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How's business? More retailers say wait until the quarter

Fred O'Connor | March 8, 2011
In an effort to get investors to focus on long-term results, retailers are no longer issuing 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."


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