The misleading 52 weeks

I am surprised by the inventiveness of companies that use 52 weeks annual reporting instead of the more usual 12 months. I have often wondered why they think that 364 days is better than 365. They must believe that this one day is important to leave out, but they never tell us why.

Sometimes the 52 weeks end on a Friday and sometimes a Saturday:

“The Company’s fiscal year ends on the Saturday nearest January 31.”

So for this company The Kroger Co., sometimes this Saturday is at the end of January and sometimes at the beginning of February.

The most surprising choice of year end comes from Associated British Foods who chose the middle of September:

“The Group’s consolidated financial statements are prepared to the Saturday nearest to 15 September. Accordingly, they have been prepared for the 53 weeks ended 18 September 2021.”

I wonder what the historic reason for that could be.

371 days

And then, once every four years, 364 days become 371 days!  How logical is that? But Ah! An accountant will say, this 371 days is 53 weeks, they do this to make sure that the 52 weeks finish more or less at the same time of the year. If this is their objective then why not use the 12 month model? We are back to my initial wondering.

And in addition, comparisons year on year, or 52 weeks on 52 weeks, are lost and a phrase such as this is used:

“Group revenue was in line with last year on a reported basis,”

This means that accountants are comparing a 52 week year with a 53 week year as though they were the same number of weeks. They compare revenues of 53 weeks saying, with this vague wording’ they are ‘in line’ with revenues of 52 weeks. Accurate but not honest.

Instead of ‘reporting basis’, the honest companies use another expression, for instance ‘adjusted basis’:

 “On an adjusted basis profit before tax was up 49%.”

And calculate the 49% as though two years have the same number of weeks. The whole argument of 52 week reporting, that of better comparability from year to year is lost.

Interim Reporting

52 weeks allows bizarre interim reporting. Most companies divide the 52 weeks by four and logically call it quarterly reporting. Others split the year into two unequal periods one of 24 weeks and the other of 28 instead of two of 26 weeks.   They don’t call it half yearly reporting of course, but interim reporting. And when one of the years is 53 weeks,  that messes up at least one reporting period completely.

So there is nothing logical in 52 week reporting, but accountants keep it because, I suppose, history wins over logic.