Steady Year For Retail

New York — Kept guessing for most of the year by a tricky economy and a volatile group of on-again, off-again shoppers, key American retailers turned in a strong, if not remarkable, performance, during 2004 — sales held relatively steady, but profits lagged far behind the impressive gains of 2003 when a handful of big stores made the entire retail spectrum look group look good as they recovered from earlier crushing losses.

The 33 retailers ranked in this year's edition of the Home Textiles Today Retail Report Card pushed composite profits up 14.6 percent, to $27.4 billion in 2004 from $17.7 billion; but that was still only half the size of the whopping gains of 35.4 and 47.5 percent of the two preceding years, 2003 and 2003.

While the gains were smaller, at least on paper, at least more stores were making money. Only three reported losses during 2004: Retail Ventures; the former Sears, Roebuck & Co.; and The Bombay Co. That's a big improvement over 2003, when twice as many retailers, a total of six, lost money.

Sales for the 32 retailers measured in this year's Report Card climbed 9.4 percent, to $692.2 billion from $623.8 billion in 2003, improving on the 8 percent increase put up in 2003. But the good cheer got spread around only so far when it came to the top line — almost one in five in this year's sample lost ground in sales, six out of the total of 32.

When it came to making money during 2004, nobody did it better than a blue-ribbon group of seven retail companies, roughly one-fifth of the stores in this year's report card, who drove their earnings higher by more than 20 percent: Target, up 76.8 percent; Bed Bath & Beyond, up 26.4 percent; Kohl's, up 25.7 percent; newcomer Anna's Linens, up 23.4 percent; Costco, up 22.4 percent; Williams-Sonoma, up 21.6 percent; and May, up 20.7 percent.

When it comes to the top line, the honor roll of the five strongest players was led by a newcomer to this year's Retail Report Card, Anna's Linens — with plans to go public and releasing its numbers — pushing sales up 45.3 percent, to $225.2 million. Next in line, no surprise, was Bed Bath & Beyond, with sales up 25 percent; followed by Restoration Hardware, up 19.9 percent; Lowe's, up 18.2 percent; and Kohl's, up 13.8 percent.

Breaking results out by channel of distribution, the easy winner was the all-the-time-low-price group, where profits soared 40.6 percent, to $15.2 billion, largely on the strength of a whopping 76.8 percent gain at Target as the slimmed-down chain spun off some of its holdings. Acting as a drag in the channel was Retail Ventures, with its loss of $19.5 million.

Earnings runner-up was the warehouse channel, with profits shooting up 21 percent.

But not all channels were riding the gravy train, and three actually lost money during 2003. Held in check by a $507 million loss at Sears, the mid-price channel recorded a 75.7 percent decline. Held back by weakness at Hancock Fabrics, the fabric and decorating channel posted a 16.6 percent drop in profits; and off-pricers were off 6.2 percent, hurt by a loss at Big Lots and weakness at Ross Stores.