2008 Global Powers of Retailing: “Standing out from the crowd”

By Deloitte

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The Highlight are:

In 2006, the global economy was strong with global GDP rising an astounding 5.4%, one of the fastest rates ever recorded. Relatively rapid economic expansion took place in such disparate locations as Argentina, Canada, China, Germany, India, Russia, the UK, and the US. In many countries, elevated home prices added substantially to consumer wealth, thereby stimulating expanded spending. Even the US was still experiencing the last gasps of the housing bubble, and consumers were fairly flush with cash. Big

emerging markets continued to experience rapid growth in consumer incomes, with millions shifting from poverty to the middle class. Economically, this was a good time to be in the retailing business. Strong consumer spending resulted in healthy growth for the industry’s Top 250 retailers in fiscal 2006, the financial period covered in this report.

Total retail sales for the Top 250 Global Powers of Retailing rose to $3.25 trillion, up 8.0% from last year’s Top 250 total of $3.01 trillion. Compared with fiscal 2005, more companies participated in that growth. While 49 of the Top 250 saw sales drop in 2005, only 36 retailers experienced declining sales among this year’s group.

A growing number of retailers have been taken private in recent years, making it more difficult to measure profitability for the group as a whole. For the 2006 fiscal year, net income loss figures were available for 187 companies. The average net profit margin for this group was 3.6%, a slight uptick from 3.5% in 2005 and a significant improvement over the average profit margin of 2.7% in 2004. Just seven companies

reported a net loss in 2006, compared with 15 of 188 companies in 2005.

Based on the 187 companies that disclosed their profits/losses, return on assets averaged 5.8%. This, along with financial leverage (total assets / stockholders’ equity) of 3.4x, resulted in average return on equity of 15.7%. To rank among the Top 250 globally required fiscal 2006 retail sales of at least $2.72 billion, up from $2.5 billion the year before. The average retail sales volume for companies in this elite group was $13.0 billion. (Top 250 Highlights continued on p G26.)

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2008 Global Powers of Retailing