Resorting to obscure nonsense won't cover up bad news

By Guy Montague-Jones

- Last updated on GMT

Related tags Inter parfums Analyst

Every product is “innovative”, every award is “prestigious” and everyone is “delighted” to be climbing the corporate ladder.

Companies usually dress up events using a set wardrobe of adjectives designed to make the ordinary sound exceptional.

Thanks to the financial crisis marketers are now wheeling out an emergency chest of confusing words and phrases to disguise harsh realities.

Companies no longer fire workers. They reconsider headcount and streamline operations instead.

Last week Inter Parfums treated us to some particularly inventive examples of cloudy language.

After reporting a 16 percent fall in quarterly sales, the company announced “initiatives to right size our staff”​ and measures to “align our spending with anticipated sales”​. Shining some light on this last statement is the admission that Inter Parfums is “revising” (reducing) its sales forecast for the year ahead to $390m.

Financial statements are a rich source of confusing and misleading information. As well as playing language games, companies also refrain from revealing unsavory facts.

Avon exuberantly declared in February that annual savings of $200m would be generated from an “extension” of its restructuring program.

Observers had to wait for a conference call to learn that behind this “extension” lay a significant contraction. Avon would be letting go of 3,000 workers.

Companies are understandably shy about revealing the true extent of bad news but achieve little by trying to cover it up.

Presenting its latest financial results L’Oreal omitted comparative figures that would make for uncomfortable reading.

Bernstein Research analyst Andrew Wood said there was a “lack of historical (or even quarterly) results context...obfuscation was in great supply.”

By trying to hide bad news L’Oreal only succeeded in arousing the suspicion of analysts and journalists.

Obfuscation is one of the best ways of encouraging critical eyes to look more deeply into your affairs. Just ask Richard Nixon.

Related topics Market Trends

Related news