Success comes in all shapes and sizes - discount department stores and supercenters - Brief Article - Statistical Data Included

The success of the nation's top discount department stores and supercenters is no secret to anyone in the mass retail industry. Taken alone, the discount and supercenter formats of Wal-Mart, Kmart and Target account for more than $170 billion of the entire $478 billion industry tracked by The DSN Retailing Today Annual Industry Report. But success comes in all shapes and sizes, and in each of the vertical categories that together comprise the majority of the mass market revenue, chains big and small, public and private, vie for market share in hostile environments where fending off other vertical competitors as well as the Big Three is part of routine survival.

Naturally, a select few of these specialty chains rise above the competition each year to produce financial results that make them the envy of their industries--and 1999 was no exception.

Staples: In 1999, this office supply giant bumped sales to nearly $6 billion, up more than 23% over 1998. Pre-tax income rose almost $200 million to $571 million, and in North America it added more than 75 stores to put it within spitting distance of 1,000 units.

Kohl's: This mid-tier hotrod is on fire. It ended 1999 with more than $4.5 billion in net sales, up roughly 24%. Operating income rose 32%, and the company opened more than 70 stores and expanded into three new markets, Colorado, Missouri and Texas. Since it went public at $14 per share in May 1992, its share price has risen steadily and is currently trading within points of its 52-week high of $66.5

RadioShack: A new name has brought renewed conviction to this veteran of the CE market. Net sales rose 15% in 1999, and pre-tax income soared a cool 42%. In fact, RadioShack's 1999 corporate pre-tax income of $480 was the corporation's highest in a decade.

Dollar General: Nothing short of the pace setter in the growing deep discount segment, Dollar General last year kept sales and operating income on a 20% growth curve and added more than 600 units. In 2000, it plans to repeat its performance in store production and take its total unit count to within a handful of 5000.

Michaels: From a base of 15 stores in Texas in 1984 to its current count of more than 450 in 45 states, Michaels is the chain to beat in the crafts category. And crafty moves in 1999 led to a $300 million sales increase and a 40% jump in operating income.

Bed Bath & Beyond: Home is where the heart is, not to mention the competition--which makes BBB's 34% increase in net sales all the more impressive. What's more, BBB's 32% increase in operating income and the addition of 55 stores bodes well for the future.

Dollar Tree: This super single-pricer from Norfolk, Va., broke into the billion-dollar club in 1999 thanks to a 27% increase in net revenue. It pushed its operating income up 35% to $162 million, and its store count is rising at the rate of 200 units annually, thanks to a string of acquisitions.

Hobby Lobby: Three years ago, privately held Hobby Lobby increased its merchandising efforts in home accents and is now beginning to reap the rewards. In 1999, the retailer nearly broke $800 million in net sales with some 200 units.

99 Cents Only: Expanding outside its core Southern California market last year for the first time, 99 Cents Only is on an exponential growth curve that saw sales shoot up 30% and earnings jump more than 7%. More importantly, though, its store base increased roughly 30% and it expects to maintain that growth rate through 2000.

Zany Brainy: This specialty toy retailer put its name on the big map with the pending acquisition of Noodle Kidoodle. But even before that deal, Zany ended the year with sales of $241 million, up an astonishing 43% -- a statistic only to be outdone by earnings that trippled over 1998.

Nineteen ninety nine was indeed a good year for retail. The economy was the healthiest ifs been in a decade and the consumer confidence index was evergreen.

However, these ten retailers did much more than ride the wave of a strong economy. In each case, success came about as a result of cunning merchandising and market savvy, a formula that undoubtedly will keep them in the headlines for years to come.

COPYRIGHT 2000 Lebhar-Friedman, Inc.
COPYRIGHT 2000 Gale Group