Same-store sales reports issued by various retail chains and other monthly retail data for June 2010 were, depending on whom you believe, either "further evidence of an economic slowdown", a "mixed bag of reports" or reflect "consumer's continued stinginess" and "even the rich cutting back."
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Another possibility is that these reports mean nothing at all as the data is too unreliable and complex, and too short-term focused to be incorporated into an investment thesis for the group. Perhaps investors should ignore these reports and focus on which stores will be successful in profitably bringing customers into the store over the long term.

Retail Revolt
Some retailers have apparently figured this out as well, and have stopped releasing monthly sales data. These companies include Wal-Mart (NYSE:WMT), which used to provide weekly numbers, and then moved slowly over time from monthly to quarterly.

Macy's (NYSE:M) stopped giving monthly sales reports in early 2008, citing confusion over shifts in the calendar and promotional activity. The company resumed monthly guidance about six months later after the vociferous complaints of investors and analysts. The company reported June 2010 same store sales up by 6.5%. (Find out how to make sense of the retailers in Analyzing Retail Stocks.)

Macro Reports
One report issued monthly is the MasterCard Advisors SpendingPulse, a proprietary report released by Mastercard (NYSE:MA). This report tracks retail and service sales on the company's payment network.

There are some issues with the MasterCard Advisors SpendingPulse report that make it tricky to use. The report is macro focused and provides data on sub-sectors in retail without a specific company break down. These categories include luxury, jewelry, electronics, appliances, footwear and various apparel subsectors including women's, men's and family and children.

The report captures only Mastercard payments at the retailers, and does not have access to other payment networks. Also, cash and check purchases are not covered and are projected using "survey-based estimates."

The June 2010 report had luxury sales down by 3.9% on a year-over-year basis. The definition of luxury, however, excludes jewelry, which had a strong 10.1% increase. So it would seem that the rich are spending, but only selectively. (Retail sales have a lot to do with consumers' outlook on the economy. Find out more in Understanding The Consumer Confidence Index.)

Government Report
Another closely watched report is the Advance Retail Trade and Food Services report released monthly by the U.S. Census Bureau. The latest report covering May 2010 indicated sales down by 1.2% sequentially from April. Like the Mastercard report, this one covers only the macro picture, and doesn't have data by store brand.

Although the report has the word "advance" in the title, and is subject to revisions, investors frequently ignore this part. The government adjusts the Advance Retail Trade and Food Services report the following month when its issues the Monthly Retail Trade and Food Services. There is also an annual revision that the government produces that can change the numbers.

Other Problems
Aside from the short-term nature of the information and the unreliability discussed above, there are other problems with an over reliance on monthly retail sales reports. The reports say nothing about profitability of the companies, and only focuses on the top line. Top-line growth is great, but was that done by cutting prices too much or through other promotions.

There is also no reliable method of measuring the promotional activity of a particular retailer, relative to its own history or to its peers. Sometimes a retailer will admit to it publicly, but most information on excessive promotional activity comes anecdotally based on personal observation of the store base.

The Numbers
For those investors that do crave monthly data, here are the highlights of the reports issued so far to date. All the numbers are for June 2010, measured on a year over year basis.

  • Nordstrom (NYSE:JWN) - Up 14.1%
  • Abercrombie & Fitch (NYSE:ANF) - Up 9%
  • Aeropostale (NYSE:ARO) - Up 8%
  • Buckle (NYSE:BKE) - Down 7.3%
  • Gap Stores (NYSE:GPS) - Flat
  • Kohl's (NYSE:KSS) – Up 5.9%
  • Limited (NYSE:LTD) - Up 6%

Bottom Line
The various reports on monthly retail sales that are available to investors can sometimes provide a confusing and difficult to interpret picture of what's going on in the retail environment. This raises the question of whether too much attention is focused on these snapshots in time.

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