4-5-4 Calendar

The 4-5-4 calendar is a retail fiscal calendar that divides the year into four 13-week quarters and each quarter into three months of four, five and four weeks. Every fiscal month is made of whole weeks that start on the same weekday, so a month contains the same number of Saturdays as the same month last year, and the year is 52 weeks long, with a 53rd week added when the fiscal year has drifted far enough from the calendar. It is the period structure a merchandise financial plan, an open-to-buy and a weekly trading report are phased on when a business uses it.

This entry is a definition. The full treatment — the three conventions, the 53rd week and calendar shift — is in the retail calendar guide.

Why whole weeks

A weekend day and a weekday carry different volume, so a calendar month with five Saturdays cannot be compared with the same month last year when it had four. Whole-week months remove that difference from year-on-year comparisons. The sibling conventions, 4-4-5 and 5-4-4, move the five-week month to the end or the start of the quarter; quarters and years are identical under all three, and the choice matters mainly for whether the merchandise plan's months line up with the months finance closes on.

What it does to a plan

The months inside a quarter are not comparable with each other. The five-week month holds 25 per cent more trading weeks than a four-week month, so it out-sells its neighbours on calendar length alone. Plan at the week, and treat the month as a sum of weeks.

The figures below are illustrative, chosen because they divide cleanly; they are not benchmarks or targets and are not drawn from any brand. A quarter is planned at $1,300,000 of sales across its 13 weeks, and for simplicity each week carries the same $100,000; a real plan applies the season's weekly shape, as how to phase a sales plan sets out. Built from weeks, the 4-5-4 months are $400,000, $500,000 and $400,000. Split evenly by month instead, each gets $1,300,000 ÷ 3 = $433,333: the five-week month is planned $66,667 short and each four-week month $33,333 heavy. A receipt plan built on the even split lands too much stock in the four-week months and too little in the five-week month, and because the quarter still totals $1,300,000, nothing in the total shows it.

The 53rd week

Fifty-two weeks are 364 days, one or two short of the calendar year, so the fiscal year falls behind a little every year, and a 53rd week is periodically added to bring it back, conventionally at the end of the fourth quarter. The year that carries it has one more selling week than the year before, and the year after has one fewer than the year it is compared with. Year-on-year figures across either boundary are restated on a 52-week basis before they are read. Moving holidays shift between week numbers in the same way, so last year's weekly shape is realigned to this year's calendar before it phases a plan.

Common mistakes

• →Comparing months within a quarter. The five-week month's lead over its neighbours is calendar length, not trade.
• →Splitting a quarter evenly by month. The quarter reconciles while every month's receipts land against the wrong weeks.
• →Two calendars in one business. Merchandising on 4-5-4 and finance closing on 4-4-5 puts a structural difference into every monthly reconciliation.
• →Reading a 53-week year unrestated. The extra week looks like growth in one year and decline in the next.