are much better than where we used to be, in our merchandise, in our presentation, in our attention to the customer, in many areas. Can we be better? Absolutely, but we have gotten a lot better.”

Ron Frasch, chairman and ceo of Bergdorf Goodman: “We already spend a lot of time and money talking about ourselves. What we’ve got to do is spend more time listening to the customers who come into our store. That’s the rating that counts.”

Simon Doonan, creative director of Barneys New York: “I would rate Barneys an 11, and I don’t mean Chapter 11, because Barneys is a survivor. This company has been through extraordinary vicissitudes, and it’s come out with the image still very much intact. We are the number-one signifier of stylish, upscale fashion consumption. Barneys is the ultimate, and there’s a fabulous history.”

As for analysts’ views, Philip Emma, a retail-debt analyst at Moody’s, applauds Scott’s paltry grading. “That’s absolutely the right approach to take, to continually strive to be more than what you are.”

Retailers seeing themselves as a nine or 10 are treading “fairly dangerous” waters, he noted.

“The biggest risk to Wal-Mart is Wal-Mart themselves,” said Emma. “As soon as companies stop trying to improve their operations, that’s when complacency sets in and that’s when they have difficulties.”

WWD asked seven leading financial analysts to rate the retailers on a sliding scale — and, naturally, they wanted to remain anonymous.”