Redbox parent Coinstar turned in a great third quarter this year, with same-store Redbox sales growth at more than 17%. The Wall Street Journal feels, however, that this growth number can be a bit deceiving, and some of it should be chalked up to the fact that there are now two Redbox kiosks at many locations.
Coinstar’s method of calculating revenue is to immediately begin including the second kiosk’s revenue in same-store sales because it is considered part of an existing location. This approach, different from most other retailers, has the WSJ a bit concerned about the clarity of Coinstar’s numbers. From the Journal:
“Generally, when retailers expand a store’s square footage by at least 15%, they take it out of the group from which same-store sales are calculated . . . Excluding new outlets’ sales contribution is crucial for assessing the underlying strength of companies that are expanding their retail locations rapidly like Redbox.”
The crux of the WSJ‘s argument is this: with Coinstar’s current approach to measuring revenue from second kiosks, it is unclear how the second machine affects the sales of the first.
Coinstar believes it is being transparent in its reporting on this matter—what do you think? Should Coinstar investors be at all concerned about the company’s revenue reporting strategies?
(via The Wall Street Journal)