Iy you were only using this retail number what does this all mean in trading terms? Short stocks, Long stocks and why? Im not an economist just curious what the number reaveals?
What will ultimately happen: 1. Weak holiday sales will be disregarded as due to "gift card purchases" 2. When the gift cards are redeemed, they will be mixed in with current sales... and the Gummint will say, "don't worry, be happy... retail sales are doing just fine".
Posted 12/23/2003 3:29 AM Advertisement RELATED STORIES Retail industry Happy holidays elude Wal-Mart, retailers More shoppers proceed to checkout online Retailers eager for gift-card proceeds By Lorrie Grant, USA TODAY Retailers â like consumers â are hooked on gift cards, despite their potential to mess up earnings. Perhaps no retailer knows that better than Wal-Mart (WMT), where heavy demand for holiday gift cards is slamming December sales, currently hovering at the low end of its 3% to 5% growth forecast. The problem: Strong gains in gift-card sales can threaten the bottom line if consumers delay redeeming them. That's because gift-card purchases can't immediately be counted as sales. The purchase is logged as a liability until the card is swapped for merchandise. So, to benefit the 2003 sales year, most retailers are depending on millions of holiday gift-card recipients to spend by the time their fiscal year ends Jan. 31. Still, retailers say that gift cards foster customer loyalty, help win new customers and often coax consumers into spending more than the value on the card. They are so popular this holiday shopping season that sales are expected to hit $17.2 billion, or 8% of all sales, according to the National Retail Federation. "There is only a 5% incidence where someone doesn't redeem a gift card within the first 30 days of receiving it, and that gap has been closing over the years," says Mike Brewer of Stored Value Systems, which processes gift-card transactions. Still, retailers that wrap up the year in December have a greater urgency for gift-card redemption. Major retailers closing books in December: Gift cards cannot be immediately counted as sales according to this article. Remember Google is your friend.
Yeah I did not say gnome was wrong, just that it did not make sense to count gift cards that way. That is why I did not google it. . It does make sense as someone mentioned how you need inventory to match it off against for clean accounting but it certainly will distort sales figures for many X-mas' to come.
Lol that is screwed up accounting. A gift card sale is a sale, who cares if its been redeemed or not? The stores dont lose anything if the cards arent ultimately redeemed, do they?
It wasn't so bad in the beginning with gift certificates, so it didn't highly reflect on many stores sheets...but as demand for them surged, the realization set in that it's going to begin to screw up December sales when it counts the most, so I'm sure some adjustments were made to accommodate and "even" things out. As expected, it helped drive the Dow up...considering forecasts had it swinging the other way.
I still have two in my wallet, one from home Depot I forget the other, left over from Christmas- it is the most annoying gift to get... (apologies to my brother)