NEW YORK (TheStreet) -- From 1896 to 1930, there were more than 1,800 makers of passenger motor vehicles in the United States.
Now it is down to "The Big Three" of Chrysler, Ford (F), and General Motors (GM), with niche players like Telsa Motors (TSLA). Poor management, adverse technological changes, competition from abroad and debilitating economic conditions all played roles in reducing the number of companies making passenger cars and trucks in the U.S.
The same factors could narrow down department stores so that Wal-Mart (WMT - Get Report), Target (TGT) and Costco (COST - Get Report) remain as the "The Big Three" with others struggling to carve out and protect dwindling market shares.
There is certainly no shortage of retailers in the U.S., but some famous names look like they may not survive. J.C. Penney (JCP), Sears Holdings (SHLD), Dillard's (DDS) and Bon-Ton Stores (BONT) all have negative sales growth on a quarterly basis and for the last five years. The Great Recession certainly contributed to declining sales growth, but there should be positive growth by now. The continuing negative growth for these companies is very bearish.
By contrast, sales growth has increased for Wal-Mart, Costco, and Target on a quarterly basis and for the past half decade.
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What makes the future of retailers such as J.C. Penney and Sears even more precarious is their debt, which must be serviced with cash generated by declining sales.
The debt-to-equity ratio for Bon-Ton Stores is more than 18. That means that it required more than $18 of borrowing to produce every dollar of shareholder equity. J.C. Penney has a debt-to-equity ratio of 2.5. For Sears Holdings, it is 0.9. Dillard's has a more modest debt-to-equity ratio of 0.41. By contrast, the debt-to-equity ratio for Costco is 0.46.
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