Myron E. Ullman, the chief executive of J. C. Penney, said that with the housing market in turmoil and gas prices surging, “there is not enough visibility to give something meaningful.”
The analysts who track J. C. Penney and the rest of the retail business can barely contain their frustration with all the lip zipping. “Withholding information is not what investors want,” said Bill Dreher, a longtime retail analyst at Deutsche Bank Securities. “They want clarity.”
A tough economy, Mr. Dreher added, “is a time to be more communicative, not a time to deprive us of guidance or clamp down on information.”
Though they have no legal obligation to do so, most publicly traded retail companies divulge their monthly sales performance and offer an estimate of their annual profits, with the figures becoming guideposts for Wall Street, economists and investors.
The profit forecasts allow stores to set reasonable expectations for investors, and minimize the chances for surprises, which Wall Street tends to dislike.
The monthly sales figures from retailers are especially valuable to economists, because they provide a regular snapshot of consumer finances and confidence. The first Thursday of every month, dozens of chains disclose how much sales rose or fell at stores open at least one year, a figure known as same-store sales. “It’s a barometer of the economy and a benchmark for the industry,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers, a trade group.
But monthly sales have become controversial within retailing. Stores say they encourage employees to make decisions that bolster sales within a given month, even if they may hurt the company over time.
And some retailers argue that frequent quirks in the calendar can skew the numbers from one month to the next, creating a false impression of strong or weak performance.
That is what happened at chains like Macy’s during the 2007 holiday season. Because Thanksgiving occurred a week earlier than normal last year, one week of holiday shopping shifted from December to November. As a result, reported sales surged in November and plunged in December. Macy’s sales, for example, rose 13.4 percent in November 2007, but fell 7.9 percent in December. When the latter figure came out, Macy’s stock fell more than 6 percent in two days.
Despite warnings about the calendar shift, many investors were surprised by the December numbers. Executives at Macy’s found this agonizing — and said it contributed to their decision to stop reporting monthly store sales after January 2008.
“The numbers are increasingly confusing because of the calendar shifts,” said Jim Sluzewski, a spokesman for Macy’s. He added that the monthly numbers encourage “a short-term orientation, which is not the way to run a business.”
But analysts suspect another motivation for Macy’s: weak performance. The department store chain, which has experienced ups and downs since its merger with May Department Stores in 2005, reported sales declined in seven out of the last nine months that it provided such figures.
It was not until Starbucks ran into business problems, in January, that it stopped offering annual profit forecasts and same-store sales for its coffee shops.
With the chain experimenting with a variety of changes, like closing stores and dropping warm breakfast sandwiches, the chief executive, Howard Schultz, said monthly sales “will not be an effective indicator of our performance.”