We retail-watchers put too much stock in quarterly comparable-store sales figures, says investment firm Consensus Advisors. (Guilty!) So the firm does an annual Retailer Health Rating that looks at more financial measures and a bigger timeframe. Their analysis: Amazon.com (AMZN) tops the heap, followed by apparel chain Aeropostale (ARO). Down around 5th place: Walmart (WMT).
The study aims to detect manipulated sales jumps — due to a big ad push, say, or too much price-cutting — to discover which chains are truly financially healthy and best-positioned for future growth. It tracks four measures over a five-year period, so startup chains need not apply. The firm’s yardsticks are healthy sales growth (with little cannibalization or margin erosion), how well the company leverages its assets, pricing power (as in resisting price erosion), and the strength of the balance sheet.
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