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Global Powers of Retailing Top 250 (2010)

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Deloitte Touche Tohmatsu (“Deloitte”), in conjunction with STORES Media, is pleased to present the 13th annual Global Powers of Retailing. This report identifies the 250 largest retailers around the world based on publicly available data for the companies’ 2008 fiscal year (encompassing fiscal years ended through June 2009). The report also provides an outlook for the global economy, a discussion of the major challenges facing retailers and an analysis of market capitalization in the retail industry.

2008 a Tumultuous Time for Global Retail Industry The global economic expansion came to an end in 2008. As that year progressed, the recession that began in the United States worsened and around the globe. Retailers faced an extremely challenging environment as consumers became more cautious and reduced their spending in response to troubled housing, employment and credit markets. As consumers realized they could no longer spend beyond their means, retailers selling discretionary goods were particularly hard hit; those selling food and other necessities fared considerably better.

Fiscal 2008 sales and profits for the Top 250 Global Powers of Retailing reflect the impact of declining consumer confidence. Among the Top 250, 61 retailers had declining retail sales in fiscal 2008, up from 44 in 2007. As spending became much more dependent on income than on credit, retailers selling apparel and accessories, consumer electronics and home improvement products struggled. Given the severity of the economic downturn, however, composite retail sales growth was not as sluggish as might have been anticipated. Sales-weighted, currency-adjusted retail sales for the Top 250 rose 6.3 percent in fiscal 2008 compared with 7.6 percent in 2007.

While sales growth slowed as recession-weary consumers pulled back, profitability plunged. The composite net profit margin fell from 3.7 percent in fiscal 2007 to 2.4 percent in 2008, bringing to an end what had been a trend of continuing improvement in retail profitability in recent years.

Many retailers “bought” sales with heavy promotions, which hit the bottom line hard. Of the 184 companies that disclosed their bottom-line results, 30 operated at a loss (more than double the 14 unprofitable companies in fiscal 2007). Perhaps more telling, 123 companies -- two-thirds of those that reported bottom-line results -- saw their net profit margin decline in 2008.

Combined retail sales of the Top 250 Global Powers of Retailing exceeded $3.8 trillion in fiscal 2008, a year-over-year increase of 5.5 percent. Some of that increase reflects nominal sales growth, some reflects the changing composition of the Top 250 list -- and part of the gain in the aggregate U.S. dollar-denominated sales figure is due to the impact of a weaker dollar against many major currencies during this period.