Top discounters report healthy '88 sales, income

Top Discounters Report Healthy '88 Sales, Income

NEW YORK--In a stable but unspectacular economic climate, most of the top discounters reported healthy sales and income results for 1988.

Wal-Mart, Toys "R" Us, Circuit City and PACE were the star performers among the top 20 discounters and mass merchandisers (excluding some private companies), posting sales gains from all operations of more than 20 percent compared to the previous year.

In contrast, sales of the three mass merchandisers--Sears, JCPenny and Montgomery Ward--were flat, with none reporting sales gains in the double digits. Penney was the only retailer on the chart that posted a loss in sales compared to the previous year.

The figures also bear out, for the most part, that the mighty continue to get mightier in the discount store industry. K mart, however, is continuing to lose ground to its top two discount rivals, Wal-Mart and Target, in terms of year-to-year percentage sales increases. K mart posted a 6.5 percent increase in sales (from all operations), while Wal-Mart's sales (from all operations except its Hypermart USAs) were up 29.4 percent, hitting the $20 billion mark for the first time. Target's sales were up 19.0 percent.

Wal-Mart was also the big winner in earnings, with a 23.9 percent rise in operating income for the year. The discounter's net earnings gains outpaced the sales increase as the bottom line went to $837.2 million, up 33.4 percent from $627.6 million. The net profit ratio went up slightly to 4.1 percent from 3.9 percent.

Sears topped the $30 billion mark for the first time, posting a 7.8 percent sales increase to $30.3 billion from $28.1 billion the previous year. Operating income fell 76.9 percent to $300 million last year from $1.3 billion the previous year.

K mart's operating income hit $1.24 billion, up 6.2 percent from $1.17 billion. Net income growth also ran ahead of its sales gain, jumping 16 percent to $802.9 million from $692.2 million. Its net profit ratio increased marginally to 2.9 percent from 2.7 percent, but still lagged behind Wal-Mart.

JCPenny suffered a 3.3 percent decline in sales but held on--with room to spare--to the No. 4 spot among discounters and mass merchandisers. Penney also reported a 15.7 percent loss in operating income. While the chain offered no official explanation for the loss, the discontinuance of such big-ticket departments as home electronics, sporting goods and photographic equipment was undoubtedly a factor.

Woolworth reported $8.1 billion in '88 sales, up 12.7 percent from $7.2 billion. Operating income outpaced sales, rising 9.4 percent to $444 million from $406 million. Net income hit $288 million, up 14.7 percent from $251 million.

Target recorded $6.3 billion in sales last year, a 19.0 jump over the previous year's $5.3 billion. Operating income lagged behind sales, rising by only 5.6 percent to $341 million from $323 million in 1987.

Montgomery Ward, which went private last year, only reported sales figures--a 4.3 percent increase to $4.7 billion from $4.6 billion in 1987.

Toys "R" Us hit the $4 billion mark for the first time, posting a strong 27.5 percent increase from $3.1 billion. Operating earnings also rose an impressive 23.9 percent to $429 million from $346 million. Net earnings were even better, up 31.4 percent--outpacing the sales increase--to $268 million from $204 million.

Table : Fiscal Year-End Results of Top Discounters, Mass Merchandisers

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