Smaller discounters dominated rankings in 1992 - return on assets, sales per square foot, etc - Discount Store News Annual Discount Industry Report; Part 1: Chain Analysis - Industry Overview

Discount Store News, July 5, 1993

The third annual Discount Store News report on publicly-held discounters is in, and many so-called smaller concerns garnered awards in 1992. [TABULAR DATA OMITTED]

Waban Inc.'s stock topped the leaderboard in sales per square foot for 1992. The result for the operator of BJ's and HomeBase: sales per square foot was a resounding $797.20, which was just enough to edge out Price Company ($772.42) for that honor.

Some other compelling numbers from the Natick, Massachusetts-based warehouse club operator:

* Net sales rose 21% in fiscal year 1993 to $3.36 billion,

* Net income swelled 47% during the same period to $44.2 million.

* The company's revenue growth over the last three years was 17.8% while earnings growth for the same period was 15.4%.

Just how did the news affect the retailer's performance on Wall Street over the past 12 months? Not too spectacularly, as Waban's total return to shareholders was a negative 41.1% during the time span. The company employs 17,200 workers.

Another retailer that posted strong marks last year was Bed, Bath and Beyond. The "superstore" operator of domestic merchandise and home furnishings occupied the top rung in not one but two categories: return on assets and return on sales. The Springfield, N.J., company posted a stellar return on assets of 27.2%, out-distancing Fred's, which was next in line with a 19.8% return on assets. [TABULAR DATA OMITTED]

Additionally, Bed, Bath and Beyond had return on sales of 12.6%, displacing Pic 'N Save from that honor last year, and once again outpacing Fred's, which was the bride's maid with a 7.9% return on sale ratio. [TABULAR DATA OMITTED]

How did Wall Street react to these numbers? In bullish fashion, as the retailer of 34 outlets reported a hefty 139.4% total return for shareholders over the last 12 months en route to a close of $39.50.

For the past two years, sales growth has averaged 27.7% and earnings growth has averaged 18.3%. Bed Bath and Beyond went public in June of 1992, when Goldman Sachs sold 6.25 million shares at $17 each. [TABULAR DATA OMITTED]

In the best management of merchandise inventory category, that honor went to Price Co. Specifically, the San Diego-based operator of membership-only cash and carry wholesale clubs posted a merchandise inventory-to-sales ratio of 5.21%, outpacing Clothestime which was second with a 7.37% ratio.

But like that of Waban, Wall Street was not impressed with Price Co.'s aforementioned ratios, nor with the company's three-year sales growth rate of 14.3% or its three-year earnings growth rate of 3.3%.

The net effect of these last two figures was a 12.4% total loss for shareholders over the last 12 months ended June 8.

A newcomer to the ranks of publicly-held discount retailers was best at containing its selling, general and administrative (SG&A) costs in 1992. The company: Sportmart. Its claim to fame: the retailer boasted the lowest SG&A expense-to-sales ratio of all publicly-held retailers in the census with a 3.71% result.

In fact, the Niles, Illinois-based concern improved this all-important ratio from the

         Sales per Square Foot(1)
                                            1993
                                            Sales
                                        Per Square
Company                                     Foot
Waban Inc.                                 $797.20
Price Company                               772.42
Costco Wholesale Corp.                      548.22
Tops Appliance City Inc.                    513.39
Best Buy Co. Inc.                           483.72
L. Luria & Son Inc.                         471.87
Smart & Final Inc.                          450.31
Sears Roebuck & Co.                         401.72
Dayton-Hudson Corp.                         343.36
Strawbridge & Clothier                      341.45
Wal-Mart Stores Inc.                        294.09
Staples Inc.                                289.28
Syms Corp.                                  264.15
Toys "R" Us Inc.                            252.44
Warehouse Club Inc.                         231.99
Men's Wearhouse Inc.                        229.20
AutoZone Inc.                               229.05
S & K Famous Brands Inc.                    226.62
Meyer (Fred) Inc.                           225.68
TJX Cos. Inc.                               225.32
Office Depot Inc.                           225.06
Drug Emporium Inc.                          222.44
Kmart Corp.                                 215.57
Ross Stores Inc.                            214.38
ShopKo Stores Inc.                          207.96
Woolworth Corp.                             205.40
Bradlees Inc.                               202.44
Service Merchandise Co. Inc.                198.02
Sportmart Inc.                              189.79
Hi-Lo Automotive Inc.                       189.07
All For A Dollar Inc.                       175.97
Clothestime Inc.                            165.88
Caldor Corp.                                165.12
Michaels Stores Inc.                        163.97
Sports & Recreation Inc.                    156.85
Fred's Inc.                                 152.90
Value City Department Stores Inc.           147.11
Hills Department Stores Inc.                142.07
Discount Auto Parts Inc.                    141.99
Pep Boys-Manny, Moe & Jack                  140.74
Dress Barn Inc.                             139.65
MacFrugal's Bargains Close-Outs Inc.        139.64
Jamesway Corp.                              133.82
SportsTown Inc.                             132.81
Pamida Holdings Corp.                       131.51
One Price Clothing Stores Inc.              128.64
Rose's Stores Inc. (Class A)                123.25
Tuesday Morning Corp.                       111.94
Dollar General Corp.                         98.57
Bed, Bath & Beyond Inc.                      97.84
Consolidated Stores Corp.                    97.38
Family Dollar Stores Inc.                    77.40
Sprouse-Reitz Stores Inc.                    69.18