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Maven: Holes in Gap Coverage

Same-store sales numbers without color on the margins is threadbare.
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You know that children's song, "

Little Bunny Foo-Foo

," about the rabbit committing genocide on a population of field mice? The Business Press Maven sings it to his three children every night and it always gets him thinking, "If

I

could go around boppin' something on the head with the heedless energy of a sociopath, just what would it be?"

The answer usually comes as one of the small Mavens is shouting at me that I forgot to turn off the light: I would bop the concept, so prevalent in the business media and seen all around us today in writing about

Gap

(GPS) - Get Gap, Inc. Report

, that revenue numbers are all that matters in retailing.

Each month, we see same-store sales numbers reported without any context or texture. Was discounting involved? If it was, profits -- the only thing that matters -- won't be nearly as good as sales, a top-line (read: ultimately worthless) number. In fairness, growth of top-line numbers can be a good indication of the

possibility

of bottom-line growth. So if same-store numbers look off-the-charts good, is the company giving any further guidance to the quarter's numbers? If so, great. If not, why not?

But we got little to none of this when

Gap reported same-store sales numbers that appeared to knock the cover off the ball. Why do the business media selectively inform investors?

The media can't seem to outrun their demons. Each holiday shopping season (as I have

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railed and wailed against) they literally send reporters to malls to appraise the size of the crowds, the length of the lines and the frequency of fistfights in those lines in order to declare the all-important retail season a success (long lines, lots of fights) or not (fewer lines, tamer crowds).

During this sales season and each month when same-store sales are stuffed down our collective gullet, we are given next to no impression of how much a role price cuts played. Business journalist dudes, a word of advice: Put down the nursery school rhymes one weekend and run a lemonade stand with your little ones. It doesn't matter how much you sell if you are only selling because you are cutting prices and the discounts are eating up your profits. If you are losing money, you can't make it up on volume.

Let me walk you through the field, looking at what we were fed on Gap. I promise not to bop you on the head.

Reuters

led off the nonsense Thursday morning with a headline that nearly made The Business Press Maven have a seizure.

"

Gap March same-store sales rise 16 percent

," the headline declared. Mind you, Wall Street had expected Gap's same-store sales to come in as being

down

1%. It has been many moons since Gap exceeded expectations in anything, and this was such a conspicuous beating of an expectation that -- well, I'm sure I wasn't the only one with tremors.

There was some justice at play, too, for those like The Business Press Maven, who think that CEOs are overpaid and

overpraised. Since the firing of Paul Pressler in January, the company has had no permanent CEO. Will a CEO-less company become the next rage?

Not so fast. A correction soon followed: Gap same-store sales were actually up only

6%

, and guess what? The Business Press Maven hardly has a qualm with such a mistake. Journalism, like any profession, is a human enterprise and minor mistakes of detail happen.

It was the errors of thought, or thin thought or even the lack of thought that got my goat and bopped it on the head.

Reuters

said nothing about what role discounting might have played. Nor did it deign to mention whether Gap was offering new guidance on its quarterly numbers. The usual convoy of business media outlets started weighing in and, again, had nothing much to offer.

Forbes

credited warm weather

(don't get me going on

the business media, retailing and weather) and the Easter Bunny (hey, a rabbit -- be careful!) coming early for a good shopping season. Though it does mention Gap, it includes none of the details that mean anything.

To the

Associated Press'

way of thinking,

the important details

had to do with the fact that this was the first same-store sales gain since January 2006. Oh, and the stock rose 2 cents.

I could go on. And on.

You might say, "Maven, when you mention a shorter article from one of the wire services, how much fill-out do you expect them to give?"

Well, it doesn't take much. The

Associated Press

, for example, had the space, time and inclination to give perspective on the last same-store-sales increase. And look, by way of comparison, at

the story

from Dow Jones'

MarketWatch

.

In only a paragraph at 8:17 a.m. on Thursday, just four minutes after

Reuters

gave me tremors with that 16% oopsie, Dow Jones'

MarketWatch

included an essential sentence. After mentioning that Gap said the timing of the Easter holiday helped, the article took care to note that management also added, "spring clearance at Gap and Banana Republic stores also helped, although this resulted in merchandise margins below last spring's levels."

This excellent paragraph was written by Michael Baron. Be careful out there, Michael. Because you actually mentioned margins in retailing, some in business journalism might want to bop you on the head.

And before I put myself out of your misery, one last thing. A lot of your have

written

The Business Press Maven in the past year, asking how he could be so bearish on housing yet so bullish on the economy, at least from a stock-picker's perspective. I've answered that because housing is something the entire media understand, it is too often framed -- actively and passively -- as the be-all and end-all of the economy. But at this point it doesn't hold a candle to capital expenditures by business. Anyhow,

The Wall Street Journal

essentially does a good job of

saying the same thing

this morning.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;

click here

to send him an email.