NEW YORK (AdAge.com) -- Walmart, the nation's largest retailer, will cease reporting monthly sales, giving analysts and Wall Street less insight into consumer behavior in the teeth of a nasty recession.
The retailer made the announcement as it reported a 5% increase in April same-store sales. Going forward, Walmart said it will only report quarterly same-store sales. Same-store sales, a comparison of year-over-year sales at stores open at least a year, have long been considered a key measure by which analysts and Wall Street determine a retailer's health. And given that the move comes in the midst of a recession, analysts say the lack of information will make it that much more difficult to discern what consumers are doing and buying.
Walmart is "a bellwether," said Patricia Edwards, retail analyst and founder of Storehouse Partners. "As a retail analyst, it's causing me a little bit of heartburn. They're the first set of retail numbers I pull up every month. They are the most important. To find out we're not going to have that level of detail on a monthly basis is hard."
Eliminating short-term volatility
Walmart argues that by reporting on a quarterly basis, it will be able to eliminate short-term volatility. Given that the retailer has consistently reported same-store sales gains throughout the recession, Ms. Edwards said it has the "political capital" to make that decision.
"Walmart was built on a foundation that manages for long-term success," said Tom Schoewe, exec VP-chief financial officer, Walmart Stores. "This decision aligns investors with the long-term view we take to build shareholder value. We feel this also will reduce the intra-period volatility related to events such as calendar shifts."
Retailers across categories have embraced similar arguments and pushed back on the metric in recent years. According to TNS Retail Forward, 34 companies now report monthly same-store sales, down from 87 five years ago.
"This is a long-term trend that has been steady, with perhaps six to 12 companies dropping monthly reporting each year for various reasons," said Frank Badillo, senior economist at TNS Retail Forward. "The trend is likely to continue and it may or may not be accelerated by Walmart's decision to stop reporting monthly results. ... The decision can depend, to a great extent, on pushback from investors and the markets."
Indeed, in February 2008 Macy's announced it would stop reporting monthly sales, which some say fueled concerns about the retailer's viability. Macy's subsequently returned to reporting monthly sales later that year. While some analysts indicated that the timing of Walmart's decision was likely coincidental, perhaps related to management changes, others took a more doubtful view.
"My cynical response is that they are facing tougher comparisons as they move ahead, and that's a typical response of any company. When news gets more negative, stop the news," said Michael Niemira, chief economist at the International Council of Shopping Centers. "It's a bad message for Walmart to send, especially in these times. ... And it's a bad message for the economy as a whole."