4. Office Depot

24/7 Wall St.: American Stores Starving for Customers

Drop in sales: -16.8 percent
2005 sales: $14.3 billion
2010 sales: $11.9 billion
5 yr. change in stock price: -89 percent

All three of the major office supply companies — the other two being OfficeMax and Staples — have done poorly for three reasons. First, there are too many competitors in the sector. Second, retailers from outside the sector, particularly the Wal-Mart/Sam’s Club franchise, have further divided market share and depressed the margins. And the last and most obvious battle is the toll taken by the recession.

(AP Photo/Gene J. Puskar)

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Great American S... It’s no secret that U.S. retail sales collapsed in 2008 and 2009 because of the recession. But several of the largest retailers consistently performed poorly between 2005 and 2010 for reasons that go beyond the recession. 24/7 Wall St. takes a closer look at which retailers lost most in total sales during that period and found that their troubles have a few common elements.

To identify the largest retailers in America with the worst sales, 24/7 Wall St. looked at the National Retail Federation’s Stores Magazine. Using the 2006 and 2001 “Top 100 Retailers” lists, they then identified companies that had lost the most in annual retail sales from 2005 to 2010. 24/7 Wall St. only ranked public companies in order to demonstrate how declining sales affect the overall health of the company. Researchers also excluded companies with significant M&A activity because it can distort sales.

(AP Photo/Douglas C. Pizac)

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8. J.C. Penney Drop in sales: -5.9 percent
2005 sales: $18.8 billion
2010 sales: $17.7 billion
5 yr. change in stock price: -52 percent

J.C. Penney is an iconic U.S. brand. It was started by James Cash Penney in 1902. At one point, it employed Sam Walton, the founder of Wal-Mart. J.C. Penney suffers from two problems. The first is that it is in the highly competitive middle-market department store business, which includes Kohl’s, Macy’s, and Dillard’s. Poor management has allowed competitors to flank the company in store locations and merchandise selection. Mike Ullman has been the head of J.C. Penney’s during its decline. He joined the company as CEO in 2004. Problems at J.C.Penney have been severe enough that the board is replacing Ullman with former Apple Store chief Ron Johnson.

(AP Photo/Phil Coale)

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The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.
7. The Gap Drop in sales: -9.4 percent
2005 sales: $16 billion
2010 sales: $14.5 billion
5 yr. change in stock price: +13 percent

The Gap, which was founded in 1969, was the cool location for casual dress during the 1990s, capturing the nation with its slogan, “Fall into the Gap.” The company’s 3,100 stores include Gap, Old Navy, and Banana Republic. The Gap’s competition has grown both because of merchandise decisions at large department stores and the rise of retailers like Abercrombie & Fitch. Gap has been through several CEOs since it fired its famed chief Mickey Drexler.

(AP Photo/Eric Risberg)

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6. Foot Locker Drop in sales: -12.3 percent
2005 sales: $5.7 billion
2010 sales: $5.0 billion
5 yr. change in stock price: -17 percent

In 1974, Woolworth, another famous American retailer, founded Foot Locker to take advantage of the growing interest in athletic shoes; Nike was only founded ten years earlier. Unfortunately for Foot Locker, athletic shoes are now sold by almost every department store and big-box retailer in the United States. The company’s major products, which include Nike, Adidas, and Underarmor, built their own franchises by being available in as many retail outlets across the country and even by having their own stores.

(AP Photo/David Zalubowski)

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5. The Home Depo... Drop in sales: -16.6 percent
2005 sales: $81.5 billion (restated to $77.1 billion due to HD Supply, August 2007)
2010 sales: $68.0 billion
5 yr. change in stock price: +1 percent

The Home Depot is the world’s largest retailer of building materials and home improvement products. The company has over 2,200 stores worldwide. The chain has been badly damaged by the housing crisis, which began in earnest in 2007. From 2007 to 2008, the company’s stock fell from $35 to under $27. Home Depot’s prospects were also hurt by the presence of Robert Nardelli, who operated the chain in the first half of the decade.

(AP Photo/Paul Sakuma)

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The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.
4. Office Depot Drop in sales: -16.8 percent
2005 sales: $14.3 billion
2010 sales: $11.9 billion
5 yr. change in stock price: -89 percent

All three of the major office supply companies — the other two being OfficeMax and Staples — have done poorly for three reasons. First, there are too many competitors in the sector. Second, retailers from outside the sector, particularly the Wal-Mart/Sam’s Club franchise, have further divided market share and depressed the margins. And the last and most obvious battle is the toll taken by the recession.

(AP Photo/Gene J. Puskar)

More From 24/7 Wall St.:
Worst Housing Markets Poised to Recover
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Cities with the Poorest Neighborhoods

The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.
3. OfficeMax Drop in sales: -22.8 percent
2005 sales: $9.2 billion
2010 sales: $7.1 billion
5 yr. change in stock price: -83 percent

OfficeMax is the smallest of the three retailers in its office supplies industry, with total revenue of $7 billion, compared with $25 billion for market leader Staples. And it’s because of Staples that the company never had a chance of breaking through in a meaningful way since its inception. Its small market share prevents it from having the purchasing and distribution leverage that its bigger rivals do.

(AP Photo/Jeff Roberson, File)

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2. Dillard's Drop in sales: -23.1 percent
2005 sales: $7.8 billion
2010 sales: $6.0 billion
5 yr. change in stock price: +87 percent

Dillard’s is another huge America retailer founded in the first half of the century that now finds itself in the crowded general department store sector, which includes Saks and Macy’s. All three companies have struggled to expand and have posted only modest net income.

(AP Photo/Mike Wintroath)

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1. Sears Drop in sales: -23.5 percent
2005 sales: $54 billion
2010 sales: $41.3 billion
5 yr. change in stock price: -50 percent

Sears Holdings was created in November 2004 by a merger between Sears Roebuck and Kmart. Sears Roebuck was once among the largest retailers in the country and essentially created the catalog business. The merger was engineered by hedge fund manager Eddie Lampert. Each of the chains was weak before the transaction, and Kmart was in bankruptcy. Management has been unable to improve the company’s fortunes, which to some extent are hurt by the power of Target and Wal-Mart.

(AP Photo/Paul Sakuma, File)

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The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.
More From 24/7 W... Americans are losing their appetite for these once-popular eateries. Click here to see which chains could soon be a thing of the past.