Special Report
America's Best Run Companies
January 5, 2015 7:00 am
Last Updated: January 5, 2015 9:42 am
4. The Kroger Company (NYSE: KR)
> Industry: Food retail
> Revenue (last 12 months): $106.5 billion
> 1-year share price change: 61.8%
Kroger has had an extremely strong year. Identical supermarket sales, which tracks sales at supermarkets open five quarters without a relocation or an expansion, were up 4.7% year-over-year in the first nine months of 2014, and up 5% excluding fuel.
New, aggressive initiatives have been a major factor in Kroger’s recent success. Kroger has made a number of successful management decisions, including the acquisition of grocer Harris Teeter, and the expansion of its natural and organic offerings, including its private label brand Simple Truth. According to a report from Morgan Stanley, “Kroger is well positioned to benefit from health and wellness offerings, [the] Harris Teeter merger, and [an] increased digital focus.”
Kroger is among the largest employers in America. It had more than 375,000 associates as of September, when it announced plans to expand headcount by 20,000.
5. Under Armour
> Industry: Apparel, accessories, and luxury goods
> Revenue (last 12 months): $2.9 billion
> 1-year share price change: 58.2%
Through the first three quarters of 2014, revenues at Under Armour rose by almost one-third, to nearly $2.2 billion. The company also said in October that it expected revenues to break $3 billion for the first time in its history in 2014. According to The Wall Street Journal, Under Armour surpassed Adidas earlier this year as the number two sportswear company in the U.S. But to catch frontrunner Nike, Under Armour will have to grow substantially — Nike’s most recent quarterly revenues totalled $7.4 billion.
Still, Nike is likely feeling some pressure, especially given Under Armour’s recent success with women. When Yahoo Finance chose Under Armour its 2014 Company of the Year, it also mentioned its growing women’s line. Similarly, when Advertising Age named Under Armour its 2014 Market of the Year, it focused on its highly successful directed-to-women marketing campaign.
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6. O’Reilly Automotive
> Industry: Automotive retail
> Revenue (last 12 months): $7.1 billion
> 1-year share price change: 51.4%
In a retail landscape where many companies have opted to shrink their store base, O’Reilly Automotive has thrived by expanding it. The company spent aggressively to grow its two target markets: do-it-yourself customers and do-it-for-me customers. According to Morningstar, “O’Reilly holds a considerable lead over [its] rivals thanks to its expertise, customer relationships, and extensive infrastructure lead.”
These investments have paid off. Revenue was up 9% year-over-year in the third quarter of 2014, while comparable sales rose by 6.2% from the same quarter the year before. Bottom line growth was even better, as diluted earnings per share rose by 22% in the third quarter, the 23rd consecutive quarter in which diluted EPS rose by more than 15% year-on-year.
The company actually managed to capitalize from the weak economy of the recent years as many Americans have had to replace car parts to extend the life of their cars rather than buy new ones. However, not all of O’Reilly’s success came from industry tailwinds. According to R.W. Baird, “O’Reilly has a superior mousetrap in auto part retail,” with “superior customer service, better part availability, and a favorable mix of commercial business.”
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