Top 150 – sales, earnings, bits and bytes

Who would have predicted this time last year that a 4% increase in May comps would be a reason to climb to the top of the tallest building and shout for joy? And yet, that’s exactly what Wal-Mart senior management did (or something very close to it) when it assembled an arena full of associates, analysts and media for its annual shareholders meeting.

That any reatailer would get excited about 4% comps is a development that speaks volumes about the state of affairs in the current retail market. For one, the 4% increase (while far from record-breaking) is a big deal for Wal-Mart, a company whose fortune has taken a decidedly positive turn for the better in the last year. Not only did its May comps outpace most of the retail pack, but its year-end figures were punctuated by near double-digit sales and earnings, and its share price recently flirted with $60, a feat not accomplished since March 2004.

But if you’re not yet convinced that the solid financials of the nation’s highest-volume value retailers are as much about prophetic planning as they are about happenstance, you may not be alone. Let’s face it, no one would have predicted that the cost of gasoline would reach a national average of more than $4 per gallon. And similarly, few would have predicted that a decline in the economy would coincide in almost perfect unison with a rise in value-based retailing.

The mere fact that there’s excitement over 4% comps is a testament to the rough economic situation facing retail in general. And that news is borne out in this year’s Top 150 Annual Industry Report, which begins on page 11.

Among the most notable developments you’ll see when scouring the list is the disproportionate number of year-over-year sales declines among the highest-volume retailers. Net sales, for example, were down at The Home Depot, Macy’s and JCPenney. Similarly, many of the nation’s highest-volume retailers couldn’t keep pace with last year’s operating results. Lowe’s and Ahold U.S. each missed the mark by well over $100 million, while Kmart alone fell short by more than a half-billion dollars.

The silver lining to this otherwise gray cloud that defined much of 2007 is that plenty of retail companies held their own and managed to keep the growth train going—a sure sign that not all is lost when it comes to organic growth. They include sector leaders the likes of Kroger, which topped the $70 billion mark for the first time; Costco, which increased sales by more than 7%; Staples, which opened its 2,000th store and flirted with $20 billion in sales; and Best Buy, whose double-digit sales growth put it above the $40 billion sales mark, a first for any true vertical retailer.

But that’s only the Top 20.

The biggest news from this year’s Top 150 is that the list itself has gone digital. Yes, we’ve teased you in this issue with results for the Top 20 (actually, it’s only the Top 19). But the rest of this year’s list, including profiles of a dozen of the industry’s highest-volume companies, is being distributed via a medium that you, the reader, has requested as your most preferred means of delivery: www.RetailingToday.com/Top150 .