With another earnings season almost finished, it’s time to look beyond the typically gloomy results for retailers and find the winners.
Among S&P 500 SPX, -0.36% companies, there are 35 retailers, according to FactSet. That includes Amazon.com Inc. AMZN, -0.56% which stands apart since it derives nearly all of its sales from the internet. It’s easy to think Amazon completely dominates U.S. retail, but that’s not really true.
Combined sales for the most recently reported quarter (through March 8) for the 35 S&P 500 retailers were $457.6 billion. Wal-Mart Stores Inc. WMT, +1.72% contributed 29% of those sales.
Each earnings season, numbers that dominate headlines are growth rates for comparable-store sales. But it’s also important to know whether sales have been juiced by promotional discounts, so investors need to consider gross profit margins, which are sales less the cost of goods sold, divided by sales. You can then look at net income margins, which are earnings divided by sales. But the problem with net income margin is that any company’s earnings can be skewed by one-time events.
Amazon runs hardly any brick-and-mortar stores, so we’re going to exclude the company from our list of retailers that increased comparable-store sales while improving gross margins. The company’s sales for the fourth quarter were up 22% from a year earlier, but Amazon’s gross profit margin narrowed to 33.80% from 35.01% a year earlier. So the company paid a price for such stellar growth.
Of the remaining 34 S&P 500 retailers, 17 reported increased comparable-store sales, and 11 of those improved gross profit margins. Here they are:
