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An explanation of the 53-week year
Dividing the retail calendar into 52 weeks of seven days each, or 364 days, leaves an extra day each year to be accounted for. As a result, every five to six years a week is added to the fiscal calendar. This anomaly has most recently occurred in FY'00, FY'06 and FY'12, and will occur in FY'17.
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The 4-5-4 Calendar, which is widely followed by retailers today, was derived in the 1930’s during an informal inter-industry discussion. Prior to and during the 1930’s, retailers used a straight calendar to report monthly sales. This calendar became problematic as Saturdays and Sundays became an increasingly large percentage of sales, since the number of weekends in a month varied year to year. A calendar that maintained the same number of weekends in comparable months was desired and the 4-5-4 Calendar was developed. Many stores began using the 4-5-4 Calendar in the 1940’s.
The 4-5-4 Calendar serves as a voluntary guide for the retail industry and ensures sales comparability between years by dividing the year into months based on a 4 weeks – 5 weeks – 4 weeks format. The layout of the calendar lines up holidays and ensures the same number of Saturdays and Sundays in comparable months. Hence, like days are compared to like days for sales reporting purposes. The 4-5-4 Calendar also establishes Sales Release dates, which have historically been on the first Thursday following the month’s end. In recent years, however, as the flow of information has improved, more companies are releasing sales data earlier in the week.
Due to the layout of the 4-5-4 Calendar (52 weeks x 7 days = 364 days), which results in one remaining day each year, and the occurrence of Leap Year, it is sometimes necessary to add a 53rd week to the end of the calendar for sales reporting purposes only. This occurs approximately every five to six years, though this is not always the case. 1995, 2000, 2006, and 2012 are all 53-week years.
If, after laying out the entire 52-week calendar for any given year, there are four or more days left in January during the 53rd week, then a 53rd week is added. For instance, if you look at the 4-5-4 Calendar for 2004-2006, you will see that in 2005 there were only three days remaining in January after the 52nd week (January 29-31). However, in 2006 there are four days remaining in January so a 53rd week is added on to the end of that year.
For comparability purposes, the NRF 4-5-4 Calendar restates a 53-week year in the subsequent year (ex. 2006 is restated for comparability to 2007). This is accomplished by pushing each week of the 53-week year back one week, thereby ignoring the first week of the fiscal year (in this example, 2006). The benefit in doing so is to align holidays, which naturally account for a significant percentage of retailers’ sales. The restatement is shown on the 2006-2008 4-5-4 Calendar. The first week of sales for 2006 begins on February 5, 2006 and ends on February 11, 2006 versus January 29 – February 4, 2006 on the 2005-2007 calendar. An alternative approach is to not restate and instead ignore the 53rd week of sales for comparability.