These hot companies are thriving in the face of a weak economy.
A user-friendly site; new products like the Kindle reader and the Roku video stream player; customer service ratings that rank with the best anywhere: For Amazon.com, it all adds up to a loyal customer base that kept sales humming through the worst economic downturn since the Great Depression.
Analysts point to this year's late Easter as a catalyst for shifting more March sales into April. But with unemployment still high at 8.8% and gas prices climbing, this spring's moderate rebound from the disasters of 2009 and 2010 isn't looking very broad based. Currently, about 50% of all retail purchases are made by 10% of all shoppers, notes Howard Davidowitz, president of Davidowitz & Associates, a New York-based retail consultant and investment bank. The historical norm is closer to 30% of purchases coming from the upper 10%.
"Those invested in the capital markets are doing great right now. That's what's driving retail," says Davidowitz. But while a Dow that's up 28% since last summer is helping investors, the mass consumer market is still licking its wounds from its housing-driven loss of wealth. So expect a sluggish retail landscape for a while longer.
But there are always exceptions, like Rue21 (rue), which places second on our list of the fastest-growing retailers. Since coming out of bankruptcy in 2003, the apparel chain has found success selling denim and hoodies at its outlet locations, undercutting Gap and other chains on price. Sales rose 181% from 2006 to 2010.
In third place: Chipotle Mexican Grill (CMGB), which grew sales 123% over the same four-year span by catering to time-conscious and cost-conscious consumers with consistently fresh food and a restaurant atmosphere that's a cut above the usual fast food joint.
Right behind Chipotle is appliance and electronics chain HH Gregg, which grew its sales revenue 121% thanks in part to taking over a number of former Circuit City (CC) stores. However, Davidowitz has his doubts about whether HH Gregg can maintain such strong growth in the face of stiff competition from the likes of Best Buy (BBY) and Wal-Mart (WMT).
One smaller chain on our list that he does like: ninth-place Ulta Salon, Cosmetics and Fragrance (ULTA), a Bolingbrook, Ill.-based chain that's grown sales 92.7% since 2006 by selling its beauty products at appealing prices in low-cost strip centers. In a way, Ulta's growth is the mirror image of the performance of struggling department stores, which typically showcase the cosmetics counter out front. Moving the counter out of the big store, in effect, and setting it up as a standalone on cheaper real estate has been a winning formula for Ulta, at least during the rough economy of the past four years. "It's a good business, really a good concept right now," says Davidowitz.
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