Discussion in 'Trading' started by MattF, Feb 13, 2008.
Both regular and "excluding autos."
Guess a lot of gift cards were spent...
you mean everyone is lying to us?
Good thing we own so much freakin retail! ~si
But those gift cards were paid for in December so if it is true, then the fact that it would be gift cards is meaningless.
I believe gift cards are not counted as "sales" when the cards are purchased, but rather when the cards are redeemed.
That seems wierd no? I mean the store got the money already when the gift card was purchased. Whether you use accrual or cash accounting it seems like it should count as a sale at that moment. All that is happening is delivery is occurring at a later date of the product. If this is how they do it, it leads to a distortion of the data it seems.
Only if you purchase an AMEX gift card I would think does the store not get paid until it is actually used. I wonder if the data looks into that.
I understand the company does not match a product sale with the cash inflow until the actual sale is made so maybe that is why they wait to count it until then but they are getting the money upfront. Maybe they delay counting it in revenues and treat is a deferred asset. Can lead to unintended manipulation of the data or misrepresentation without trying to.
I always thought it's weird too. However, if the purchase of the card were rung up as "sales", there wouldn't be a corresponding reduction in inventory.
Maybe they just hold the card sales in a separate account, then charge merchandise bought later with the card against that account... ??
What a joke report. Much of it was due to higher gasoline prices.
"Excluding automobiles and gasoline, purchases were unchanged from a month earlier."
yea i believe gift card sales are recorded as a deferred revenue item, which is a liability (however the cash assets account increases to offset this).
only when it converts into a sale is the liability removed and actual revenue recorded.
Of course what all of this actually means... with gift card purchases on the rise, we'll never know the status of holiday sales.... over which there is always teeth gnashing.
yea it'll now take 3 months to get proper holiday sale figures.
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