No. of Recommendations: 0
This must be the perfect time to rank the retailers. All 4 of these companies have recently filed their 10-K for 1998.
Gap is firing on all cylinders. The company grew net income by 54% while growing total assets by only 19%. That means that each additional dollar invested in the company is more profitable than the last. Nevertheless, Gap's poor showing on the cash-to-debt ratio really drags down its overall score. Considering that diluted shares declined by 2% year-over-year, the company apparently believes its stock is undervalued enough to buy back shares rather than pay down the debt. Such aggressive financial management is great if all works out as planned, but can be disasterous if company performance hiccups.
Gap Inc. Abercrombie American Eagle Limited
Current Period Year-ago PeriodYear-over-Year Current Period Current Period Current Period
FY '98 (1/30/99FY '97 (1/31/98 Growth FY '98 (1/30/99) FY '98 (1/30/99FY '98 (1/30/99)
Income Statement . . .
Sales 9,055 6,508 39.1% 816 588 9,347
Cost of Goods S 5,318 4,022 32.2% 472 353 6,349
Net Income 825 534 54.4% 102 54 314
Shares Outstand 603 615 -2.0%
Balance Sheet . . .
Cash & Equivale 565 913 -38.1% 164 85 870
Current Assets 1,872 1,831 2.2% 218 155 2,318
Short-term Debt 91 85 7.0% 0 0 100
Current Liabili 1,553 992 56.6% 122 60 1,248
Long-term Debt 497 496 0.1% 0 0 550
1 1 1Competitors
Margins & Ratios . . .
Gross Margins 41.3% 38.2% 3.1 42.2% 39.9% 32.1% 38.0%
Net Margins 9.1% 8.2% 0.9 12.5% 9.2% 3.4% 8.4%
Cash-to-Debt 0.96 1.57 -38.8% No Debt! No Debt! 1.34 1.72
Net Cash -22.0 332.4 N/A 163.6 85.3 220.3 156.4
Fool Flow Ratio 0.89 1.01 -11.7% 0.45 1.16 1.26 0.96
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Ranking Rule Makers
1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 1 Sales Growth 3
Openness 1 Gross Margins 3
Optimism 1 Net Margins 3
Legitimacy 1 Shares Outstandin 3
Inevitability 1 Cash-to-Debt 0
Solitariness 1 Fool Flow Ratio 3
Humor 1 Expansion Potenti 3
Subtotal 7 Subtotal 18
2) Financial Loca Points (0-2) 4) Monopoly Statu Points (0-4)
Mass Market Habit 1 Gross Margins 2
Gross Margins 1 Net Margins 2
Net Margins 1 Net Cash 0
Cash-to-Debt 0 Fool Flow Ratio 2
Fool Flow Ratio 2 Convenience 4
Your Interest 2 Subtotal 10
Subtotal 7
5) Your Enjoyment 1
Total Score 43 Second Tier
