Mergers and Acquisitions Propel Fastest 50

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From fiscal 2003 through 2008, composite sales for the 50 fastest-growing retailers rose at a compound annual rate of 25.3 percent, more than three times faster than the growth rate for the Top 250 as a whole. For the 36 companies among the Top 250’s 50 fastest growers that disclosed their 2008 bottom-line results, strong sales also translated into solid profits. The composite net profit margin for the Fastest 50 retailers was 3.3, compared with 2.4 percent for the overall Top 250. Only four of 36 operated at a net loss.

Mergers and acquisitions played a big part in boosting sales for many of these companies. Wesfarmers’ acquisition of Coles Group, making it the second fastest-growing retailer over the 2003-2008 period, has already been noted. At the end of 2007, sixth-ranked Cencosud acquired Wong supermarkets, the largest retailer in Peru, as well as Brazilian retailer GBarbosa. This boosted the Chilean retailer from No. 112 to No. 80. On January 1, 2008, Mexico’s Soriana took over Grupo Gigante’s supermarket business. With this transaction, Soriana has become a leading supermarket chain in Mexico, second only to Wal-Mart. O’Reilly Automotive acquired CSK Auto in July 2008, creating the third-largest auto parts chain in the United States.

While acquisitions enable retailers to enter new markets, add new channels and introduce new concepts much more quickly than organic growth, the latter was also a factor for many Fastest 50 retailers. Following a rapid regional rollout over the past decade, OJSC “Magnit” has become the largest food retailer in Russia in terms of number of stores. In addition to expansion of its discount “convenience” store concept, the company is focused on developing a national chain of “Magnit” hypermarkets. BİM (Birleşik Mağazalar), a Turkish company that operates a chain of hard discount stores, is a newcomer to the Top 250 and ranks ninth among the Fastest 50. Founded in 1995, it is now Turkey’s No. 2 retailer with approximately 2,300 stores. BİM began expanding into North Africa in 2009.

Russia’s privately owned Euroset Group, No. 1 on the Fastest 50 list, experienced serious financial problems in 2008 and was bought by a Russian businessman who later sold a 49.9 percent stake in the cellphone and accessories retailer to Russian mobile telecommunications carrier VimpelCom.