Sales for World's Top 250 Retailers Show 6 Percent Gain Over Previous Year

The amount of money consumers spent with the top 250 retailers in the world reached a record $3.01 trillion between July 1, 2005 and June 30, 2006, up 6 percent over last year's total of $2.84 trillion, shows a new report from Deloitte Touche Tohmatsu, in conjunction with STORES magazine.

The retail sales data shows that consumer spending around the globe reached an impressive $90,000 per second, or $5.4 million per minute, at the world's 250 biggest retailers.

"The Global Powers of Retailing 2007" ranks the largest 250 retailers worldwide by revenue, lists the 50 fastest growers in the world, and examines the hurdles retailers face in an increasingly challenging environment. The rankings are based on publicly available data for the companies' fiscal years ended during the period from July 1, 2005 to June 30, 2006, referred to in this press release as "2005."

Ira Kalish, Consumer Business Director at Deloitte Services LP's Deloitte Research, said, "Although the global economy showed signs of stress, the year ended June 2006 was healthy for most of the world's leading retailers. However, sustaining such performance will not be easy."

Movers and Shakers

While the top ten retailers have been a relatively stable group in recent years, the report reveals that over the last decade Home Depot, Tesco, Costco, and German hard discounter Schwartz have taken dramatic leaps up the rankings (see chart).

Country of

Company Origin Rank 2005 Rank 2000 Rank 1996

Wal-Mart US 1 1 1

Carrefour France 2 2 8

Home Depot US 3 4 24

Metro Germany 4 5 4

Tesco UK 5 13 18

Kroger US 6 3 13

Target US 7 10 12

Costco US 8 14 23

Sears Holdings* US 9 7 7

Schwarz Germany 10 29 33

Sources: published company data and Planet Retail

*Rankings prior to 2005 represent predecessor company, Kmart.

Kalish said, "Revenue growth is the key measure of how effective a business has been at identifying and satisfying customer needs. As we move into 2007, the challenge for retailers will be to keep up the momentum in revenue growth."

However, not every company enjoyed strong growth. Forty-nine retailers, or 20 percent of the top 250, saw retail sales decline. Nearly half of these are based in Europe, where the series of demergers and divestitures -- such as Ahold, Littlewoods, Modelo Continente and KarstadtQuelle -- led to a decrease in company revenues. Partially as a result, European companies in the top 250 saw below average revenue growth (8.6 percent). By comparison, Latin American retailers enjoyed the greatest growth (20.3 percent), more than double the top 250 average (8.4 percent).

Latin American Retailers Lead in Profitability

According to the report, the average net profit margin for the companies in the top 250 showed healthy improvement, increasing to 3.5 percent, compared with last year's 2.7 percent and significantly above the average margin from 2000 (1.7 percent). Latin American retailers were the most profitable by region, with net income averaging 4.4 percent of sales, while Asia Pacific retailers were the least profitable on average, at 2.9 percent. Within Europe, UK companies led the pack with a 5.5 percent average net profit margin. Germany, historically a low-margin market, trailed the others with an average profit margin of just 2 percent.

Fast Moving Consumer Goods is the Biggest Group

The biggest sector by sales volume in the top 250 is the Fast Moving Consumer Goods (FMCG) group (such as Wal-Mart, Carrefour and Metro), with a total of 133 companies. However, the group has below average performance compared to the rest of the top 250. Interestingly, on average the FMCGs in the top 250 operate in the fewest number of countries, compared to companies in other sectors.

Speciality Retailers Take Root in Top 250

While the majority of the top 250 have been in the food sector (including supermarket, cash & carry, hard discount and convenience stores) over the last ten years, their presence on the list is shrinking. In 1995, 61 percent of top 250 operated food-related formats; however, in this year's report, 135 of the top 250 retailers (58 percent) were food-related, as specialty stores expanded internationally and displaced food retailers on the list.

Lawrence Hutter, Partner, Deloitte MCS Ltd and Global Consumer Business Lead, said, "The rising share of specialty retailers points to a burgeoning middle class worldwide -- with more disposable income to spend on apparel and home-goods -- as well as the globalization of fashion trends. These trends will likely give rise to more global expansion by specialty retailers, in order to meet this group's new shopping needs."

The 50 Fastest Growing Companies

Over the last five years, revenues at the fastest growing companies in the world grew an average of 24.3 percent -- nearly three times the rate of the top 250 (8.4 percent), according to the report. Acquisitions boosted sales for many of the Fastest 50, including No. 1-ranked Iceland-based Baugur Group. Interestingly, 36 of the Fastest 50 operate in only one sector, such as consumer electronics, pharmaceuticals, and fashion.

To download a copy of Global Powers of Retailing 2007 go to http://www.deloitte.com/consumerbusiness.

To see a chart on the world's most international retailers please go to http://www.deloitte.com/retailmap.

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