How to cover sinking retailers
No company enjoys admitting that it is having financial troubles or is in danger of shutting its doors, and typically does everything in its power to spin a positive outlook to the media and consumers.
This desire to maintain a successful image makes it even trickier for a reporter to cover foundering companies.
In my weekend reading, I came across an article from The Wall Street Journal, “For Four Retailers, Do or Die.” The article highlighted Best Buy Co., J.C. Penney Co., RadioShack Corp. and Sears Holdings Corp. as four retailers who, going into 2013, have 12 critical months ahead of them to either turn around or fail.
In addition to these four companies that have gotten the brunt of tough coverage from analysts and retail reporters in the past year as they’ve faced financial woes, smaller chains such as Abercrombie & Fitch Co., Pacific Sunwear of California Inc. and Barnes & Noble Inc. have also experienced trouble.
As roundups of the year are published and commentators are predicting which companies will may disappear in 2013, such as this one by 24/7 Wall St., I’m left wondering how business journalists should best approach stories about struggling retailers and also how they should handle the relationship with those companies.
What is the best way to approach the public relations team and company executives for commentary and honest answers when both parties know that the article most likely won’t make the company involved look good?
I’ve looked at some stories that have been published during the past year to see how news outlets have covered these retailers and how journalists have worked with the company to quote it in the story.
From most of the stories that I read, the best stories that covered difficult subjects removed any opinion about a company and inserted indisputable facts and figures first, before quoting analysts or investors, who obviously influence the tone of a story. Many of the stories cited sales figures, comparing them to previous years and to competitors, or took a look at market share.
The reporters would also look at retail trends in recent years and illustrate whether retailers had kept pace or stayed ahead of trends or had fallen behind and started too late.
The most reliable of the stories also made mentions of attempting to talk to a company, or, at best, quoted executives at the company or public relations officials with whom the reporters had had personal conversations.
Bloomberg published a story in October about Abercrombie’s declining sales and bizarre requests by its Chief Executive Officer Michael Jeffries during corporate jet flights. The only comment from the company present in the article is an e-mailed statement provided by the company that said the board supported Jeffries’s strategy for the company.
“In an e-mailed statement provided by the company, lead independent director Craig Stapleton said the board supports Jeffries’s strategy. The company doesn’t comment on rumors and speculation, General Counsel Rocky Robins said in the same e- mail.”
This type of general e-mailed statement provides no information, and refusals by a company to comment at all seems far too common in company coverage stories. Those kind of statements aren’t beneficial to the company and its public relations team, to the reporter or to the consumers of news.
A lack of comment doesn’t allow the company to share its side of the story and only makes it look guilty or having no good answer or rebuttal to the questions a reporter is asking. A simple statement, such as the e-mailed one in the Abercrombie story, is better than no commentary, but not by much.
If companies are offered a voice in a story about them — and they should be if a story is fair an accurate — then they should take it.
The best type of comment, of course, is one that provides both accurate information and insight into a company’s situation from either a PR person for the company or from an executive. This is more rare, and sometimes when this does happen, the person will ask for anonymity in a story.
In the past, I’ve covered a company whose public relations team called me with some negative information about the company and provided me with supporting quotes, but would not let me give the names of my sources in the story. No matter how much I asked, they refused to budge.
In this case, unfortunately, the PR team seems to have the upper hand, as the reporter wants to scoop the information and can typically get permissions from editors to publish the story. In August, The Journal wrote a story about Best Buy’s turnaround plan, quoting “people familiar with the matter,” which is one of the most common ways to quote an anonymous source.
Other popular ways that I’ve seen reporters quote a company in a story that has negative undertones is typically to pull quotes from a conference call, such as this story about J.C. Penney’s marketing strategy by The Journal in June.
A significant number of business stories quote conference calls, which I don’t believe is the best way to get the voice of a company into a story. This shortcut can be beneficial when a reporter is pressed for time and needs to get a story out quickly or has repeatedly tried to get a company to comment to no avail.
Using a conference call or investor conference quote as a replacement to interacting personally with public relations seems lazy and takes away the possibility of developing a relationship with the company and receiving newsbreaking information in the future.
While calling to ask probing or negative questions about a company isn’t always the easiest, it provides the opportunity to receive the most accurate and original answers, which can lead to the best story.