One trend where Target is late

For a company so often on the leading edge of offering its shopper affordable fashions in the apparel and home categories, there is one area where Target has been slow to keep pace with the prevailing trend.

The trend in question is the move by a growing number of retailers to discontinue the practice of disclosing monthly sales. The issue came in to focus again this month when three fairly trendy retailers -- Abercrombie & Fitch, Aeropostale and American Eagle Outfitters -- stopped reporting monthly. It was an even bigger deal two years ago when Walmart stopped its monthly reports.

Today, there are fewer than 30 retailers who report monthly, and, with the exception of warehouse club chains Costco and BJ’s, their ranks are dominated by department stores and apparel retailers. It would have been easy enough for Target to follow Walmart’s lead and discontinue monthly reporting, but the company has maintained the practice and its monthly disclosures remain content rich. For example, the company elaborates on the same-store sales performance by product category and also offers insight into geographical performance, indicating which regions of the country performed better or worse than the overall average.

The reasons why companies stopped reporting monthly vary, but generally the rationale has something to do with a desire to focusing shareholders on the long-term performance of the company. A three-month quarterly period offers a more accurate reflection of the performance of the business as there can be considerable volatility from month to month.

A good example of this phenomenon can be seen this month. Target is forecasting its same-store sales will decline in the mid-to-upper single-digit range in March because Easter arrives late on April 24. Consequently, sales related to the holiday will occur in April whereas last year Easter fell on April 4 and a large percentage of sales related to the holiday occurred in March 2009 making for a challenging comparison this March.

Conversely, this year’s April comps are forecast in the mid teens as the company faces an easy comparison against the prior year’s Easter free April.

The net effect is a wash, as the blended same-store sales performance for both months is a low single-digit increase.


Login or Register to post a comment.