So far we have relied on Comp Sales (also know as Same Store Sales), which is a measurement of productivity in revenue used to compare sales of retail stores that have been open for a year or more, to gauge Retailer health. Now, the folks at Consesus Advisors have come up with a new way to gauge the Health.
The Consensus Retailer Health Ratings (RHRs) measure and compare retailers over a five-year period with regard to their:
- Healthy Growth
- Asset Utilization
- Pricing Power
- Balance Sheet Strength
Each of the four components is comprised of a variety of factors and measurements that, taken together, yield a relative score for each retailer in the component. Each component is important to overall health, but we do not weight each component of the RHRs equally. We employ a proprietary weighting system that incorporates the correlation of the components to commonly used financial performance metrics such as return on assets, net income margin, total investment return and return on capital. Retailers are assigned scores and placed in
one of five tiers.
I liked the way, Consensus Retailer Health Ratings™ enable one to compare a retailer's area of strength / points of weakness to those of its peers.