Target and other retailers wonder: Too much information?

  • Article by: JANET MOORE , Star Tribune
  • Updated: October 4, 2012 - 11:09 PM

Seeking what one analyst called "breathing room,'' Target said it will stop reporting monthly same-store sales figures next year.

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Grace Carlson, 6, waited her turn while her mom, Ann, and sister, Claire, 11, shopped for school supplies Thursday at a Target store in Edina. Target reported a 2.1 percent gain in sales last month, propelled by strong demand for groceries and health and beauty items. Analysts expected more.

Photo: Jeff Wheeler, Star Tribune

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For years, the first Thursday of every month gave retailers and industry analysts a peek into the buying behavior of shoppers.

On that day, most publicly traded retailers reported the previous month's sales for stores open at least a year. Called same-store or comparable-store sales, the metric was seen by some as a key indicator of consumer behavior, particularly at peak times such as the Christmas holidays and back to school.

But on Thursday, Minneapolis-based Target Corp. said it would cease reporting monthly sales beginning in fiscal 2013 and instead will report on a quarterly basis. The decision is "consistent with the practice of the vast majority of our retail peers," said John Mulligan, the company's chief financial officer. Those peers include beefy discount rival Wal-Mart Stores Inc., which discontinued monthly reporting in May 2009.

"I don't think it's any kind of mystery," said Clementine Martin Illanes, a retail strategist with the New York consulting firm Kurt Salmon. "I think it's just retailers giving themselves some breathing room, and a bit more flexibility to manage their business the way they want to. Some see same-store sales as an indicator, when in reality sales may be up one month and down another."

In that vein, Thursday's same-store results topped analysts' estimates, but still slowed when compared with the back-to-school frenzy in August.

September sales among 22 retailers rose 3.9 percent in September, as opposed to the 6 percent rise in August, according to the International Council of Shopping Centers (ICSC). But, given the economic and political uncertainty weighing on many Americans, analysts say the results are an encouraging sign for stores as they head into what's traditionally the busiest shopping period of the year in November and December.

Target reported a 2.1 percent gain in sales last month, propelled by strong demand for groceries and health and beauty items. Still, results were slightly below analysts' expectations. The trendy discounter's stock barely budged on the news, closing at $63.65 on Thursday, up 56 cents.

Macy's posted a 2.5 percent increase last month that was below the gain of 3.3 percent analysts polled by Thomson Reuters had expected. Meanwhile, Costco's 5.7 percent gain put it among the merchants that posted results that beat Wall Street estimates.

About 13 percent of the $2.4 trillion U.S. retail industry now reports monthly revenue. The nation's second-biggest department store chain, Macy's, is among them, as well as popular middle-market merchant Kohl's, wholesaler Costco, and specialty retailer Limited Brands, which includes Victoria's Secret and Bath & Body Works stores.

'Longer-term focus'

Target's Mulligan said in a statement that aligning sales guidance and quarterly results "will create a longer-term focus and provide greater understanding of our sales results in the context of our overall performance."

The monthly reporting practice still has some fans. Retail expert Ken Perkins says on his website that same-store sales remain a "key metric for gauging a retailer's underlying health and organic growth." The monthly reports also provide supplemental data regarding the general health of consumer spending, he said.

The monthly reports also offer investors 12 key performance indicators to help with their investment decisions, as opposed to just four quarterly figures, Perkins wrote.

Right now, shoppers are heading into Halloween shopping season when consumers are expected to spend $8 billion on costumes, decorations and candy, according to the National Retail Federation.

Consumer confidence is at a seven-month high as people are feeling better about rising home prices and a rebounding stock market. Still, job growth remains weak and prices for everything from food to gas are higher.

There's a worry that the U.S. economy could fall into another recession next year. That's when tax increases and deep government spending cuts will take effect unless Congress reaches a budget deal.

"If [Congress] can get their act together, it will be good for the consumer's psyche," said Michael P. Niemira, ICSC's chief economist. "If they don't, I think you could see problems. It could affect high-end spenders and the general confidence on the economy."

The Associated Press contributed to this report. Janet Moore • 612-673-7752

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