When a retailer blames weather for its weakness, and the business media reports it without a raised eyebrow -- well, let's just say the storm cloud in my soul darkens a shade.
But there are always silver linings, and on Thursday we were granted the perfect opportunity to perform some rough justice on this nonsense. In a daring display of common sense, the Business Press Maven is going to use basic statistics to disprove a ridiculous claim made by a national retailer that was dutifully transcribed for public consumption by the business media.
Early Thursday morning, Bentonville, Ark.-based
claimed that the weather made them report disappointing January same-store sales and that excuse was passed along by the dutiful stenographers working at
and other places.
I'll submit this
effort for your initial disapproval:
"Starting at the top, Wal-Mart Stores Inc. said that unfavorable weather led to a January same-store sales increase, excluding fuel sales, of just 0.5% from a year earlier. That compares with an average estimate of analysts polled by Thomson Financial of same-store sales -- those at locations open at least a year -- rising 2%."
Here's what The Business Press Maven wants to ask: What catastrophic event hit Bentonville, Ark., where this esteemed regional retailer operates? Uh, wait a minute. You mean to tell me that Wal-Mart is not a regional operator? That they are the very definition of a national chain?
Well then, since we are comparing sales of a national chain from this January to last January, rather than accept the half-baked excuses the business media passes along, let us, savvy investors, go an extra step and play weatherman.
With apologies to Bob Dylan, you do need one to find out which way the wind is blowing, but it's easy enough, especially if you are divining the same-store sales temperature.
The National Oceanic and Atmospheric Administration is a federal agency that compiles world weather data on land and ocean surfaces, and you can use that data to compare months. And let me tell you, the national weather overview of the United States, which is Wal-Mart's major "region," shows some interesting stuff in January.
The average temperature of January 2008 was 30.5 degrees Fahrenheit, 1.3 degrees cooler than the average temperature in 2007. Was that cold enough to keep shoppers inside or cold enough to spur people to go buy a new jacket? Part of the problem with using weather as a cause/effect in retailing is that it can be easily interpreted different ways.
There are, of course, isolated circumstances when weather might be a factor in a retailer's performance. If, say, a retailer was very regional and over one week in January in that particular region there was a blizzard that enameled all the malls in snow and ice brought business to a near standstill, well, I could swallow the excuse. A week of biblical flooding some spring in the backyard of another regional retailer? Well, sure. In these isolated circumstances, I can accept weather as something more than a sly formulation to deflect blame and attention.
But this brings me back to Wal-Mart's misdirection. Weather in the Midwest, South and Southeast, where Wal-Mart is exceptionally strong and where
specifically said the company's sales were effected, had what NOAA described as "near-normal" temperatures.
Now of course, the Business Press Maven is more apt to believe that if weather has an impact on the behavior of shoppers, it is less in temperature than precipitation (see those floods and weeklong flurries). Well, both January 2008 and January 2007 were, overall, near average in terms of precipitation.
Listen, retailers have a long record of blaming all manner of weather for any type of underperformance. But since the business media doesn't bother to do it, take it from me, the loyal manservant of the savvy investor, that before you succumb to this manipulation and deceit, check the weather claims against this reliable little thing I like to call
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
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