The new bragging rights in retail and fashion don’t come cheap — try $1 billion.
Companies are throwing around the 10-digit number all the time now, pointing to new breakthroughs in income, revenues, money raised and more.
Earlier this month, footwear and apparel company Nike coolly noted that it made more than $1 billion in profits during the most-recent quarter. Ath-leisure rival Lululemon, while smaller, also passed its own $1 billion mark, logging more than $1 billion revenues for a quarter — a year ahead of its schedule. And then there was American Eagle Outfitters, which passed the $1 billion sales mark during a single quarter last December.
They join the so-called “unicorns,” the private companies that have grabbed headlines all over by scoring 10-digit valuations. During the first three months of 2019, four private consumer companies — Glossier, FabFitFun, Rent the Runway and Casper — raised money at such sky-high levels.
It all raises the question: Just how many billions does a company need to be taken seriously?
“In some sense, a billion dollars is a bragging right,” said Craig Johnson, founder and president of Customer Growth Partners, a consulting and research firm. “But a billion dollars today ain’t what used to be. It’s still good, but if a company gets to the $10 billion mark, and I’m talking sales now, that is still a very significant number. [The company] will be taken seriously there, almost by definition.”
Instead, Johnson said revenues of $1 billion is more like a threshold that companies need to reach to be taken seriously.
Even in the age of e-commerce, it took web giant Amazon 24 quarters as a public company to surpass the $1 billion mark in revenues in December of 2001. (Now, Amazon has gone well beyond that and logged $3 billion in net income in the last quarter.)
But soon, a billion might no longer be enough.
These days, public companies are tip-toeing into the trillion-dollar arena.
Tech giant Apple has already passed that mark in August, when the company’s stock climbed to more than $207 a piece, making it the first publicly traded American company to be worth more than $1 trillion. But the milestone was short lived as share prices fell again.
Amazon followed suit the next month when its shares reached a high of $2,050.50, elevating the e-commerce company’s status as a trillion-dollar player — albeit only briefly.
Regardless of a company’s 10- or 13-digit status, Johnson said the core question still is, “Are they profitable?”
“There are a lot of perfectly healthy companies that are relatively smaller companies,” he said.
“You don’t have to be a $10 billion company to be taken seriously if you have a good growth record at the $1 billion or $2 billion mark,” Johnson said. “At the end of the day, you’ve got to be making money.”