How are 2020’s wacky comparisons affecting retailers now?
The mantra for all the Willy Lomans of the world is to beat last year’s numbers, but the pandemic has distorted sales comparisons, making that tough. A few retailers on fourth-quarter investor calls are encouraging analysts to compare 2021’s figures to 2019’s for a more normalized perspective.
Kroger, for example, provided a wider range in issuing 2021 guidance due to the uncertainty surrounding food-at-home trends as COVID-19 vaccines rollout. Same-store sales in 2021 are expected to decline three percent to five percent against 2020, but expand nine to 11 percent on a two-year stack basis. Gary Millerchip, Kroger’s CFO, told analysts, “Evaluating our performance using a two-year period will more accurately measure our underlying momentum.”
Dick’s Sporting Goods provided guidance based on both 2020 and 2019 levels.
Lee Belitsky, Dick’s EVP and CFO, said, “Due to the uneven nature of 2020, we planned 2021 off a 2019 baseline and, for the same reason, believe it will be important to compare against both 2019 and 2020. Furthermore, given the continued uncertainty around when athlete activities will normalize in 2021 and what the new normal will be, we’ll be guiding to a wider range of possible outcomes that we typically do.”
Walmart predicted low single-digit U.S. comps for 2021 against 8.6 percent growth in 2020. Brett Biggs, EVP and CFO, told analysts, “We’ve got stimulus plans and other things that are sitting out there. But even with that, Walmart U.S. would have a 10 percent two-year stack. It will be very, very healthy growth.”
B.J.’s Wholesale Club CFO Bob Eddy said that, based on current pandemic trends, elevated consumer demand through the first half implies high-teens double-digit stacked comps for the first quarter. Mr. Eddy added, “We also currently expect something that looks more like normal life to emerge as more people are vaccinated. As that happens, and more people venture back to restaurants, we expect to give up some of the sales gains experienced in 2020 that resulted from increased consumption of food-at-home. But at this point, we cannot accurately judge the timing or degree of these changes.”
Most retailers are providing more limited or no guidance, given continued uncertainties.
- Kroger Delivers Strong Fourth Quarter and Fiscal Year 2020 Results – The Kroger Co.
- Walmart Stores Inc. (WMT) Q4 2021 Earnings Call Transcript – The Motley Fool
- Macy’s Inc (M) Q4 2020 Earnings Call Transcript – The Motley Fool
- BJ’s Wholesale Club Holdings, Inc. (BJ) Q4 2020 Earnings Call Transcript – The Motley Fool
- Dick’s Sporting Goods Inc (DKS) Q4 2020 Earnings Call Transcript – The Motley Fool
- Staring at impossible comps – Searchspring
DISCUSSION QUESTIONS: What challenges do 2020’s abnormal comparisons present to retailers or brands in 2021 as they do their forward planning? Should traditional performance metrics be ignored or significantly adjusted?