Are the largest public retailers top financial performers? A longitudinal analysis

Abstract

Purpose

To empirically study the performance of large retailers in terms of the strategic profit model and the retail performance index over time.

Design/methodology/approach

This study looks at how well the largest public US retailers performed financially from 1982 to 2001. Several measures are employed, including sales and profit growth, profit margins, asset turnover, return on assets, financial leverage, and return on net worth. The performance of Wal‐Mart is broken out.

Findings

As a group, the largest public US retailers have not performed very well across a number of measures. They have not been “high performers.” Wal‐Mart has outperformed other very large retailers for virtually every financial measure. It has been a “high performer” by not losing its edge as it has grown.

Research limitations/implications

Only public retailers were included in the study. Retailers reported financial data using different fiscal years. The federal government converted its data from SIC to NAICS codes during the time frame of the study; the data were converted based on a model from Retail Forward.

Practical implications

As the largest firms seek to heighten their marketplace concentration, they have to be careful not to fall into a growth trap. They need to be more devoted to driving up their financial performance.

Originality/value

The paper reports the results of a comprehensive longitudinal study of the largest public retailers, and focuses on applying two under‐researched retail performance tools: the strategic profit model and the retail performance index.

Citation

Evans, J.R. (2005), "Are the largest public retailers top financial performers? A longitudinal analysis", International Journal of Retail & Distribution Management, Vol. 33 No. 11, pp. 842-857. https://doi.org/10.1108/09590550510629428