Global Top 20 Retailers - Company Benchmarking Analysis

World Market Intelligence’s Global Top 20 Retailers: Company Benchmarking Analysis report compares the financial and operational strength of the top 20 Global retail companies. The benchmarking is based on key parameters and ratios that enable analysis of where a particular company stands against its peers within the industry. Scope Benchmarks the top 20 industry players against each other using five key pillars of analysis: Liquidity, activity, profitability, leverage and valuation ratios Detailed financial and operational data covering a five-year period for all 20 companies Compares and assesses each company’s performance & prospects in relation to its peers Uses a range of analytical tools, including scorecards, heat charts and peer lists Profiles of major market players including Scorecard analysis Key company information Detailed company financials SWOT analysis Reasons to Buy Rank the performance of the leading retailers using our benchmarking tools & metrics Understand the factors influencing performance in the retail industry Develop strategies based on peer analysis Identify potential M&A targets Exploit the relative strengths and weaknesses of your competitors

Additional Information

As expected, Wal-Mart remained the leading player in the top 5 global retail market in FY08 with US$405.6 billion in revenues. There is however a huge gap with Carrefour S.A., which occupied the second position with revenues of US$129.8 billion. On revenue growth however both Wal-Mart and Carrefour were not in the top five, and instead Wesfarmers and Casino Guichard lead the pack. It is interesting to note that despite the soft retail market, the top five, as ranked by revenue growth, registered a double-digit revenue growth in 2008. Operating expenses were in line with revenue, and both Wal-Mart and Carrefour occupied the top two positions. In productivity, Metro AG achieved the best in class, and was in the first four slots in each of the four productivity measures. Metro AG occupied the second and third positions in outlet and area productivity, respectively, whereas Wal-Mart was at the top in outlet. Though Seven & i Holdings, a Japan-based company, held the top slot in labor productivity due to its low employee base, it was average on the other three productivity measures. Wal-Mart ended the FY08 with the highest net income among its peers, though on the net profit margin, it was pushed down to the seventh position, with Lowe’s and Ahold occupying the first two. Metro AG which performed well in terms of productivity did not do well on the profit margin due to losses from discontinued operations as well as costs incurred for trimming its store network. Amidst weak retail environment, all companies excepting CVS Caremark witnessed a contraction in profit margins in 2008 over 2007, mainly due to decline in operating margins.

When it comes to the efficient utilisation of capital, most of the retailers performed well. On a comparative basis, Best Buy topped the list with ROCE of 26.6%, whereas Walgreen achieved the highest return on its assets (ROA). On the capex front, Wal-Mart reduced its capex in FY08 over FY07, as it is focussed more on efficiency through improving its inventory management. As at FY08, the first five companies in the top 20 list accounted for about 50.0% of the total capex expended in FY08, with Wal-Mart at the top position. In terms of asset size, Wal-Mart continued to remain at the top due to the sheer size of its operations, but in terms of asset growth, Wesfarmers registered the highest rate due to its acquisition of Coles Group in 2007. All the companies in the top 5 enjoyed a positive working capital over the last five years with Target leading the list. Based on quick ratio that excludes inventory, all companies excepting Target were within the narrow band of 0.3 to 0.5, as retailers sell mostly in cash. In terms of collection efficiency, J Sainsbury, Tesco PLC and Metro AG were the top three, followed closely by Wal-Mart. Wal-Mart, as expected, retained the top rank in terms of both shareholder’s funds and total debt as at FY08. On debt-to-equity ratio however, Walgreen and CVS Caremark had the lowest numbers. In terms of market capitalization, despite fluctuation seen for the top five over the last five years, Wal-Mart continued to have the highest market value. With the exception of Sears Holdings, most US-based retailers in the top 20 had a P/E ranging from 10-16 in 2008. For Sears Holdings, the P/E reached an unusual level of 98 due to the significant decline in its net profit. With a P/E of 29.9 as at FY08, Wesfarmers seems a bit expensive.

On the basis of the Heat Chart for the top 20 retailers, three companies achieved the above-average score in FY08. Of the three companies, Wal-Mart and Walgreen are based in the US, and Ahold in Netherlands. It is interesting to note, most retailers had an impressive scores in terms of activity ratios, and were on the opposite side of the scale in the liquidity as they usually do not carry high accounts receivables.