SEC Questions Retailers on Adequacy of Online Sales Disclosures

The SEC has asked a number of large retailers—including Target Corp. and Wal-Mart Stores Inc.—to provide additional information about the amount of goods purchased on the Internet in their periodic filings. While online sales have grown across the retail industry, total sales still often dwarf goods sold online for many retailers.

Retailers often struggle with how to present this information to investors increasingly focused on online prowess. Target, for example, recently stated that its digital sales had grown by double-digit percentages. In response to questions from the SEC, Target acknowledged in June that “digital sales represented an immaterial amount of total sales.” The SEC posed similar questions to several other retailers, expressing concern that retailers might be exaggerating online sales by touting high percentage growth rates in online sales rather than the quantity of such sales. Companies with both an online and brick-and-mortar sales presence should take note of this development.