Judging buying by the numbers can be puzzling

Did consumers splurge or were they conservative in April?

Answering that question isn't that simple, considering a rosy government report on retail sales released last week and a much more subdued report from the nation's largest retailers that came out the previous week.

The Commerce Department released data that revealed that consumers went on a buying binge in April, lifting retail sales a stronger than expected 3.8 percent from a year ago. The figure excludes automotive sales.

But the results announced by retailers on May 9 were largely disappointing, up only 1.6 percent, according to the Bank of Tokyo-Mitsubishi Ltd.'s 80-store tally. That was well below its forecast of a 3.5 percent gain.

Meanwhile, Instinet Research's Redbook 56-store index registered a modest 1.5 percent increase, below its projection of a 2 percent to 3 percent gain.

Who's right and who's wrong? Neither, according to analysts, who point to key differences in the reporting period, the types and breadth of stores; and how each measures retailers' sales performances. In fact, Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi, who has been tracking monthly retail sales since 1984, says such discrepancies account for Commerce's figures being different from his index about one-third of the time, including April.

"Even if you match it up and exclude automotive, food services and gasoline from the Commerce figures, you will still see differences," said Niemira, whose own index, while diverse, does not include those three categories.

"When you try to pull the two reports together, you have to look for common themes," he said, citing, for example, the pace of the consumer spending recovery.

Equal averages

In fact, the average of the March and April sales figures, from both the Commerce Department and the Bank of Tokyo index, are almost identical. Commerce's average is a 3.9 percent gain, while Niemira's index recorded a 4 percent increase.

The Commerce Department measures 1,200 stores, including privately held stores, while the chain store indexes' universe is much smaller and only tracks publicly held companies.

Vicki Garrett, a survey statistician for the Commerce Department's Census bureau, said chain-store indexes are more static than the government's list, noting they report on the same merchants "over and over again."

"We can capture new trends," said Garrett, who gets her information from retailers through monthly surveys. In addition to a consistent roster of stores, Commerce constantly adds or subtracts stores as they shutter or make their debut.

Furthermore, Commerce tabulates sales on a monthly calendar basis, while the nation's largest retailers report on a rotating four-five-four week schedule, created by the National Retail Federation. Merchants usually report their sales on the first Thursday of each month.

Matter of timing

That difference in timing can result in major discrepancies, particularly last month, according to Walter Loeb, a retail consultant. Warm weather during most of April turned cool in the first week of May, which stifled demand for spring clothing. That didn't show up in the Commerce Department's April figures, but depressed indexes like Niemira's.

More importantly, Commerce tracks total sales, while the chain store indexes measure sales at stores open at least a year, known as same-store sales. Newer stores tend to generate higher sales than older stores.

Many analysts believe same-store sales are the best indicator of a retailer's health. On the other hand, Commerce offers a broader snapshot of the industry.

Niemira said the gap typically widens between the two during booming economic times, but gets narrower as the economy turns sour. That's because in robust times, stores go on store expansion binges, thereby pushing the government figures higher.

In bad times, there tends to be more bankruptcies and store closings, but chain store indexes don't report sales figures from those companies. Commerce does include those sales.

In fact, the discrepancy between the reports in April isn't as bad as what Niemira saw in healthier economic times.

"We are in a sense closing the gap," Niemira said.