The Wall Street Journal on Sears

http://www.futureofcapitalism.com/2010/05/the-wall-street-journal-on-sears

When the Wall Street Journal reported earlier this week on Walmart's first quarter, the same-store sales figures were down, while the income numbers were up. The Journal's headline then, as we noted, focused on the bad news: "Wal-Mart Same-Store Sales Fall." This morning, Sears Holdings reported its first quarter results, with an outcome that is the reverse of Walmart's -- same-store sales are up, while income is down. The Journal headline: "Sears Profit Slides 39%, Hurt by Lower Margins."

If you had to discern a governing principle of the Journal's retail coverage, it wouldn't be to emphasize profits at the expense of same-store sales, or to emphasize same-store sales at the expense of profits, but simply to emphasize whatever news is worse for the retailer. In part this is the natural bad-news bias of the press; a plane crash is newsworthy, while a plane landing safely is not.

But neither Walmart nor Sears Holdings are in plane crashes. One purpose of financial news is to provide trustworthy guidance to potential investors about what is happening at a company. The bad-news bias has the potential to skew the investment decisions of those who are not aware that it exists.

by Ira Stoll  |  May 20, 2010 at 7:45 am Related Topics:  Press receive the latest by email: subscribe to the free futureofcapitalism.com mailing list