When public companies tell the world how much money they made over a quarter, they have to follow accounting guidelines intended to keep those financial figures honest and consistent. <\/p>\n
However, for better or worse, alongside the profit figures that comply with those standards, many companies also report more forgiving, \u201cadjusted\u201d versions of those figures. Those adjustments are intended to show what a company\u2019s bottom line might have looked like if those standards \u2014 and the financial impact related to any number of issues like taxes, litigation, layoffs, the impact from the war in Ukraine, changes in the value of currencies or cannabis plants or whatever else \u2014 essentially didn\u2019t apply. <\/p>\n
In the fourth quarter, among the 30 companies in the Dow Jones Industrial Average, the gap between those two types of profit was far wider than normal, according to a FactSet analysis published Thursday. <\/p>\n
That analysis found that the median difference between per-share profit reported based on generally accepted accounting principles, or GAAP, and the adjusted kind \u2014 non-GAAP \u2014 stood at 31%. That\u2019s far above the norm for that difference \u2014 11.7% \u2014 based on five-year averages. <\/p>\n
It\u2019s also the fourth biggest difference between GAAP and non-GAAP earnings per share for Dow companies since FactSet began tracking it in 2016. And the last time that spread surpassed 31% was during the second half of 2020, when the pandemic upended the economy. <\/p>\n
The biggest such differences in the most recent quarter could be found in companies like drugstore chain Walgreens Boots Alliance Inc. The spread for chemical and materials giant Dow Inc. The adjustments that companies make to their profit figures \u2014 which tend to take more priority among the Wall Street analysts whose commentary can drive stock action \u2014 have long been a matter of debate among executives and investors. <\/p>\n Many companies say those adjustments allow them to express their profit in a purer form that factors out the impact of \u201conce-in-a-lifetime\u201d events and random noise. But many others say the practice gives company leadership too much leeway to say what does and doesn\u2019t count when calculating profits. <\/p>\n \u201cSupporters of the practice argue that it provides the market with a more accurate picture of earnings from the day-to-day operations of companies, as items that companies deem to be one-time events or nonoperating in nature are typically excluded from the non-GAAP (earnings per share) numbers,\u201d FactSet Senior Earnings Analyst John Butters said in the report on Thursday. <\/p>\n \u201cCritics of the practice argue that there is no industry standard definition of non-GAAP EPS, and companies can take advantage of the lack of standards to exclude items that (more often than not) have a negative impact on earnings to boost non-GAAP EPS,\u201d he continued. <\/p>\n While fourth-quarter earnings season is largely in the books, the week ahead will feature more retailers, led by Target Corp., Costco Wholesale Corp. Elsewhere, clothing chain Gap Inc. Elsewhere in retail and clothing, Abercrombie & Fitch Target sales:<\/strong> Target \u201cExpect sales to remain challenged in 4Q,\u201d BofA analysts said in a note on Friday, and adding that they were bracing for \u201ccontinued soft discretionary trends,\u201d even as declines in customer traffic show signs of getting better. Price increases for food and drinks haven\u2019t been as aggressive recently. That\u2019ll be a relief for customers. But it won\u2019t help Target\u2019s sales. <\/p>\n Kroger:<\/strong> Grocery-chain Kroger
\n WBA,
\n
\n at 925%. The company, in its earnings release, cited \u201cchallenging retail market trends in the U.S. and a 21 percentage point headwind from a higher tax rate.\u201d <\/p>\n
\n DOW,
\n
\n was 386.7%, as it digested the effects of restructuring, litigation, pension settlements the devaluation of Argentina\u2019s peso and other matters. Companies like Verizon Communications Inc.
\n VZ,
\n
\n Merck & Co.
\n MRK,
\n
\n Salesforce Inc.
\n CRM,
\n
\n and Johnson & Johnson
\n JNJ,
\n
\n rounded out the top 10. <\/p>\nThis week in earnings<\/h2>\n
\n COST,
\n
\n and Kroger Co. Taken together, the results will show us how much room higher-priced groceries have left for shoppers to buy clothing or anything else. <\/p>\n
\n GPS,
\n
\n reports results, as it tries to restore cultural relevance<\/a> to its namesake stores, improve marketing at Old Navy and make Banana Republic a more \u201cpremium\u201d destination. Bargain retailers Ross Stores Inc.
\n ROST,
\n
\n and Burlington Stores Inc.
\n BURL,
\n
\n also report, after rival TJX Cos.\u2019 results were better than expected<\/a> on holiday-season enthusiasm. Nordstrom Inc.
\n JWN,
\n
\n also reports, albeit after warning of \u201csoft<\/a>e<\/a>ning<\/a>\u201d consumer spending ahead of the holidays. Foot Locker Inc.
\n FL,
\n
\n will also release its earnings, after Nike Inc. cut its sales outlook<\/a>. <\/p>\n
\n ANF,
\n
\n Victoria\u2019s Secret & Co.
\n VSCO,
\n
\n Big Lots Inc.
\n BIG,
\n
\n and American Eagle Outfitters Inc.
\n AEO,
\n
\n report. Outside of retail, results are due from Broadcom Inc.
\n AVGO,
\n
\n Marvell Technology Inc.
\n MRVL,
\n
\n and DocuSign Inc.
\n DOCU,
\n The number to watch<\/h2>\n
\n TGT,
\n
\n which reports on Tuesday, has spent the past two years as something of gauge for how much people are buying things they want \u2014 like clothing, or TVs or laptops or furniture \u2014 as opposed to the things they need. Unlike rival Walmart Inc., those kinds of products make up a bigger share of Target\u2019s business than groceries, and Target has remained cautious on its expectations for consumer demand. <\/p>\nThe call to put on your calendar<\/h2>\n
\n KR,
\n
\n reports results on Thursday. Those results will arrive after the Federal Trade Commission sued to block the merger deal between the company and Albertsons Cos.
\n ACI,
\n
\n saying it would further push grocery prices higher<\/a>. Kroger\u2019s earnings call will offer more detail about where grocery prices and consumer demand stand, and potentially shed more like on how executives are thinking about growing regulatory pushback. <\/p>\n<\/p><\/div>\n<\/div>\n