It started out as the New York Racket, a bargain store at the corner of Main and Morgan in Monroe, about 20 miles southeast of Charlotte. The year was 1888, and though the name likely would be laughed out of focus groups today, it worked well enough then. “Racket” was a common term for the dry-goods trade among merchants in small Southern towns, and William Henry Belk added “New York” to give it panache. But when brother John left his medical practice and joined the business three years later, the store became W.H. Belk and Bro.
The Belks took a different approach to retailing than most other small-town Southern merchants: Sales were strictly in cash, with no haggling over prices, and customers could return goods for a full refund if not satisfied. Their store did well enough that they began investing in others. In 1894, the first one outside Monroe to carry the Belk name opened in Union, S.C. But when envious townspeople gloated over the bankruptcy of a cotton mill in which the Belks had invested, Henry decided to leave Monroe. He returned from a scouting trip to Houston ready to sell everything and move to Texas, but his mother urged him to stay. So he settled on Charlotte, just up the new railroad line, opening his first store there in 1895.
From its base in the Queen City, the retailer grew and prospered through the 20th century into the 21st. Though long one of the state’s largest and best-known companies, Belk Inc. didn’t show up on the annual ranking of top private companies that Business North Carolina has published since 1984. That’s because the survey that produces it is voluntary and the company chose not to participate. And until this year, the Carolinas practice of Grant Thornton LLP — which compiles and vets the list — excluded companies with public debt. Both barriers have fallen, and Belk, now a chain of more than 300 department stories in 16 Southern states, makes its debut at No. 1.
“They basically operate like a private company, anyway,” says Billy Moore, leader of the accounting firm’s Carolinas consumer and industrial products practice. “Public debt is just another way of financing it.” The ranking is based on company revenue in its latest fiscal year. Surveys started going out in late May. “This year, we took another look at the criteria and decided we really wanted to make it simpler,” says Mar Dee Baker, director of marketing for the Carolinas practice.
Belk’s emergence pushed General Parts International Inc., a Raleigh-based auto-parts distributor, from the top spot it has held on the list since 1997. Though Belk sales slipped some from the year before, they were still enough — $3.3 billion, according to regulatory filings — to account for about 10% of the $30.8 billion grossed by all the companies on the list.
Despite the addition of Belk and other newcomers, overall revenue increased just 7% from the year before, suggesting that continuing economic woes were still dragging down sales. Construction, in particular, suffered: Raleigh-based Clancy & Theys Construction Co. was the largest general contractor in the ranking last year but slipped from eighth to 14th, and no company dropped more than Charlotte-based Blythe Development Co., which fell from 49th to 79th. “That has a lot to do with the continued tightness in the credit market for construction and real-estate type projects,” Moore says. “I think as soon as the credit markets free up a little bit, you’ll see that turn around.”
The biggest risk facing most companies — according to 58% of respondents to a Grant Thornton survey of those on the list — is loss of key customers. “There’s a lot of people with excess capacity, and there’s a lot of competition for key customers,” Moore says. “That translates into lower margins that people are experiencing from their sales.” But many see the economy slowly improving, and it’s beginning to show up in the numbers. Things have certainly improved at Belk, still in just its third generation of leadership after more than 120 years in business. In the first half of the current fiscal year, sales were running slightly ahead of last year.
“Most people I work with today are fairly optimistic about where we’re heading,” Moore says. “They’re spending more money. They’re looking at how to continue to invest in their businesses. A year and a half ago, that wasn’t the case. A lot of them had dug in, and they were trying to withstand the downturn in the economy. Now, they’re looking to the future.”