Will H&M perform better after ending monthly sales reports?

Discussion
Photo: RetailWire
Jul 18, 2017

H&M announced yesterday that it would no longer issue monthly sales reports after reporting that its revenues increased seven percent in June. The Swedish apparel retailer, which had not been reporting same-store numbers, also promised greater transparency into its strategic initiatives and business results going forward.

It’s not unusual for publicly traded retailers to stop releasing monthly sales reports. Walmart ended the practice in 2009 and J.C. Penney did so in 2014. Home Depot, Kohl’s, Macy’s, Nordstrom, Target and TJX Cos, haven’t reported monthly figures for years. H&M’s rationale for ending the practice is that monthly updates do not provide an accurate picture of where the business is headed. Instead, like others before it, H&M’s leadership maintains that quarterly and/or seasonal reports offer investors more accurate insights into its performance.

While H&M’s decision is unlikely to make or break its relationship with investors, not everyone is thrilled with the decision. An unnamed fund manager told Reuters, “Monthly data was not a problem when the company performed well. Why should it be now?”

H&M has steadily increased its store count in recent years even as its stock price has faltered. MarketWatch reports that the company had 4,517 stores in operation at the end of June, up from 4,095 at the same time last year. Earlier this year, the retailer announced it was looking to slow its global store count growth from 10 percent to 15 percent annually and focus instead on growing sales in individual markets, including online, by similar percentages. H&M’s share price has fallen 18 percent over the past year.

The company, which has been criticized for a lack of transparency into its strategic objectives and performance in the past, announced that it would begin to hold “capital market days” where it would be more forthcoming about its goals and results. Last month, Reuters reports, CEO Karl-Johan Perrson took part in a quarterly earnings conference call about H&M’s results for the first time.

H&M plans to reports it third quarter results on Sept. 15 and its fourth quarter numbers on Dec. 15.

DISCUSSION QUESTIONS: Do you approve of H&M’s decision to end monthly sales reports? Will the company’s capital market days and participation of the CEO in quarterly earnings calls provide the information investors need to make decisions about their holdings in H&M?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"It lets a company spend time talking about where it wants to go, rather than focusing on why this month wasn't comparable to the same month a year ago"
"If there is one single thing that hurts the sustainability of business today it is short-term thinking."
"If the management of H&M was making decisions based on being able to present more appealing month-to-month data, then ending the practice is good."

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6 Comments on "Will H&M perform better after ending monthly sales reports?"


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Mark Ryski
BrainTrust

While outside stakeholders and interested parties frequently and understandably desire more data, H&M’s decision to end monthly reporting is reasonable. Just as other retailers discovered, month-to-month variations do not necessarily provide the most accurate view of performance. Participation in capital market days and quarterly earnings calls should provide the investment community with the information they need, just as is the case with publicly traded retailers.

Dick Seesel
BrainTrust

I agree that there used to be too much focus on monthly comp sales numbers, given changes in the promotional calendar, holiday shifts from one year to the next and weather deviations. So I understand H&M’s desire to report quarterly sales as a more accurate measure of its business trend.

On the other hand, it’s hard to conclude that the retailers who switched from monthly to quarterly reporting a while ago saw any benefit to their sales trend (in some cases it has been just the opposite). If anything, the change has put even more of a spotlight on quarterly earnings rather than the long-term strategic view for many of these companies.

Gene Detroyer
BrainTrust

If there is one single thing that hurts the sustainability of business today it is short-term thinking. It leads to poor decision making and mortgaging the future for the satisfaction of Wall Street. Month-to-month variances and even quarter-to-quarter variances are such that, especially in retail, this type of reporting makes little sense.

Will H&M perform better after ending monthly sales reports? That depends who is defining “perform.”

Larry Negrich
Guest

If the management of H&M was making decisions based on being able to present more appealing month-to-month data, then ending the practice was a good idea. Decisions to make the business look better in the short-term are often destructive to the long-term health and direction of a retailer. There is always pressure to make each subsequent period appear better and that is more difficult when the period is shorter. Quarterly sales reporting is sufficient and even that causes some rather unwise decisions to be made in order to make the quarter look better.

Nikki Baird
BrainTrust
Nikki Baird
VP of Strategy, Aptos
4 years 10 months ago

Yes, yes, 100 percent yes. When you have to spend more time explaining why this June’s numbers are different because this date was a Saturday last year and there was that big festival that happened across a bunch of markets last year that fell in July this year and on and on — when you have to spend more time doing that than actually reporting your results — you need to shift to quarterly reporting.

I agree, however, that it doesn’t solve the problem of short-term thinking. But it does at least let the company spend more time talking about where it wants to go, rather than focusing on why this month wasn’t really comparable to the same month a year ago.

Craig Sundstrom
Guest

By itself, the decision doesn’t mean much, since it can be either for good reasons (trying to emphasize more important long-run trends) or not so good (hide flailing performance). I think they were wise to do it on an “up” month — though that evidently didn’t stop (all) complaints — but it should be part of a comprehensive evaluation of practices and announced well in advance.

wpDiscuz
Braintrust
"It lets a company spend time talking about where it wants to go, rather than focusing on why this month wasn't comparable to the same month a year ago"
"If there is one single thing that hurts the sustainability of business today it is short-term thinking."
"If the management of H&M was making decisions based on being able to present more appealing month-to-month data, then ending the practice is good."

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