SPECIALTY RETAILER—PROFITABILITY VIEW

With this case, we review the profitability of several specialty retail stores. The companies reviewed and the year end dates are as follows:

1. Abercrombie & Fitch Co.

(January 31, 2009—52 week; February 2, 2008—52 week; February 3, 2007—53 week) ‘‘Abercrombie & Fitch Co.…is a specialty retailer that operates stores and websites selling casual sportswear apparel.’’ 10 K

2. Limited Brands, Inc.

(January 31, 2009—52 week; February 2, 2008—52 week; February 3, 2007—53 week) ‘‘We operate in the highly competitive specialty retail business.’’ 10 K

3. GAP, Inc.

(January 31, 2009—52 week; February 2, 2008—52 week; February 3, 2007—53 week) ‘‘We are a global specialty retailer offering clothing, accessories, and personal care products.’’

10 K

 

Abercrombie & Fitch

Limited Brands

GAP

Data reviewed

2009

2008

2009

2008

2009

2008

Net profit margin

7.69

12.69

2.39

6.87

6.66

5.5

Return on assets

10.05

19.76

3

9.58

12.56

10.58

Return on total equity

15.72

31.47

10.75

27.75

22.33

18.35

Required

a. Comment on the net profit margin for these companies. Consider absolute amounts and trend.

b. Comment on the return on assets for these companies. Consider absolute amounts and trend.

c. Comment on the return on total equity for these companies. Consider absolute amounts and trend.

d. Comment on the relative profitability of these companies.