Like many industry observers, we eagerly anticipate the first Thursday of every month when U.S. retailers release monthly same-store sales reports, as they provide a timely indicator of both performance at individual chains and clues about overall spending trends by American consumers. Unfortunately, the decade-long trend of retailers discontinuing monthly reporting continues (see graphic below), and soon it seems we will have only the oft-revised monthly retail report from the Dept. of Commerce and be forced to extrapolate company performance based on overall sector results in between quarterly reports.
Same-store sales, also called comparable store sales (or like-store sales, identical store sales) have long been one of the most relevant measures of healthy growth at retail companies, as it provides an “apples-to-apples” comparison of top-line growth at existing stores (usually open at least 12 months, excluding new & remodeled stores). This enables analysts to differentiate between sales growth that comes from new stores, especially at-fast growing chains that derive much of their growth from increased store counts, from that of improved operations at existing stores.
Retailers are not required to report monthly sales, but it has been a novel aspect of the industry since the 1970′s. Same-store sales are no “silver bullet” for retail industry performance and there has always been noise in monthly comparisons caused by factors including calendar shifts and changes in weather. However, the monthly reports have long provided a unique perspective on company and industry trends, relative and comparative performance, and retail executive commentary and outlooks.
Ten years ago over 100 retailers reported performance on a monthly basis, and as recently as July 2004 there were still 77 chains reporting across a variety of sectors with aggregate monthly revenues of $52.5 billion, representing 65% of GAFO (General Merchandise, Apparel & Accessories, Furniture and Other – Office Supplies, Stationary & Gifts) sales.
Last month, only 27 chains with aggregate July revenues of $30.6 billion reported results, comprising just 31% of GAFO sales for the month. With Hot Topic announcing July would be their last monthly report and BJ’s Wholesale likely to stop reporting when their buyout by private equity is complete, the ranks will be down to just 25.
(click below for expanded graphic)
While some of the contraction can be attributed to bankruptcies (Gottschalks, Bombay Co, Sharper Image) and some due to acquisitions (Goody’s by Stage Stores), the majority of companies made conscious decisions to stop reporting monthly sales. Unfortunately, there is no longer any representation from footwear companies, dollar stores, woman’s apparel companies or home goods retailers, and many important bellwethers such as Home Depot, Lowe’s, Best Buy and Barnes & Noble ceased reporting long ago.
There is basically one main argument put forth as the reason why retailers discontinue reporting sales on a monthly basis: companies want to align how management thinks about the business to the interest of long-term shareholders, removing short-term trading and volatility of share prices. Continue reading ‘Are Monthly Same-Store Sales Losing Their Luster’
