Thursday, May 5, 2011

Amazon, Costco, and Sears

May 5, 2011
Retailers Post Strong April Sales

Among the stronger performers, warehouse club Costco Wholesale Corp. posted a 12% rise in April same-store sales, ahead of expectations for 8.9%, despite being closed on Easter. Costco operates gasoline stations at its sites and said higher fuel costs, as well as strength in foreign currencies, aided results.

Costco reports same store sales.

There are also signs of trouble among retailers that do not report monthly same-store sales, including Sears Holdings Corp., which on Tuesday warned of a big first quarter loss.

Sears once reported same store sales but Eddie Lampert said in 2006 that same-store sales were a "vastly overrated" measure of a retailers health. Perhaps revenue per employee or net income per employee would be better measures long-term?

Amazon
Total Annual Revenue (ending December 2010): $34.2 Billion
Total Annual Net Income (ending December 2010): $1.15 Billion
Full Time Employees: 33,700
Revenue per Employee: $1,010,000
Net Income per Employee: $34,100

Costco
Total Annual Revenue (ending August 2010): $77.9 Billion
Total Annual Net Income (ending August 2010): $1.30 Billion
Full Time Employees: 82,000
Revenue per Employee: $950,000
Net Income per Employee: $15,900

Sears
Total Annual Revenue (ending January 2011): $43.3 Billion
Total Annual Net Income (ending January 2011): $0.133 Billion
Full Time Employees: 312,000
Revenue per Employee: $139,000
Net Income per Employee: $426

Imagine what would happen to employment on a national level if the efficient Costco and Amazon continue to grow while the inefficient Sears continues to shrink. Put another way, Sears has vastly more employees than Amazon and Costco combined.

$426 isn't exactly much of a safety buffer for Sears (or their employees).


Update:

Per request, here's a look at Target.

Target
Total Annual Revenue (ending January 2011): $67.4 Billion
Total Annual Net Income (ending January 2011): $2.92 Billion
Full Time Employees: 355,000
Revenue per Employee: $190,000
Net Income per Employee: $8,230

And while I am at it, here's the 800 pound gorilla.

Wal-Mart
Total Annual Revenue (ending January 2011): $422 Billion
Total Annual Net Income (ending January 2011): $16.4 Billion
Full Time Employees: 2,100,000
Revenue per Employee: $201,000
Net Income per Employee: $7,810

8 comments:

mab said...

Imagine what would happen to employment on a national level if the efficient Costco and Amazon continue to grow while the inefficient Sears continues to shrink.

Stag,

Everything will be okay as long as we prevent prices from falling. Imagine how bad things would be if non-FIRE sector employees actually got the price benefits of innovation.

We're very fortunate that our elastic currency makes it so easy to create ponzi credit. It's a wonderful system. That's what Warren Buffett says anyway and he's always right.

Charles Kiting said...

Would be nice to see Sears' numbers compared to Target's.

I've been going to Sears and Kmart more often recently because they have actually improved their shopping experience over Target. Target is now having the same empty shelf problem Kmart had about 6 years ago, Kmart doesn't have that now (maybe it will return). And when I go to Target the number of open registers is half the number of open registers at Kmart.

Stagflationary Mark said...

mab,

Everything will be okay as long as we prevent prices from falling.

Everything looks bad. We could not stop prices from falling today. I guess there was just way too much leverage in the silver lining.

Charles Kiting,

Here's a blast from the past.

October 22, 2007
Retailer Excuse of the Month

Target blamed "greater-than-normal daily volatility". That was a new one to me. I hadn't heard that one before. Go figure.

I'll add Target to the post shortly.

Andrew said...

Traditional reatailers typically employ casuals/part-timers as a signifcant proportion of the headcount and the proportion is influenced by location (ie, supply/demand): are the employee numbers actual or full time equivalents? Variances in workforce composition may explain some of the disparity. Just curious.

Stagflationary Mark said...

Andrew,

I thought about that when making this post. I just had no way to compensate for it.

That said, I think it could just make the situation look even worse.

Here's the thinking.

If it is true (can't say that it is true, but I lean that way) that Sears hires more part time employees than Amazon, then the revenue per employee at Sears would look even worse than it currently does (compared to Amazon).

Two half-time employees should equal one full-time employee. I am not counting any of Sears' half-time employees though since the only data I had was "full time employees".

Stagflationary Mark said...

Put another way, if variances in workforce composition are responsible for the effect we're seeing here, then Sears would have to be hiring far fewer part time employees than the other companies I listed.

I doubt that's the case but I can't prove it.

Gordon said...

Is there any data on FTEs (full-time equivalent) employees? Or is any of your current source data FTE instead of just full-time staff?

I have a friend who just quit Target. She managed the deli and snack bar in a SuperTarget in a wealthy suburb. Because she didn't fit in with (and socialize with) the rest of the management team, she was being tracked to be the store's "worst" manager. This, despite the fact that her department had higher sales, using significantly fewer employee hours, than other similar stores.

Target wants their managers to be young and outgoing. They also use a "best, worst, in the middle" ranking system. Because my friend didn't fit the desired demographic, and because she didn't hang out and drink with the other managers, she was doomed.

Good for me, because now she and I are going to start the food truck business she's always wanted to own.

Stagflationary Mark said...

Gordon,

Full-time equivalent employee information would certainly be helpful. I just don't know where I would find it. Yahoo reports the number of full time employees on their site which I'm guessing they just pull from the annual reports.

My girlfriend could tell you many "doomed" stories of her own. She's back in school doing a career change.

Good luck to you on the food truck business.