Top 10 Most Profitable Retailers, 2016

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Top 10 Most Profitable Retailers, 2016

07/19/2016
Forget revenue, store counts, online traffic, etc. — if you want to know who is succeeded in retail just look at the bottom line — it is all about turning a profit.

Apparel Magazine's "Top 50" ranks the 50 apparel companies that have the highest profit margin. There are many familiar members of the annual report as well as a handful of first-timers — including number one overall Michael Kors, which took the top spot with a 20.15% profit margin.

Click here to download the entire Top 50 report. Here is a quick look at the top 10 retailers on the list:


Michael Kors. The global lifestyle brand makes its debut on the Top 50 this year. And while its earnings and profitability are down in its most recent financial filing, it still churned out a whopping 17.78% profitability. MK has expanded so rapidly in the past few years that many have judged it overexposed. This year the company continues to expand its international markets and e-commerce flagships and is building up its men’s business. Also, in the spring it launched Michael Kors ACCESS, a line of wearable technology. Profit Margin: 20.15%.
 
The Buckle. Sales, net income and profitability were all slightly down in 2015 but the company still turned in an impressive performance, with profitability of 13.16%. Online sales were up 11.8%, to $105.5 million.  The popular denim destination opened nine new stores, completed 44 remodels and closed one store during the year, closing 2015 with 385 of its 468 stores in its newest format. This year it expects to open four new stores and complete 18 remodels.
Profit Margin: 13.16%.
 
lululemon athletica. lululemon is focusing on the "experience" part of the retail experience, expanding its community concept with Hub 17, a unique 5,000-squarefoot space above its Flatiron store in NYC for fitness classes, monthly dinners, concerts, art shows and more. It is turning up the heat on digital with new CRM capabilities and marketing, opened new locations in London, Seoul and Tokyo, and expects to open 11 stores this year. International is expected to account for 20% to 25% of business by 2020, by when it expects total revenue to double to roughly $4 billion. Profit Margin: 12.91%.
 
Nike. In an era when big established companies often find that their processes are cumbersome and that their businesses are outpaced in innovation by younger, more flexible startups, Nike has proven that big and nimble are not mutually exclusive. From its powerful marketing spots such as last year’s clever “We’re short a guy,” (watch it) to its Sport Research Lab which continues to develop product to enhance athletic performance, to its new NIKE+ app that combines on demand coaching, a personal store, and engaging experiences, Nike is just doing it. Profit Margin: 10.70%.
 
L Brands. Victoria’s Secret recently announced that it is scrapping its famous catalog, which the company says is an outdated concept — and one that cost $125 million to $150 million annually. Other recent big changes at the company include job cuts, the elimination of swimwear, shoes and accessories, and the division of the VS business into Victoria’s Secret Lingerie, PINK and Victoria’s Secret Beauty, each of which will be managed by separate executives. Profit Margin: 10.31%.
 
VF Corp. Just a few other highlights from the year: The Vans and The North Face brands came together in 2015 to launch a joint collection of popular limited-edition shoes and outerwear; VF saw great performance in running and training apparel driven by Mountain Athletics, which grew more than 4%; 36 % of sales came from outside the United States; VF sourced or produced more than 550 million units of apparel and footwear, 23% at its own locations and 77% with contract suppliers, along the way establishing VF’s Responsible Sourcing program. Profit Margin: 9.95%.
 
Francesca’s Collections. In line with its Vision 2020 long-term strategic plan, it improved inventory management, clearing out slow moving inventory and improving the flow cadence to boutiques, with new merchandise arriving almost daily; enhanced merchandise assortments; and elevated the boutique experience — efforts that took hold in the second half of the year with a return to positive comps. Its apparel business grew significantly, led by dresses, which doubled in sales over last year. Profit Margin: 8.69%.
 
Ross Stores. Operating margin for the year increased to a record 13.6%, and the company ended the year with inventories up 3%, with packaway levels at 47% of total inventories, compared with 45% last year. The company plans to add about 70 Ross and 20 dd’s Discounts locations in 2016. Matching Walmart’s moves, Ross raised the minimum wage to $10 per hour in the second quarter of this year in efforts to attract and retain talent. Profit Margin: 8.55%.
 
Carter’s. It turned in record sales and earnings in 2015 and its 27th consecutive year of sales growth, opened more than 100 new stores in North America and began e-commerce capabilities in China via the launch of its Carter’s brand on Alibaba’s Tmall, which received more than 12 million visits last year. Young children’s is the fastest-growing apparel segment in China, estimated at $12 billion and projected to more than double to $25 billion by 2025. In the United States, the segment grew about 2% last year to $20.5 billion, with Carter’s piece of the pie growing to 17%. Profit Margin:7.89%.
 
Columbia Sportswear. Record sales of $2.3 billion included 7% growth from the Columbia brand, 26% growth from SOREL and 29% growth from prAna (in its first full year as a member of the company’s portfolio); 21%  growth in the United States, balanced across wholesale and direct-to-consumer, including a 30% increase in e-comm sales; and 20% growth in its Europe-direct markets. Profit Margin: 7.49%.