Dave Ramsey, an American financial author and radio host, recently made the following claim on his 6 December 2013 radio show (at 5 minutes into the show) when discussing holiday shopping in the United States (i.e. Black Friday through Christmas),

[retailers] make all of their money for the entire year in 45 days.

This statement was made in the context that shopper aren't good at controlling their impulses and marketers are very good at getting people to spend money since the holidays are when retailers make their profits for the year.

Is this statement in fact accurate in the sense that retailers either make all of their money for the year from holiday shopping or that they don't turn a profit until the holiday shopping season?

  • 8
    It's kind of a misleading question. If a business has a profit margin of 10% then you could argue that the first 90% of the days in a year are just covering costs, and the last 10% is pure profit. But the same argument could be applied to a week, a month, a quarter, or a decade. No-one would say that a store makes all its profit on Saturdays, but that's probably the case if you apply that concept on a weekly basis (assuming the US where Saturday is considered the last day of the week). – Mark Dec 10 '13 at 22:09
  • This sounds like a reinterpretation of the (false) anecdote that 'Black Friday' earns it's name from being the day that retailers go 'into the black' for the year. Since that canard is untrue, this one probably isn't either, unless you want to slice and dice the data in some horrifically awkward manner. – LessPop_MoreFizz Dec 10 '13 at 23:47
  • 1
    @Mark I don't see how it's a misleading question. It is an exact quote from the Dave Ramsey show. The claim made by Ramsey might be false or misleading, but a quote is a quote. – rjzii Dec 11 '13 at 1:11
  • 2
    @Rob - You're right - the question isn't misleading, the assertion is. – Mark Dec 11 '13 at 1:35
  • 1
    That's three -1 votes, anyone actually care to explain their reasoning? – rjzii Dec 11 '13 at 20:31

No, the claim is completely ridiculous, and easy to disprove. The claim doesn't say which retailer(s) are supposed to only make profits during holiday shopping, but, at least in the U.S., when we think "retailers", we think of Wal-Mart or Target.

The Wal-Mart web site shows that they turned a profit every quarter of 2013:

The Target web site shows:

And compare this to Walmart's 2012Q4 US$1.51 EPS, or Target's 2012Q4 $1.47 GAAP EPS and you can see that, if all else is equal, the last quarter of the year, which encompasses the holiday season, is more profitable. But it is not in any way the only profitable, nor is it significantly more profitable, such that one might choose to ignore the other 3/4 of the year.

It should be similarly easy to find the earnings per quarter of any publicly-traded retail company you fancy.

  • I've added Target to the answer since they are the other big retailer in the United States, but there is a bit of a gap when it comes to Main Street retailers. Do you have any information on them since it is plausible that for smaller local or regional retailers they might not be as profitable. – rjzii Dec 11 '13 at 12:42
  • 1
    @rob: It's possible, but less likely. A small business is less likely to handle a loss (or break-even) state for 320 days out of the year. – Flimzy Dec 11 '13 at 13:28
  • 2
    I imagine for certain sufficiently narrow industry segments, a profit is only made 45 days out of the year. The U.S. fireworks industry, or Christmas tree farms. But the companies that engage in such businesses typically operate in other related segments, as well. Fireworks manufacturers sell world-wide, and fireworks retailers operate other seasonal businesses other times of year, etc. Christmas tree farms often sell other types of trees or farm goods during the rest of the year, etc. – Flimzy Dec 11 '13 at 13:39

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .