Media Oversold the Retail Story

The number of reports that missed the story in August's retail data disquieted the Maven.
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The Business Press Maven should not have to holler and wave his arms on a street corner concerning coverage of the monthly retail sales numbers, right? Well, after reading a few days of coverage ... clear that corner. I'm likely to hit you in the eye with an errant hand or yell in your ear.

Retail sales should be an easy item to report accurately on to investors. It's a pretty straightforward statistic. August retail sales appeared better than expected, the same way that July sales were a little lighter than expected. All in all? Probably pretty close to a wash. But little of what the business media wrote reflected this. Why?

The calendar was a bit screwy this year, with the enormous states of Texas and Florida starting school later than last year and many tax-free days also being rearranged. We just went through this in July, to explain the lighter-looking number. So when the prettier-than-expected August number comes out, what do we see?

The business media, those little gullibles, get all giggly and schoolgirl-ish.

"

Retail Carries the Day

," screamed

Forbes

in a headline late last week. The article began in similarly overheated fashion: "The big stories Thursday centered on retailers ringing up strong sales in August ..."

Lower down, Forbes mentions something that might not have been factored into the number, saying that this might render it a "false reading," so I felt a little better. But that something had nothing to do with the calendar shift -- the shift we just got done talking about in July.

Wrote Forbes: "Despite the strong retail performance, the market is still concerned that August could be a false reading on the market as the effects of the housing market struggles on consumers may not have factored into the numbers." Nothing about Florida or Texas or the shift in tax-free shopping days that often accompany the back-to-school period.

Same went for the

Financial Times

, which got jiggy with the headline: "Retail sales figures offer some therapy." Notice that the only concern expressed below was about -- uh, money market rates:"Wall Street stocks were moderately higher in afternoon trade yesterday with investors digesting better-than-expected retail sales for August amid concerns over elevated money market rates."

In the kicker, we are told what investors were looking toward for a "broader view," so I felt better. Perhaps investors were going to lump July and August sales into a combined statistic, a good idea. Uh, no. Investors were looking to the monthly employment report, the

Financial Times

told investors, which was true enough in and of itself, but in this context it is hardly the broader view we were looking for.

Business Week

was a fascinating case. In two articles on the same day last week, it reported the number the almost the right way, then later the right way. The difference altered the message of the articles.

At 8:58 a.m., it posted an excited article about how stocks were gaining on the retail sales numbers, which came in at 3.1% vs. an expected 2.6%. The headline: "

Stocks Gain on Retail Sales, Jobless Claims

," introduced the following: "Reports issued Thursday eased fears about consumer spending and the labor market ..." They do make vague reference to a calendar shift, but offer no sense of the scope. Where? In one of the Dakotas, perhaps? That wouldn't be such a big deal.

But by 2:18 p.m.,

Business Week

mentions Texas and Florida specifically, plus other states with the tax-free shift. And, sure enough,

its headline

was way more measured: "Retailers: A Back-to-School Bounce: August sales for chains like Wal-Mart beat expectations, easing fears about consumer spending. But analysts aren't celebrating just yet."

The New York Times

, by contrast, was direct and to-the-point. Its headline: "Retail Sales Rise, but Data May Mask Trouble," gave a clear indication from the start. As did its lead: "Despite dire predictions, the back-to-school shopping season was not a disaster. Or was it?" They mention Florida and Texas and even the influence of discounting, a factor too often ignored by the business media when it comes to groovy-looking top-line figures.

On the subject of

The New York Times

, let's touch briefly on its big Sunday profile of the man who would be Comeback Kid. Michael Dell is trying to remake his namesake, in part by moving into retail business, a big departure. When this move was announced, The Business Press Maven came down like thunder on the business media for not mentioning the fact that

Dell

(DELL) - Get Report

tried to go retail a dozen years ago, it didn't work and Michael said it wasn't their thing. That, of course, does not mean automatic failure here. Not by any means. But

as I noted then, everything the company does in retailing from the start must be set against and measured by its past failure.

When Dell originally announced the move, few media outlets referenced the past failure. The

Times

did so in its large profile. As you read about these initiatives, just remember that this historical test makes what you are reading useful. If you don't see it, do the only responsible thing: crumple it up.

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;

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