Questioning Quarterly Quotes
March 10, 2008-- Home Textiles Today,
I think there are two ways of looking at the recent announcement by Macy's Inc. that it will no longer report monthly sales.
Version 1: Macy's must be expecting a lot of bad months ahead and it wants to avoid the heat.
Version 2: Take Macy's at its word: It wants to focus Wall Street on longer-term objectives, and monthly reports get in the way of that.
While I don't discount Version 1, it should be noted that Macy's continued to post monthly numbers through years of dismal performance. Further, lousy monthlies beget lousy quarterlies, which no public company can forego revealing.
Likely, both are true. But as the Wall Street Journal noted of the Macy's decision, over the past year or so 12 other retail organizations have opted out of monthly reporting. Macy's makes it a baker's dozen.
For the record, the others are: Sears Holdings, Home Depot, Dollar General, Joseph A. Bank, CVS, Jo-Ann Stores, Pier 1, Claire's, Dress Barn, New & Co., Guess and Gymboree.
Other retailers no longer reporting monthly also include the now privately held Mervyn's and Linens 'n Things. Count publicly traded Bed Bath & Beyond among those that don't report monthly. I'm not sure it ever did.
Monthly reports give us all a nice peek behind the curtain at comp-store trends, but they tend not to provide much detail. ("Housewares outperformed the stores, while men's and children's underperformed.") And, as the Journal noted, monthlies fail to capture online sales, a growing sales channel for all major retailers.
As someone who's covered retail for 15 years now, I love monthlies. I also believe Wall Street's shareholder requirements force retailers to hew too often toward producing short-term results at the expense of long-term strategic planning and execution.
The savvy public company — in retail or any other profession — needs to satisfy both, of course.
All industries are buffeted by wider trends over which they have no control. If you're Home Depot it's the housing market. If you're General Dynamics it's how hot or cold any of the world's armed conflicts might be going in a given year.
With equity funds still on the hunt for acquisitions, I think we can expect a few more retailers to slip behind the curtain in the next couple of years.