STATE OF RETAIL 2008 THIN The fi ght for survival PICKINGS HUNT OR BE HUNTED OC&C Strategy Consultants is a global consulting fi rm with extensive expertise in the retail sector. Clients include leading retailers and investment institutions. The fi rm advises on group-level and business unit strategy, profi t improvement and mergers and acquisitions. The Times I 17 November 2008 I OC&C State of Retail 2008 I 1 2 I The Times I 17 November 2008 I OC&C State of Retail 2008 The Times I 17 November 2008 I OC&C State of Retail 2008 I 3 THE CONTENDERS The top UK retail companies ranked EBIT Pre-Freehold EBIT Post-Freehold by profit 2008 Adjustment1 Adjustment Latest Latest UK Revenue Latest EBIT Latest EBIT EBIT Accounts Revenues Growth EBIT Margin EBIT Margin Margin Rank/company Sector Ownership (£m) (%) (£m) (%) Growth 1 Tesco Grocery Major UK PLC 23/02/08 34,874.0 6.8% 1,892.9 5.4% 1,605.7 4.6% 0.0% 2 Marks and Spencer Mixed Goods Major UK PLC 29/03/08 8,309.1 4.2% 927.1 11.2% 813.0 9.8% (0.0%) 3 Next Clothing, Footwear & Accessories Major UK PLC 26/01/08 3,329.1 1.4% 536.4 16.1% 532.8 16.0% 0.6% 4 Boots Opticians, Pharmacies, Health & Beauty Private equity 31/03/08 6,153.0 3.3% 541.6 8.8% 507.9 8.3% 1.3% 5 Argos Mixed Goods Major UK PLC 01/03/08 4,099.8 10.0% 312.4 7.6% 310.1 7.6% 0.9% 6 WM Morrison Grocery Major UK PLC 01/02/08 12,969.0 4.1% 553.0 4.3% 259.7 2.0% 1.5% 7 Asda Grocery Other foreign-owned 31/12/07 16,741.3 6.9% 523.8 3.1% 258.0 1.5% (0.6%) 8 J Sainsbury Grocery Major UK PLC 22/03/08 17,837.0 4.0% 503.0 2.8% 231.0 1.3% 0.4% 9 Arcadia Group Clothing, Footwear & Accessories Family or closely-owned 30/08/08 1,848.4 (0.6%) 236.0 12.8% 219.0 11.8% (0.8%) 10 Primark Clothing, Footwear & Accessories Major UK PLC 15/09/08 1,933.0 20.7% 226.2 11.7% 186.3 9.6% (0.4%) 11 Debenhams Mixed Goods Major UK PLC 30/08/08 1,839.2 3.7% 173.0 9.4% 170.0 9.2% (1.6%) 12 John Lewis Mixed Goods Other UK listed 26/01/08 2,315.0 5.8% 167.3 7.2% 145.2 6.3% (0.1%) 13 DSG Electricals Major UK PLC 03/05/08 4,745.7 1.8% 140.8 3.0% 135.3 2.9% (1.5%) 14 River Island Clothing, Footwear & Accessories Family or closely-owned 29/12/07 652.3 7.7% 134.3 20.6% 134.3 20.6% (2.7%) 15 Lloyds Pharmacy Opticians, Pharmacies, Health & Beauty Other foreign-owned 31/12/07 1,580.7 5.3% 125.8 8.0% 125.4 7.9% (0.4%) 16 Waitrose Grocery Other UK listed 26/01/08 3,737.2 6.9% 184.9 4.9% 118.0 3.2% 0.9% 17 Co-Op Grocery Other UK listed 12/01/08 3,676.8 21.0% 139.2 3.8% 116.9 3.2% 0.7% 18 Carphone Warehouse Phones Major UK PLC 29/03/08 2,900.4 12.3% 114.0 3.9% 111.7 3.9% 2.6% 19 Halfords Group Other Major UK PLC 28/03/08 797.4 7.2% 101.4 12.7% 101.4 12.7% 0.1% 20 Matalan Clothing, Footwear & Accessories Major UK PLC 03/01/08 1,017.5 (1.4%) 90.8 8.9% 90.8 8.9% 3.6% 21 New Look Clothing, Footwear & Accessories Private equity 24/03/07 889.7 16.6% 87.4 9.8% 87.4 9.8% (4.1%) 22 Sports Direct Clothing, Footwear & Accessories Major UK PLC 27/04/08 991.3 (11.7%) 90.0 9.1% 86.3 8.7% (2.8%) 23 N Brown Group Mixed Goods Major UK PLC 03/01/08 610.9 16.6% 88.3 14.5% 86.2 14.1% 0.1% 24 Ikea DIY, Home & Gardening UK subsidiary of global 31/08/06 1,087.8 2.0% 110.5 10.2% 84.1 7.7% (1.4%) 25 Iceland Grocery Private equity 28/03/08 1,708.4 9.1% 83.7 4.9% 83.4 4.9% 2.1% 26 Findel Mixed Goods Major UK PLC 31/03/08 578.2 16.3% 73.8 12.8% 73.1 12.6% (1.0%) 27 WH Smith Books & Stationery Major UK PLC 31/08/08 1,352.0 4.1% 71.0 5.3% 70.3 5.2% 0.3% 28 Game Group Music, Video and Gaming Major UK PLC 31/01/08 1,104.7 88.4% 69.3 6.3% 67.2 6.1% 1.7% 29 C&J Clark (Clark’s) Clothing, Footwear & Accessories Family or closely-owned 31/01/08 711.7 7.6% 63.8 9.0% 62.0 8.7% 1.8% 30 B&Q DIY, Home & Gardening Major UK PLC 02/02/08 3,854.9 1.0% 60.5 1.6% 60.5 1.6% (0.9%) 31 Wickes Building Supplies DIY, Home & Gardening Major UK PLC 29/12/07 929.2 9.6% 59.5 6.4% 59.5 6.4% 1.7% 32 Somerfield Grocery Private equity 28/04/07 4,369.5 (4.1%) 55.8 1.3% 52.8 1.2% 1.8% 33 H&M Clothing, Footwear & Accessories UK subsidiary of global 30/11/07 527.5 17.6% 53.0 10.1% 52.7 10.0% (3.8%) 34 L Rowland Opticians, Pharmacies, Health & Beauty Other foreign-owned 31/01/07 429.8 12.1% 49.3 11.5% 48.7 11.3% 1.9% 35 Monsoon Accessorize Clothing, Footwear & Accessories Major UK PLC 26/05/07 530.5 9.3% 48.4 9.1% 48.4 9.1% (2.9%) 36 Dunelm DIY, Home & Gardening Major UK PLC 28/06/08 391.8 10.5% 49.2 12.5% 47.2 12.0% 1.3% 37 CarpetRight DIY, Home & Gardening Major UK PLC 03/05/08 452.7 8.3% 49.2 10.9% 46.2 10.2% 0.0% 38 DFS DIY, Home & Gardening Family or closely-owned 28/07/07 611.1 6.3% 46.0 7.5% 43.5 7.1% (0.4%) 39 John David Group (JD Sports) Clothing, Footwear & Accessories Major UK PLC 02/02/08 592.2 11.6% 42.4 7.2% 42.4 7.2% 2.3% 40 Greggs Grocery Major UK PLC 29/12/07 586.3 6.4% 45.7 7.8% 41.5 7.1% (0.3%) 41 Wilkinson Mixed Goods Family or closely-owned 01/02/08 1,364.1 9.5% 48.7 3.6% 41.5 3.0% (0.2%) 42 HMV Music, Video and Gaming Major UK PLC 26/04/08 1,079.0 15.7% 41.4 3.8% 41.4 3.8% 1.2% 43 Pets at Home Other Private equity 29/03/07 303.2 11.4% 38.2 12.6% 38.2 12.6% 1.8% 44 Harrods Mixed Goods Family or closely-owned 02/03/08 437.0 9.0% 37.1 8.5% 37.0 8.5% (6.0%) 45 Mothercare Group Clothing, Footwear & Accessories Major UK PLC 29/03/08 587.3 1.6% 34.5 5.9% 33.9 5.8% 1.3% 46 Topps Tiles DIY, Home & Gardening Major UK PLC 29/09/07 175.4 10.3% 32.9 18.8% 32.9 18.8% (1.2%) 47 TK Maxx Clothing, Footwear & Accessories UK subsidiary of global 27/01/07 945.3 19.9% 39.3 4.2% 32.2 3.4% 1.3% 48 Homebase DIY, Home & Gardening Major UK PLC 03/03/07 1,568.5 6.5% 34.6 2.2% 32.1 2.0% (0.5%) 49 TJ Morris (Home Bargains) Mixed Goods Family or closely-owned 30/06/08 383.4 18.9% 34.0 8.9% 30.2 7.9% (0.4%) 50 Freemans Mixed Goods Other foreign-owned 28/02/08 324.9 (1.5%) 29.3 9.0% 29.0 8.9% 13.6% 51 Body Shop Opticians, Pharmacies,Health & Beauty Other foreign-owned 29/12/08 329.5 8.4% 30.2 9.2% 29.0 8.8% 2.8% 52 QVC Mixed Goods Other foreign-owned 31/12/06 331.1 8.4% 28.0 8.5% 27.9 8.4% 1.3% 53 Lyreco DIY, Home & Gardening UK subsidiary of global 31/12/07 298.4 10.2% 27.8 9.3% 26.8 9.0% 0.6% 54 Superdrug Opticians, Pharmacies, Health & Beauty Other foreign-owned 29/12/07 1,097.2 6.8% 25.7 2.3% 25.5 2.3% (0.2%) 55 World Duty Free Other Other foreign-owned 31/12/07 420.5 1.5% 26.1 6.2% 25.2 6.0% (0.5%) 1 Adjusted for other income and exceptionals 4 I The Times I 17 November 2008 I OC&C State of Retail 2008 EBIT Pre-Freehold EBIT Post-Freehold Adjustment1 Adjustment Latest Latest UK Revenue Latest EBIT Latest EBIT EBIT Accounts Revenues Growth EBIT Margin EBIT Margin Margin Rank/company Sector Ownership (£m) (%) (£m) (%) Growth 56 Jane Norman Clothing, Footwear & Accessories Private equity 29/03/08 149.5 12.8% 25.2 16.9% 25.1 16.8% (2.7%) 57 BHS Mixed Goods Family or closely-owned 31/03/07 864.5 1.5% 35.5 4.1% 24.8 2.9% 0.4% 58 Maplin Electronics Electricals Private equity 29/12/07 179.8 20.3% 25.2 14.0% 24.4 13.6% (0.1%) 59 Aldi Grocery UK subsidiary of global 31/12/07 1,517.7 15.1% 56.6 3.7% 24.3 1.6% 1.1% 60 Principles Clothing, Footwear & Accessories Private equity 27/01/07 168.9 4.1% 23.1 13.7% 22.6 13.4% 0.5% 61 JJB Sports Clothing, Footwear & Accessories Major UK PLC 27/01/08 745.5 (1.2%) 23.1 3.1% 22.6 3.0% (0.9%) 62 Clinton Cards Books & Stationery Major UK PLC 03/08/08 465.0 1.1% 22.0 4.7% 21.7 4.7% 0.4% 63 Fenwick (Bentall’s) Mixed Goods Family or closely-owned 25/01/08 283.2 1.1% 29.7 10.5% 21.2 7.5% 1.0% 64 Ernest Jones Clothing, Footwear & Accessories Major UK PLC 02/02/08 198.1 1.6% 20.2 10.2% 20.2 10.2% (0.9%) 65 The Perfume Shop Opticians, Pharmacies, Health & Beauty Other foreign-owned 29/12/07 158.0 12.3% 19.8 12.6% 19.8 12.6% 1.4% 66 Laura Ashley DIY, Home & Gardening Major UK PLC 26/01/08 212.4 6.4% 20.2 9.5% 19.6 9.2% 3.9% 67 Phones 4U Phones Private equity 31/12/07 650.7 (16.8%) 19.4 3.0% 19.4 3.0% (8.4%) 68 Peacock’s Clothing, Footwear & Accessories Private equity 31/03/07 423.1 8.4% 19.1 4.5% 19.1 4.5% (0.6%) 69 H Samuel Clothing, Footwear & Accessories Major UK PLC 02/02/08 256.7 (1.6%) 18.5 7.2% 18.5 7.2% 0.7% 70 JP Boden & Co Clothing, Footwear & Accessories Family or closely-owned 31/12/07 105.9 13.6% 18.3 17.3% 18.3 17.3% 0.7% 71 Magnet DIY, Home & Gardening Other foreign-owned 31/12/07 344.1 10.8% 18.5 5.4% 18.1 5.3% 2.4% 72 Woolworths Mixed Goods Major UK PLC 02/02/08 2,969.6 8.5% 18.3 0.6% 17.4 0.6% 0.9% 73 Hobbs Clothing, Footwear & Accessories Private equity 26/01/08 96.2 3.3% 17.3 18.0% 17.3 18.0% (0.1%) 74 GAP Clothing, Footwear & Accessories UK subsidiary of global 02/03/07 198.2 2.2% 17.6 8.9% 17.1 8.6% 4.1% 75 Warehouse Clothing, Footwear & Accessories Private equity 27/01/07 127.9 7.6% 16.9 13.2% 16.9 13.2% 0.1% 76 Waterstones Books & Stationery Major UK PLC 26/04/08 564.3 5.0% 16.3 2.9% 16.3 2.9% (0.1%) 77 Ted Baker Clothing, Footwear & Accessories Major UK PLC 26/01/08 127.9 11.9% 15.9 12.4% 15.9 12.4% (1.2%) 78 Vision Express Opticians, Pharmacies, Health & Beauty Other foreign-owned 31/12/07 163.0 7.3% 16.3 10.0% 15.8 9.7% 3.2% 79 Edinburgh Woolen Mill Clothing, Footwear & Accessories Private equity 24/02/07 147.4 1.2% 15.2 10.3% 14.9 10.1% (0.9%) 80 Alexon (Bay Trading, Kaliko) Clothing, Footwear & Accessories Major UK PLC 26/01/08 262.1 (3.3%) 14.5 5.6% 14.4 5.5% 0.2% 81 Fat Face Clothing, Footwear & Accessories Private equity 06/02/07 110.9 37.4% 14.0 12.6% 14.0 12.6% 1.9% 82 Majestic Wine Other Major UK PLC 31/03/08 185.3 3.8% 14.4 7.7% 13.1 7.1% 0.3% 83 Warren James Clothing, Footwear & Accessories Family or closely-owned 31/03/07 65.3 (18.0%) 11.8 18.0% 11.8 18.0% (2.5%) 84 Harvey Nichols Mixed