The right capital structure for bricks and mortar retail?

Lex recently wrote about the hurly-burly around PetSmart, the pet supply chain. An activist or two is keen for the company to sell, and have also made noises about things like returning capital to shareholders. Looking at the numbers, private equity ownership or a big one-time payout don’t look like silly ideas. This is a very stable business that generates a good amount of cash, and it currently has no debt on it.

The last point got me thinking, and I ran a company screen on S&P Capital IQ of big retail companies that carry no debt, and a long list came back: H&M; Costco; TJX; The Gap; Ross Stores; Whole Foods; Advance Auto Parts; Bed Bath and Beyond; Best Buy; Williams-Sonoma; Foot Locker; Game Stop; Urban Outfitters. Many more as well.

Unscientifically, it struck me that there was an unusual number of companies in this industry with no debt in the capital structure – despite the presence on that list of a number of quite steady, cashy enterprises. I’m wondering if experienced retail leaders are, as a group, nervous about debt, and whether this is rational or not.

Any thoughts?