The 2009 equity market recovery has led to an increase in Q ratios for the world's largest retailers. What does this mean? They're using their tangible assets effectively and have demonstrated the strength of intangible factors, such as brand and operational efficiency, to create shareholder value.

"Q" is the ratio of a public company's market capitalization to the market value of its tangible assets. So, a Q ratio of above one means that investors value the company's non-tangible assets -- e.g., brand, differentiation, innovation, customer experience and customer loyalty -- and see these factors as reasons to pay a higher price per share. A company with a Q ratio of below one can't generate a sufficient return on its physical assets. According to Deloitte, this could create an arbitrage opportunity, as it may be ripe for an acquisition.

Continue reading Emerging Markets and Electronics Retailers Sport Best Intangible Values

Emerging Markets and Electronics Retailers Sport Best Intangible Values originally appeared on BloggingStocks on Mon, 11 Jan 2010 12:00:00 EST. Please see our terms for use of feeds.

Affordable fashion retailer Hennes & Mauritz (OTC: HMRZF) beat profit and margin expectations for the second quarter of 2009, as currency swings are becoming less costly. Gross margins reached 61%, ahead of the 60.2% forecasted by analysts for the world's third largest clothing retailer. Even though some sales figures were under pressure, H&M has turned in a strong quarter and is well-positioned for the rest of the year, particularly in a tight market for consumers.

H&M's pre-tax profits increased 6.4% to $735 million for the second quarter (which ended on May 31, 2009). The mean forecast was $721 million, according to a Reuters poll. May sales were unchanged from May 2008, though a 1.4% gain was expected. Sales in stores open for at least a year dropped 9%, rather than the forecasted 8.5%. Nonetheless, the positive developments more than offset the negative.

Continue reading H&M beats Q2 expectations, well-positioned for 2nd half

H&M beats Q2 expectations, well-positioned for 2nd half originally appeared on BloggingStocks on Thu, 25 Jun 2009 12:00:00 EST. Please see our terms for use of feeds.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

San Francisco-based Gap Inc. (NYSE: GPS) has seen its fair share of hits or misses. The original Gap Stores was an overwhelming success in the 1980s and 1990s, but ran into the proverbial wall as the century was ending. The Gap missed the fashion changes and has re-tooled and re-engineered itself more than Joan Rivers! The concept has never been quite the same or attained its cache in the minds of discerning consumers. Other concepts within the Gap system have fared better, such as the Banana Republic, and Old Navy still remains popular in the deep discount segment.

Zara offers a fresh approach to fashion with a range of price points appealing to all levels of consumers. Zara is based in Spain and is part of the huge distribution company Inditex, which trades on the Spanish exchange. Zara is just beginning to make some serious inroads into the United States. With only 154 stores in the U.S., Zara has the room to five-fold its base within the next decade. The Zara concept has over 1,400 stores spread out over 50 countries, with plans to double that base. The U.S. is fertile ground for Zara as the international cache appeals to American consumers.

Zara is a vertically integrated concept. From designing men's, women's and children's fashions to manufacturing to distribution, Zara controls the entire process. The stores are all company-owned, to complete the vertical integration. Zara has captured the cache that the Gap Stores once had. Zara's appeal ranges from casual wear to business attire, while maintaining reasonable price points.

Continue reading The next Gap Stores is Zara

The next Gap Stores is Zara originally appeared on BloggingStocks on Sun, 29 Jun 2008 09:00:00 EST. Please see our terms for use of feeds.