IN PICTURES: Eight Ways To Survive A Market Downturn


Gap is a favourite punching bag of stock analysts, due to its evident lack of vision. Same-store sales have been negative for 30 out of the last 38 quarters. How has this translated to the top and bottom lines? It's working on a fifth consecutive year of declining sales while managing to generate almost a billion dollars in net income in fiscal 2009, earning the company the title of "the master of controlling costs."

RadioShack (NYSE:RSH)

One company that comes close to Gap's level of cost controlling is RadioShack. The Dallas-based electronics store's former CEO was forced to resign in 2006 because of a "resume indiscretion," and was then replaced by Julian Day, who openly questioned how the company continued to operate. Hit hard by electronics superstores like Best Buy (NYSE:BBY), RadioShack's top line's dropped for three consecutive years and, in that time, has made exactly $502.6 million on $13.3 billion in revenue. That's a net margin of 3.8%, which ironically compares favorably with Best Buy and other electronics stores.

Lexmark (NYSE:LXK)

The Bottom Line

There are many other examples of companies that are tempting fate and actually making money despite declining sales. It appears as if most businesses can go a couple of years with negative revenue growth before the bottom line erosion begins. If you happen to own a stock with two years of negative sales growth and a third in the works, you have two choices: Either sell and move on or batten down the hatches and prepare for a bumpy ride. (To learn more, see The Bottom Line On Margins.)

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Tickers in this Article: GPS, SBUX, RSH, BBY, LXK

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