NEW YORK ( TheStreet) -- It's become a mass exodus in the retail sector, as major players discontinue reporting months same-store sales figures. The list of retailers that still report the data has dwindled to just 24, and it is unlikely this trend will slow in the coming months. And it begs the question: which company will be next to shed what has become a somewhat dated practice? Hot Topic ( HOTT) announced last week that starting in the second quarter it will no longer report monthly comparable sales results. The teen retailer is piggybacking off rivals Abercrombie & Fitch ( ANF), American Eagle Outfitters ( AEO) and Aeropostale ( ARO), who have made similar announcements over the past several months. The teen sector, in particular, has been criticized amid the recession for being over-saturated and lax in inventory control. As a result, many of these companies were forced to embark on a price war, resorting to deep discounts and promotions during the back-to-school and holiday seasons. This now puts the focus on Wet Seal ( WTSLA), Zumiez ( ZUMZ) and Buckle ( BKE) as the sole representation of the teen space. >Click here to take our retail sales poll. The trend resembles the move of women's retailers in 2005, when Talbots ( TLB) ignited an evacuation from reporting same-store sales in the sector. New York & Company ( NWY), Chico's ( CHS), Coldwater Creek ( CWTR)and Charming Shoppes ( CHRS) shelved the practice between 2006 and 2009, leaving Cato ( CATO) as the only missy retail still reporting the numbers. While a majority of the department stores still report same-store sales, Macy's ( M) withdrew from the practice in January 2008, only to return less than a year later as its business improved. But it wasn't until Wal-Mart ( WMT) stopped reporting same-store sales in May 2009 that the validity of the data was called into question. It hardly looks like a coincidence that at the same time Wal-Mart announced the end to monthly reports, same-store sales at the discount behemoth were floundering. The No.1 retailer has now reported seven consecutive quarters of declining U.S. sales. While rival Target ( TGT) isn't nearly as beaten down as Wal-Mart, the discounter has had its fair share of lackluster sales, which has ignited rumors that it could be the next chain to stop reporting monthly data.
The absence of Wal-Mart amid monthly sales reports has severely depleted the sample size and diluted the significance of same-store sales as a barometer of the entire retail industry. Currently, comparable sales reports represent barely 10% of total U.S. retail sales, according to Craig Johnson, president at Customer Growth Partners. Retailers are not required to report monthly sales and it often comes as an expense to do so. For apparel retailers, in particular, the practice often adds significant volatility in the stock if a month of inclement weather or calendar shift weighs on results. The two biggest factors contributing to same-store sales upside and downside are price and the number of customers who purchase merchandise. Thus, if prices go up and the number of transactions remains the same, comparable sales will increase, and vice versa. Any time comparable sales rise it means shoppers are either buying more or spending more -- or both, which, of course, is a good sign. But when retailers offer discounts and shoppers close their wallets, as seen during the economic downturn, same-store sales can take a major beating. Retailers have come up with some excuses to shift the blame for declining monthly sales away from internal operations. The two most frequently used (read: overused) are the weather and "calendar shift." A colder summer, a hotter winter, a few wayward storms -- all are used by companies to explain why shoppers stayed away from their stores. In the same way, an extra shopping day in a month or the shift of a holiday earlier or later are also (and with more legitimacy) tied to sales increases or decreases. Another caveat: While same-store sales are a good measure by which to judge a company against its own past performance, they don't present an accurate yard stick for stacking up retailers against each other. There is no official set of standards for how retailers should report comparable sales, since it is done on a voluntary basis. Up until recently, most retailers excluded online sales in their tallies. Those who do add e-commerce in their totals, like Macy's, Kohl's ( KSS) and most recently, Gap ( GPS), present a different picture than those who stick to the traditional definition of stores opened at least a year.
The only standard (mostly) agreed upon is the reporting calendar, which is compiled by the National Retail Federation. But even this schedule is not a hard-and-fast one, as drugstores like Rite Aid ( RAD) and Walgreen ( WAG), and teen retailers like Zumiez and Hot Topic, traditionally report their numbers up to a week before the rest of the pack. Given the diluted nature of monthly same-store sales reports, it's only likely that more retailers will give up the practice in the near future. So who's next? Which retailer do you think will announce it will no longer report monthly sales results? Take our poll to see what TheStreet thinks....
--Written by Jeanine Poggi in New York. >To contact the writer of this article, click here: Jeanine Poggi. >To follow the writer on Twitter, go to http://twitter.com/jpoggi. >To submit a news tip, send an email to: email@example.com.