January 1st: many greet the New Year’s holiday with a sense of hope and renewal. All can agree that it is the indisputable first day of a new year. But is it always? Those who use the 4-5-4 calendar might have a different experience.
Consider retailers. A massive portion of retail sales occurs between Thanksgiving and the New Year each year, to the tune of an estimated $720 billion in2018. Therefore, a massive portion of retail returns and markdowns occur within the calendar month of January. As a result, many prominent retailers orient their fiscal calendars to be based upon calendar February in order to keep returns and markdowns from impacting the new year’s bottom line right out of the gate. However, this is not the only way retail calendars differ interestingly from the Gregorian calendar.
How the 4-5-4 calendar was created
The precursor of the modern retailer calendar was developed in the 1930s. The calendar’s format was conceived to standardize the number of weekends in a recorded month since weekend sales (even in the early 20th century) accounted for a disproportionate amount of retailer revenue. It is now widely known as the “4-5-4 Calendar”. Named for its standard quarterly format–a four-week month, followed by a five-week month, followed by another four-week month. This format is standard for each quarter in every year, with a single notable exception…
Standardizing a year into neat 28 or 35-day months for a clean 52-week retail year is quite an attractive and convenient concept until one does the math. Here’s the problem: 52 7-day weeks only amounts to 364 days total, offsetting a theoretical retailer calendar by a day each year until, eventually, a retailer ends up with a 53-week year. An infamous and perhaps irritating problem for someone working in the retail sphere.
How retailers deal with the infamous 53-week year
Retailers deal with this issue in a number of different ways when it comes to year-over-year reporting. Some retailers take each week of the 53-week year and push it back a number for comparison. For example, week 53 is compared to week 52 of the previous year. Other retailers ignore the 53rd week entirely when comparing, by analyzing only the first 52 weeks for each year. Still others (in Walmart reporting, for one) compare the 53rd week to the first week of the same year rather than any week in the previous year. I.e. WM Week 201953 is compared to WM Week 201901).
Related Reading: Overages and the Secret Costs of Retailer Compliance Standards
Each of the mentioned options holds valid pros and cons, and each retailer (and sometimes buyers within retailers!) uses different methodologies to compensate. The important thing to ensure in a 53-week scenario is that everyone within a vendor organization is on the same page and everyone is aligned between vendor and retailer stakeholders. This reduces stress on the vendor and mitigates frustration when sharing insights internally and with retailer stakeholders.
Generally, many of us may take a calendar for granted, but if the standard 4-5-4 retail calendar is any indicator, the most seemingly mundane forms of timekeeping may have the most interesting history and may pose the most interesting problems to mold into insights.
FAQs
4–4–5 accounting is a method of managing accounting periods. Accounting cycles, or calendars, define the number of weeks in each financial period in each financial quarter. The 4-4-5 accounting calendar divides a year into four quarters of 13 weeks, each grouped into two 4-week "months" and one 5-week "month".
What is the 4-5-4 Calendar algorithm? ›
The 4-5-4 calendar is a guide for retailers that 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.
How to read a 4-5-4 Calendar? ›
The calendar known as 4-5-4 divides the year into months of 4 weeks, then 5 weeks, then 4 weeks and so forth. Beginning on Sundays and ending on Saturdays, it also ensures holidays are lined up and like days, such as a particular Wednesday, are lined up so that sales reporting can be done accurately.
How many weeks are there in a retail season according to the 4-5-4 Calendar? ›
The 4-5-4 Calendar is made up of 52 weeks of 7 days each, equaling 364 days total, so there is one extra day each year. Because of this, it's sometimes necessary to add a 53rd week to the end of the calendar for sales reporting purposes, so every five or six years, there is a 53-week year.
What does a 4-4-5 calendar look like? ›
In a 4-4-5 calendar, every quarter consists of 13 weeks with two 4-week months and a 5-week month. This helps make comparisons consistent, can simplify financial reporting, and can streamline operational and financial planning. We can build one in Excel with just a few functions.
What are the benefits of 5 4 4 calendar? ›
The longer "month" may be set as the first (5–4–4), second (4–5–4), or third (4–4–5) unit. Its major advantage over a regular calendar is that each period is the same length and ends on the same day of the week, which is useful for planning manufacturing or work shifts.
What is the 4-4-5 calendar 2024? ›
The retail calendar is a special calendar used by retailers, that divides the year into 4 & 5-weeks months, in order to make it easier to report sales on a like for like basis, compared to previous years.
What is a 53 week year called? ›
An ISO week-numbering year (also called ISO year informally) has 52 or 53 full weeks. That is 364 or 371 days instead of the usual 365 or 366 days.
What is the 4-4-5 calendar in SAP? ›
In SAP/b1 the creation of a fiscal year assumes a 365-day year. However, when a company is running on a 4-4-5 period definition, the fiscal year is 364 days. Many users do not follow the 365-days rule and will have a short fiscal year.
Are there 53 weeks in 2024? ›
Hi paul. prendergast, There are 52 weeks in the 2024-2025 tax year, and 53 weeks in the 2025-2026 tax year. Thank you.
2026: January, May, July, October. 2027: January, April, July, October, December.
What is the calendar trick? ›
Calendar Aptitude Tricks
You can remember the following points relating to the concepts of calendar: 100 years give us 5 odd days as calculated above. 200 years give us 5 x 2 = 10 – 7 (one week) 3 odd days. 300 years give us 5 x 3 = 15 – 14 (two weeks) 1 odd day.
What is the 4-4-5 schedule? ›
4-4-5 Accounting Calendar is one of the methods of managing accounting periods. The 4-4-5 accounting calendar means that in each quarter, the first accounting period consists of the first four weeks, the second period consists of the next four weeks, and the third period consists of the next five weeks.
What is the 4-4-5 retail calendar? ›
4-4-5 retail calendars are tools that are used to break down a calendar year into quarters, each having two four-week months and one five-week month. This allows each month to have the same number of weeks each year, enabling a more accurate comparison of sales and other business operations across years.
What is the 4-4-5 accounting method? ›
For example, the 4-4-5 accounting cycle means that in each quarter, the first financial period consists of the first four weeks, the second period consists of the next four weeks, and the third period consists if the next five weeks.
What is the 4 4 5 billing cycle? ›
4-4-5 Accounting Calendar is one of the methods of managing accounting periods. The 4-4-5 accounting calendar means that in each quarter, the first accounting period consists of the first four weeks, the second period consists of the next four weeks, and the third period consists of the next five weeks.
What are the pros and cons of 4 4 5 accounting periods? ›
4-4-5 Calendar
Each quarter has three months, but two of them are four weeks long, and the last one is five weeks long. Pros: Ensures all quarter ends fall on the same day of the week, which can be helpful for accounting purposes. Cons: Less common and might seem a bit odd at first.
What is the 4-4-5 calendar for 2024? ›
The 4-5-4 retail calendar for 2024 starts on Sunday, 4th of February 2024 and ends on Saturday, 1st of February 2025. Since retail calendar days need to be multiple of 7, the calendar year is 364 days and not 365, and so every 5 to 6 years one extra week is added to the calendar and makes it 53 weeks.
