A few good retailers soar while others stumble - Editorial

Discount Store News, May 20, 1996 by Tony Lisanti

If you're beginning to think that every retailer is struggling, you are not alone. Most people I meet these days immediately ask what the !@#$%^&* is going on in the retail industry as they quickly point out several examples of struggling companies.

Most recently, Herman's, the 117-unit sporting goods chain, filed Chapter 11 for the second time in two years, as senior editor Rich Halverson analyzes in his page one story. Amidst all the criticism, it certainly makes you wonder - Are there any good stories left in the retailing industry? Believe it or not, there actually are a few. No matter how tough it gets for some retailers, others seem to find the path to profitability. So whenever anyone asks that question about retailing, I nod politely and respond with a list of some of the success stories.

Dollar General continues to be the biggest single most impressive story of growth and commitment in retailing. The 2,500-unit retailer once again posted impressive numbers, with a 22% increase in sales and 19% in net income. About 300 stores were added last year and 350 more are planned for 1996.

Despite the worst year in the history of the traditional regional discounters, ShopKo managed to have an decent year. In fact, it was just about the only regional to post an increase in net income, as well as an increase in sales of 6%.

Wal-Mart, despite a tough year in comparison to its plan, did manage to earn $2.7 billion, even though it was a mere 2% over the previous year. And Target continued its reign as the jewel of Dayton Hudson and one of the nation's most admired retailers.

In the specialty area, one retailer in particular experienced a dramatic turnaround over the past 18 months. This company revamped just about everything you possibly could and quickly found itself in the enviable position to acquire its direct competitor - a deal it wisely decided to pass on.

The company is CompUSA, which is profiled on page 15 as part of DSN's continuing series on Power Retailers. Senior editor Pete Hisey, also our resident electronics guru, recently spent the day at CompUSA headquarters in Dallas, and analyzes the company and its new strategies.

The turnaround started with the arrival of Jim Halpin, a former Zayre exec, as president and ceo in December 1993. Six months later the stock was at an all time low and losses mounted to almost $20 million for the fiscal year ended June 1994. The stores were a m vice was poor and inventory was mismanaged. The future looked dismal for this upstart company that had almost double its size over the previous year.

But with a complete overhaul of its executive team and the company's strategy, Halpin completely reversed the retailer's course. By the end of fiscal year 1995, CompUSA stock was trading at about five times more than the previous year and was back in the black, posting a net income of $21 million.

Other retailers that continue to defy conventional wisdom that all retailers are struggling include: AutoZone, which this year will become the largest auto parts retailer in the nation; Bed Bath & Beyond continues its position as the leading home specialty chain; Men's Wearhouse, one of the few off-pricers that actually had a super year with a 36% rise in net income and 28% increase in sales; Office Depot, which continued to blaze new trails and double-digit growth in the office superstore segment; The Sports Authority, which became the first sporting goods chain to break the billion dollar sales mark.

All of these aforementioned retailers have one more thing in common: They were all nominated for DSN's Power Retailer of the Year awards. The ballot was published in the May 6 issue of DSN. The winners, which will be announced in June, will be honored at this year's annual SPARC Awards Banquet on August 11 at the Downtown Marriott in Chicago.

Congratulations to all the retailers nominated. If there ever was a time when this recognition means more than it ever has, it's this year, when the success stories have become even harder to find.