Taking the Long View

Andy Moeller

› Executive Vice President and CFO
› Christopher & Banks Corporation, Plymouth 
› Retailer of women’s apparel › NYSE: CBK
› Market capitalization: $1.1 billion

››› In our case, we give guidance for the first quarter and full year at the beginning of the year and update every three months. We are a retailer that gives monthly [sales] guidance, which is typical of the retailing industry. This industry probably gives more guidance than other industries. 

››› However, even in retailing there is a trend towards giving less guidance, with a few companies now reporting sales on a quarterly basis rather than monthly. Short-term investors, such as hedge funds, who trade aggressively around sales reports and therefore increase volatility, have in part driven this. We will be evaluating our guidance policy in the upcoming months to see if there should be any change to what we do.

Michael J. Ott

› Managing Partner
› Somerset Asset Management, Minneapolis
› Investment management for individuals and institutions

››› In my current role, I am not too concerned about companies giving quarterly guidance, as we are long-term investors. I am more concerned with companies reporting when they say they will.  

››› As a former director of research, I would say not giving guidance forces investors to pay more attention to the reputable sell-side analysts that follow a stock. The analyst covering such a company will have a more difficult time and will be forced to do better raw research . . . . It’s harder to be a lazy analyst when a company does not give guidance.  

››› I don’t know if adopting this stance [of reduced earnings guidance] impacts a stock’s valuation. I’d have to look at the empirical evidence, but my gut says it does. I think in the short run it does, but a company can work through it after a period of demonstrated performance.

Michael Robinson

› Executive Vice President and CFO
› Life Time Fitness, Inc., Eden Prairie
› Operator of fitness centers
› NYSE: LTM
› Market capitalization: $1.5 billion

››› [By e-mail] Currently, Life Time Fitness offers a small amount of quarterly directional guidance. We began doing so at the time of ourpublic offering [in 2004] . . . . In our industry, Life Time Fitness is redefining what had previously been considered health-club industry standards, and as such, it is our intent to assist analysts, investors, and shareholders in modeling against our specific business model.