The bricks-and-mortar retailers are tired of e-tailers getting the press and lofty Wall Street valuations and have fired back with clever marketing campaigns and clicks-and-mortar strategies. Now if the retailers could only give investors a little more data about their online operations.
When Staples Inc. (Nasdaq: SPLS) reported its Staples.com revenue and earnings last week, it was a welcome change. With any luck other e-tailers will follow the Staples lead.
Staples reported that its Staples.com unit had sales of $24 million for the quarter ending Oct. 31 and a loss of $2.8 million. Staples isn't revealing Staples.com's financials in the good name of disclosure -- it's trying to build hype before it creates a Staples.com tracking stock -- but it's a nice first step.
Real world retailers: Making big online moves?
Staples, the core business, reported revenue of $2.37 billion and had earnings of 20 cents a share.
Meanwhile, other retailers are hiding behind the 10 percent rule. The rough rule is that if a unit doesn't account for 10 percent of sales, it's not worth reporting. That rule means that investors may never hear what online sales are at Wal-Mart (NYSE: WMT), Toys R Us (NYSE: TOY) or The Gap (NYSE: GPS).
All three of the aforementioned companies are either making a big splash online or at least plan to. Toys R Us is talking a good game, but may not compete with eToys (Nasdaq: ETYS); The Gap clearly is doing well online and Wal-Mart may also do well when its site relaunches in January.
But we don't hear anything about it in the retailers' earnings reports. Here's a look at the metrics real-world retailers are using to describe their online businesses.
Toys R Us: All those ads, all that marketing for its web site and the best the company could come up with was:
"Customer response to the site has been phenomenal," the company said. "Traffic to the site has increased tenfold just in the last week, and we are continuing to process a record volume of orders."
In its latest earnings report, Toys R Us didn't give any page view stats, but the company did say it was adding more servers. That's good news considering last time we tried the site it was deathly slow or just out of commission. Maybe the site should be renamed Site 'B' Down. In the first quarter, Toys R Us, which reported third quarter sales of $2.5 billion, may give some actual sales figures for its online unit.
Wal-Mart: Given that Wal-Mart reported third quarter sales of $40.4 billion or so, Wall Street may never hear anything about online sales. Amazon.com's (Nasdaq: AMZN) quarterly sales don't come close to 10 percent of Wal-Mart's quarterly tally.
So it's not surprising Wal-Mart didn't mention online sales at all in its earnings release. But the online strategy is important and worth of at least a mention in future guidance.
The Gap: No excuses here. The Gap is among the best around when it comes to a "clicks and mortar" strategy. The company is launching shopping on www.oldnavy.com and www.bananarepublic.com in addition to www.thegap.com. The company has no business deferring to the dreaded 10 percent rule and should enlighten investors on its online unit. The Gap had third quarter sales just above $3 billion.
And those three retailers are just a few of the offenders when it comes to keeping mum on their online figures. Home Depot (NYSE: HD) was another company that clearly knows what its doing on the web and didn't mention online sales or traffic in its earnings release.
Excite@Home goes tracking
Tracking stocks seldom do wonders for investors, but in the case of Excite@Home (Nasdaq: ATHM), the move may make sense.
The company said early Monday that it would create a tracking stock for its media operations (the Excite portal, Matchlogic unit and other narrowband properties.)
This move makes sense because Excite@Home had a complicated board structure (basically a bunch of cable companies that have to agree on everything) that were preventing the narrowband side of the business to move quickly.
Excite@Home has essentially operated as two companies and the tracking stock move just formalizes things. Another aside worth watching, AT&T (NYSE: T), which owns a big chunk of Excite@Home, gives up formal ownership of Excite and keeps the @Home side of the business.