FL/Sporting Goods: More or Less Volatility?

For all you watchers of the weekly footwear and apparel data that comes from NPD and Sportscan, you may be in for more volatility on earnings reports. Why? Two days ago Foot Locker told NPD that it needs to make a choice – sell a weekly data product to Wall Street WITHOUT Foot Locker participating, or simply pull all weekly data distribution to the Street.

 

The catalyst was Ken Hicks at Foot Locker realizing that NPD was having its cake and eating it too. With an analyst taking his forecast lower two weeks ago based in part on NPD data, it led management to question why they were being subject to increased weekly volatility and speculation by the Street.  Didn’t we get out of the weekly sales reporting game years ago? At the same time, FL became more aware than ever that NPD has been servicing the Street and the trade with the same data, for which FL is a large contributor.   Ultimately something has to give here, and it’s likely that the days of weekly data feeds to the Street are over.   

 

Now there are two notable items…

 

1)      Our sense is that monthly data will still be available. Monthly numbers in this space are actually quite accurate and smooth out the weekly gyrations that can be the result of a variety of factors (weather, promos, and product launches).  Plus the monthly data offers more specificity into products, brands, and channel performance. Weekly numbers in the past only reflect the specialty athletic channel.

 

2)      People are likely to pick up the phone and call Sportscan to subscribe to SSI’s footwear data, a similar product but one with its own limitations.  SSI is less accurate. Instead of reporting only the sales data provided by the retailers, SSI includes its own estimates for retailers absent from the sample.  This is similar to the process IRI uses with estimating Wal-Mart’s sales.  While SSI may now be the only solution, we point out that even the big brands like Nike don’t even use SSI’s footwear data. They use apparel, which is more accurate.

 

Brian P. McGough
Managing Director


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