Last week, the chapter in an epic battle unfolded: Cyber Monday vs. Black Friday. But every other day of the year, this battle is better known as Amazon.com (NASDAQ:AMZN) vs. The Rest of the Retail Industry. But while the online shopping juggernaut continues to find success in its take-no-prisoners business model, several bricks-and-mortar competitors still thrive in spite of its attacks. (Spoiler alert: Barnes & Noble is not on this list.)
While Amazon was busy taking over the world, Ross Stores (NASDAQ:ROST) quietly solidified its foundations as a strong retail brand. An off-price retailer of clothes and home goods, Ross's claim to fame is its ability to sell high quality items for bargain-basement prices. Its October same-store sales grew to 4%, and the quarterly total rang in at 6%, versus 5% in Q3 2011. In terms of revenue, this business is by no means underperforming. Ross' 2011 revenue exceeded $8.5 billion, having increased by 8% from the previous year.
Small margins generally plague the retail industry. With this in mind, Ross' percentages are impressively consistent. The store has maintained an annual net profit margin of 7% since 2009, with a stable gross profit of 27% and operating income of 11% since then as well. Ross' valuation is also promising; its P/E of 16.7, compared with an industry average of 18, suggests that this already strong company might still be undervalued.
While other retailers lose money by scrambling to imitate Amazon's style, TJX (NYSE:TJX) -- of TJ Maxx fame -- is unapologetically bricks-and-mortar, banking on the idea that eventually, consumers get tired of sitting at their computer, and instead crave the physical experience of shopping.
This belief sounds counterintuitive in the online-shopping age, but it has clearly paid off for TJX. In August, the company reached a record high stock price nearing $47. Like Ross, this company maintains consistently solid annual margins: 7% net profit, 10% operating, and 26% gross. TJX also made $23 billion in revenue last year, up 5% from last year.
While Amazon's annual revenue is double TJX's, the online giant is valued at a head-spinning P/E of 2,766, while TJX clocks in at a much more rational 18.59. Here's another fun fact: While its revenue is much smaller, TJX's net income beats Amazon's by more than $860 million. If bricks-and-mortar is dying, TJX never got the memo.
According to Kohl's (NYSE:KSS), Wednesday was the new Black Friday this year. The company allowed customers to shop online for deals starting on Wednesday. This kind of unconventional thinking has proved profitable for the retail-giant-next-door. Its October same-store sales growth was 3.3%, and while this is down from 4% last year, it's still proof that the company generates enough revenue to stay afloat, and then some. A rational and inexpensive P/E of 11.84 sweetens the deal even further. While e-retailing has obliterated other companies of Kohl's size, this company has managed to stick around by gaining a larger slice of the leftover market share.
Honorable mention: CVS
CVS's (NYSE:CVS) creative strategy for dodging the wrath of Amazon (and the economy, the election, the end of the world, etc.) has been hugely lucrative. In 2007, it acquired pharmacy services provider Caremark Rx. Having a hand in the health-care pot widened CVS's economic moat, and the company not only weathered economic turmoil, but its stock surpassed its pre-recession price. What keeps CVS from being entirely listed along with Ross or TJ Maxx, however, is that the company relies so heavily on its Caremark division that 68% of its revenue is brought in through prescription drugs, while only 15% is general retail. Still, this company has higher revenue and net income than Amazon, and that is worth some applause.
It ain't over til the fat lady ... stops shopping
Amazon may have laid waste to many a retailer, but it has not killed all of them. Just as Cyber Monday and Black Friday coexist, so do the online retailer and its sturdier bricks-and-mortar competitors. If you can choose only one, go with TJX. Its retail business model is sturdy, and its net income beats Amazon's by a mile.
Caroline Bennett has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com. Motley Fool newsletter services recommend Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.