Monthly sales don’t make sense

Now that the world’s largest retailer no longer provides monthly sales or guidance updates, you have to wonder how much longer Target will continue a practice that tends to focus investors on short-term performance. This is probably truer at Target than some other companies, since it tends to provides more considerable detail than most when it comes to monthly results.

The company typically comments on sales by category and region of the country, noting where results were strongest and weakest and factors that influenced the performance. Even before Wal-Mart decided last week to suspend the release of monthly sales, the level of detail it provided never came close to Target.

The move by Wal-Mart followed action earlier this year when the company suspended the practice of providing monthly same-store sales guidance. The company’s CFO, Tom Schoewe, said Wal-Mart was built on a foundation that manages for long-term success and, “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. Reporting sales quarterly also places us in line with most other large retailers.” He makes a good point, as intra-period volatility was in evidence last week as Target reported results that were affected by the Easter shift. Sales last month benefitted from the inclusion of Easter since they were compared to prior year results that didn’t include beneficial impact of the holiday since it fell in March last year.