The Curious Case of Withdrawn Comparable Store Sales Disclosures: An Empirical Investigation of the Retailing Industry

Abstract

Since the late 1990s, many retailers have ceased disclosing their monthly comparable store sales (CSS) metrics, which is notable considering modern demands for information transparency. Drawing on economics, finance, and marketing literatures, we propose four potential reasons for the withdrawal of CSS disclosure: (1) avoidance of competitive information leakage, (2) concealment of poor performance, (3) decreased relevance of the metrics, and (4) prevention of management myopia. Testable hypotheses reflecting each plausible reason are tested using a unique dataset of publicly-traded retailers, spanning two decades between 1995 and 2015. The results indicate that retailers halt CSS disclosure in order to avoid information leakage towards competitors while other potential reasons lack empirical support. Specifically, retailers facing fierce competition, with undiversified customer assets, and that sell products with long life cycles are likely to limit their CSS disclosure. An event study analysis reveals that investors generally reward this withdrawal decision, and retailers in more competitive markets and with less diversified customer assets receive higher abnormal returns.

Keywords: Comparable Store Sales (CSS); Retailing; Marketing-Finance Interface; Marketing Information Disclosure; Discrete-Time Survival Analysis