The Wall Street Journal has a news article up this morning about Walmart's latest results. "For the period ended April 30, Wal-Mart reported a profit of $3.32 billion, or 88 cents a share, up from $3.02 billion, or 77 cents a share, a year earlier," the article says, noting that the 88 cents a share exceeded the company's February projection of 81 cents to 85 cents a share. The article also reports "Revenue rose 5.9% to $99.1 billion. Analysts had forecast $98.45 billion."
So what are the focus of the headline and the lead paragraph of the article? Not the increases in profits or revenues, but the bad news. The headline is, "Wal-Mart Same-Store Sales Fall." The second paragraph of the article begins, "First-quarter sales at stores open more than a year at Wal-Mart's domestic locations fell for the fourth consecutive quarter." That isn't even clear -- is it the fourth consecutive first quarter in which sales dropped, or just the fourth consecutive quarter?
Same-store sales can be an incredibly misleading statistic. Here's an example. Chain A has quarterly sales of 10, 11, 12, and 13. Chain B has quarterly sales of 50, 49, 70, and 65. Chain A has four consecutive quarters of increases in same-store sales. Hooray! Chain B, though, showed increases in sales in only two of the four quarters, and declining sales in two of the four quarters. What a disappointing result! But Chain B sold a lot more stuff than Chain A. And if you are an investor, and owner, or a manager, what probably matters most to you (or should) is total profits, not the predictability or consistency of same-store sales growth. That's not to say that same-store sales is a totally meaningless measure. But it seems weird to focus on it as much as the Journal does in its headline and in this article.