America's Most Profitable Stores
Apple Inc. (NASDAQ: AAPL) has the most successful retail stores by a wide margin. According to RetailSails, a retail and consumer goods consulting firm, the tech giant’s 372 worldwide locations sold goods at a rate of more than $6,000 per square foot of floor space in the past 12 months. The average store of the next most successful company in the United States, Tiffany & Co. (NYSE: TIF
), sold less than half that figure per square foot.
In the low-end department stores and supermarkets, sales per square foot were in many cases less than $100. Hancock Fabrics, a fabric retailer, brought in just $72 per square foot. Meanwhile, the retailers with the most profitable stores brought in more than $1,000 per square foot. These are mostly high-end brands, selling much more expensive products. Based on the RetailSails report, 24/7 Wall St. identified the nine most successful retail stores in America.
In the case of most department stores and discount stores like Wal-Mart Stores Inc. (NYSE: WMT), Kmart and Family Dollar Stores Inc. (NYSE: FDO), most items cost less than $100, and most stores are very large. The average retail space in some of the least successful stores by sales per square foot is at least 10,000 square feet. This prevents the total profits per square foot from exceeding several hundred dollars, even among the most popular stores.
For the nine most profitable corporate stores, the opposite is true. They sell luxury goods, in apparel, accessories, electronics or jewelry. Their products are often quite expensive, while the stores are generally relatively small. Much of the merchandise companies such as Apple, Tiffany and Coach Inc. (NYSE: COH) sell costs in the hundreds of dollars or more. At the same time, the average store floor space of most of these companies is less than 5,000 square feet. While total sales of the average Kmart store is roughly double what Lululemon Athletica Inc. (NASDAQ: LULU) stores do, the average floor space of a Lululemon is only 1/34th that of a Kmart store.
Because most of the profitable stores sell luxury items, they tend to be more selective in the markets they enter. Several of these companies have fewer than 100 stores nationwide. Birks & Mayors Inc. (NYSEMKT: BMJ) has only 57. Even stores that average small retail space, such as RadioShack Corp. (NYSE: RSH), turn low profit per square foot because they have hundreds of low-profit stores in low-income communities. RadioShack has 4,423 stores.
In many ways, Apple, the most successful store in terms of profit per square feet, is different from each of the other eight companies on this list. Companies like Tiffany, Coach and Select Comfort Corp. (NASDAQ: SCSS) rely primarily on their brick-and-mortar stores. Apple makes the vast majority of its sales and profits online, with its physical stores serving as hubs to improve branding and showcase new products. Apple’s business model of regularly releasing new buzz products, such as the latest iPhone, draws in large crowds of customers looking to buy these item as soon as they hit the shelves.
Relying on RetailSails’ 2012 Chain Store Productivity Guide, 24/7 Wall St. identified the nine companies with the highest sales per square foot, based on the past 12 months of sales. Retailsails also provided average store size, average annual sales per store, one-year sales growth and the number of stores.
These are America’s most profitable stores.