Based on the calendar, spring is in the air. However, that's not the case in all parts of the U.S. This winter has been so brutal that some people still haven't escaped it. When they look in their backyards, snow still hides their lawns.
The shellacking that winter put on consumers this past winter significantly affected many retailers. If consumers couldn't leave their homes, then they wouldn't be shopping as much. At least that's the case for consumers who still prefer the brick-and-mortar style of shopping.
Brick-and-mortar is still the preferred shopping method for most U.S. consumers. In 2013, overall retail sales increased 4.2% to approximately $5.1 trillion. Online sales only contributed $450 billion to this amount, representing a 10.3% jump, however, over 2012.
Online sales are growing rapidly, and Amazon.com (NASDAQ:AMZN) is the biggest beneficiary of this trend. At the same time, brick-and-mortar still rules the roost. At least for a little while longer. Whether it's brick-and-mortar or online, the following retailers are clearly doing something right: They've made the list for Retail Info Systems News' Top 5 Retailers of Q4 2013.
The big winner
The biggest winner might surprise you -- but don't get too excited. That big winner was Office Depot (NASDAQ:ODP), which saw fourth-quarter sales increase 32.8% year over year. However, keep in mind that it merged with OfficeMax, which contributed $939 million to the company's $3.5 billion in quarterly sales.
While the merger strengthens Office Depot and makes a turnaround a greater possibility, this is still a high-risk investment. Foolish investors prefer to go with proven winners.
Office Depot still generated negative operational cash flow of $107 million over the past year, and its current profit margin of negative 0.2% doesn't generate excitement. The one positive is that Office Depot is only trading at 12 times forward earnings. Therefore, if it surprises in the future, then you could see a gap up in the stock price.
The real big winner
Amazon, the second-place finisher with a 20% year-over-year sales gain, is a much different animal. Amazon didn't need a merger to deliver this kind of growth, making it the true winner. Amazon has also generated positive operational cash flow of approximately $5.5 billion over the past year, which opens many doors for future initiatives and increased revenue streams.
Amazon sports a profit margin of just 0.4%, but that's an improvement over last quarter, and the $20 price increase for Amazon Prime should aid the bottom line. As Amazon settles investors' nerves on the bottom line, it's still trading at 88 times forward earnings. That sounds scary. But if you ignore valuation, Amazon is simply a machine -- the online version of what Wal-Mart used to be on the ground -- steamrolling its competition.
Hit the deck
Deckers Outdoor (NYSE:DECK) is next on the list, enjoying a 19.2% increase in fourth-quarter sales year over year. It's somewhat amazing, and definitely impressive, that Deckers Outdoor managed to grow almost as fast as Amazon for the quarter.
The strength of its Ugg brand has played a big role. Deckers Outdoor also attributes its success to a strong focus on brands, distribution platforms, and infrastructure. Looking ahead, Deckers Outdoor aims to expand its omnichannel platform and its direct-to-consumer footprint.
Deckers Outdoor has generated approximately $403.9 million in operational cash flow over the past year. It's also only trading at 16 times forward earnings. Its top line has grown 114.4% over the past five years. This is a company that Foolish investors might want to dig deeper into.
O'Reilly Automotive has seen 21 consecutive quarters of comps sales growth. The company recently opened its 25th distribution center. This DC is located in central Florida, which will help O'Reilly Automotive support its growing presence throughout the state. Looking ahead, O'Reilly Automotive expects fiscal-year 2014 comps growth of 3%-5%.
O'Reilly Automotive is trading at just 19 times forward earnings, and it has grown its top line at a 62.41% clip over the past five years. Additionally, it has generated $908.03 million in operational cash flow over the past year and sports a healthy debt-to-equity ratio of 0.71.
Ralph Lauren has generated $881.9 million in operational cash flow over the past year. It's trading at just 18 times forward earnings. It has also grown its top line at a 44% clip over the past five years. This isn't quite as impressive as Deckers Outdoor, O'Reilly Automotive, or Amazon (273.8%), but it's still noteworthy considering the challenging consumer environment. Ralph Lauren also offers a dividend yield of 1.1%.
The Foolish takeaway
Office Depot might be capable of a turnaround after the merger, but it's still a high-risk investment. The other companies on this list are more in line with what Foolish investors want in their portfolio. If you ignore valuation, then Amazon is the most impressive. However, it's worth digging deeper into all of these retailers to find out which one is best for you.
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Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.