How’s Business? More Retailers Say Wait Until the Quarter

In an effort to get investors to focus on long-term results, retailers are no longer issuing monthly sales figures

Among analysts and investors, debate has been growing about a retailer-reporting trend to stop publicizing monthly sales, and instead to offer results only quarterly. It's a trend some retailing experts see as robbing them of an important barometer in determining a business' fiscal well-being.

Monthly reporting of same-store retail sales "gives you a look into the health of a business," says Rob Samuels, managing director and senior retail equity analyst at Phoenix Partners Group, who is now in the process of analyzing the February monthly reports of some stores, and the fiscal 2011 fourth-quarter sales results of those that don't provide the monthly numbers.

Incidentally, quarterly and monthly sales figures both are generally strong -- indicating that recession-weary U.S. consumers are opening their wallets and shopping. Target, for example, saw a 2.4 percent increase in fourth quarter comparable-store sales, and for February, it reported a monthly rise of 1.8 percent. At Macy's, February same-store sales increased 5.8 percent, while the quarterly rise was 4.3 percent. "What we're seeing in shopper data is that consumers are looking to spend," said Doug Hermanson, an economist with research firm Kantar Retail. "For the most part, the sentiment to their financial situation has improved. We think it will support continued momentum in the retail market."

But the trend toward less-frequent sales reporting remains a subject of concern among those who follow retailing, and that's been the case since 2006, according to Kantar. Five years ago, the firm compiled the monthly sales reported by 37 retailers. This year, only 28 stores can be tracked on the basis of monthly reports.

Just recently, Abercrombie & Fitch, Aeropostale and American Eagle Outfitters (AEO) were the latest to stop publicly releasing monthly sales figures, with each chain ending the practice last month. They join an already lengthy list that includes Home Depot, Sears Holdings, and Wal-Mart Stores, as well American Apparel, Ann Taylor Stores, Pacific Sunwear and CVS/Caremark.

Few of the companies have much to say about the reasons for reporting sales less often -- or even for maintaining monthly reports, if they do.

"This shift enables AEO to align its reporting schedule with the company's long-term strategic focus, as well as provide substantive information that reflects meaningful trends and performance metrics to investors and analysts," Jani Strand, the company's vice president of corporate communications and public relations, said in an e-mail. Strand did not reply to questions asking how significant a role the retailer's CFO, Joan Holstein Hilson, played in its decision to end disclosing monthly sales figures.

Target, which does issue monthly data, says through a spokeswoman that it hasn't "announced any intent to change our practice of releasing monthly sales." She declined further comment. American Apparel and Wal-Mart did not return e-mails seeking comment, and the Gap, which releases some monthly store sales data, declined to comment, or grant an interview with CFO Sabrina Simmons.

Since 2008, the recession may have also swayed some retailers into reviewing the effect of offering monthly sales details, Kantar's Hermanson says. "I think economic volatility put pressure on retailers to look at it," he suggests.

Wal-Mart's decision to stop issuing monthly sales information may support this belief. The chain, which stopped reporting the data in May 2009, recently posted its seventh consecutive quarterly decline in monthly sales at its U.S. stores.

Analysts, most of whom like to have the monthly numbers to study, concur that emphasizing long-term goals motivates retailers to stop offering monthly sales data. (In a way, it is noted, the explanations of stores mirror the reasoning some companies offer to explain backing away from the quarterly earnings guidance -- now less-commonly offered by CFOs to the analyst community.) But the opinions of retailing analysts vary about how much insight monthly figures offer, and whether stores are right to shun doing the 12 reports a year, in favor of only four.

"It's an effort to try to focus investors on longer term trends," said Erika Maschmeyer, senior research analyst at financial services firm Baird. "There can be volatility in monthly comps. I think there is a view that it can create some volatility in the stock as well because there is the risk of looking at short-term trends." Indeed, he says he himself is "generally indifferent" to monthly sales figures, and he calls the trend at some non-reporting companies "a positive move" since it shifts the "focus on the longer term."

In addition, Maschmeyer notes, investors and analysts can access quarterly sales data during earnings reports. Quarterly figures, while "still a short amount of time," do adjust for monthly fluctuations and offer a complete set of results with a conference call to give additional context, Maschmeyer said. 

Kantar's Hermanson sees more value in monthly numbers. "I see the retailer's perspective that they don't want swings in judgment. I can see how they want investors to focus on long-term plans," he says. "But I still think there are tidbits in monthly data that let you see things sooner rather waiting for quarterly numbers to come out."

But if companies think that eliminating the monthly reports may "eliminate some volatility," Samuels believes that approach may have the very opposite effect. "Initially, I think you may get more because you are adding uncertainty," he explains.

Helping decrease that uncertainty actually prompted Macy's to return to publicly issuing same-store sales data, after stopping the practice at the start of 2008's fiscal year. "We really do believe that monthly sales encourage short-term evaluation," says Jim Sluzewski, senior vice president, corporate communications & external affairs. "Monthly sales are often misunderstood." After the "bottom dropped out of the economy," he adds, Macy's in October started providing the data again "to give investors clarity into the business given the huge macroeconomic shift." Macy's didn't reply to a request for information about the role of the company's CFO in its decision to stop, and then to resume, providing monthly sales information.

Although Macy's may have returned to the practice, Kantar's Hermanson doubts whether an improved economy will get other companies to follow suit -- unless the largest retailers making the first move.

"It's possible, but it might take Wal-Mart to get back into the game and pulling other competitors into it," he says. "The more retailers that stop reporting, the less other retailers feel pressure to report."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags AeropostaleMacy'sPhoenix Partners GroupKantar RetailAmerican Eagle OutfittersInvestor relationsreportingbusiness managementAbercrombie & FitchTarget

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Fred O'Connor

IDG News Service
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?