Feature: Comparing World Retailers

Bob Vereen reports on how some of the major retailers around the world compare in profitability…

How do some of the biggest retailers in the world compare in profitability, not just sales? Or in return on the assets employed in the business? Are those the kinds of questions you’ve ever asked yourself?

In the April 17, 2006, issue of Forbes, a leading American business magazine, they provided information on the world’s 2,000 largest companies of all kinds. Among them were some retailers. The magazine’s data shows the sales in a number of millions (which ends up being actually, billions), after-tax profits and value of assets. The following spreadsheet converted the profits to a % figure and also shows a Return-on-Assets as a percentage for each firm.

Included in the listing are home centers and mass merchandisers from the US, United Kingdom, Australia, Germany and France. Retailers from the UK, Germany and France are multi-national, operating throughout Europe as well as some Asian countries. Home center profits greatly exceeded those of the mass merchandisers on the list, especially those firms operating hypermarkets with low-margin food sales.

Australia’s Wesfarmers, which owns the Bunnings home center chain, takes honors for being the most profitable retailer among those listed, but it barely edged out Home Depot, the world’s largest home center chain. Wesfarmers’ profit was 7.7% of sales, while Depot’s was 7.2%. Lowes, number 2 in sales worldwide, achieved 6.4% profit, and Kingfisher, parent of the UK’s B & Q and France’s Castorama, ranking third worldwide, earned 6.1%.

The poorest return on assets was recorded by Sears Holding, which operates Kmart discounts stores, as well as a variety of store types under the Sears banner. Its return – a paltry 2%, followed by Metro AG of Germany and France’s Carrefour, both achieving only a shade above 3% ROA. Sears Holdings’ profit also was miniscule – 1.6%.

Contrast those Return-on-Assets performances with Home Depot’s 13%, Lowes’ 11.2% or Wal*Mart’s 8.6%. This data provides an opportunity for smaller retailers to compare their performance with some of the world’s major chains.

Firm SALES IN $BILL PROFITS PROFIT % ASSETS IN $BILL ROA %
BayWa $8.29 $0.33 0.040 $3.20 0.103
Carrefour $98.60 $1.88 0.019 $51.40 0.019
Home Depot $81.50 $5.84 0.072 $44.80 0.130
Kingfisher $14.40 $0.88 0.061 $14.80 0.060
Lowes $43.20 $2.77 0.064 $24.75 0.112
Metro AG $76.54 $1.12 0.015 $36.04 0.031
Sears Holdings $38.95 $0.61 0.016 $30.70 0.020
Target $52.60 $2.41 0.046 $34.99 0.069
Tesco $65.33 $2.63 0.040 $39.25 0.067
Wal*Mart $312.20 $11.23 0.036 $138.17 0.081
Wesfarmers $6.10 $0.47 0.077 $5.50 0.086