Comparable Store Sales

What Are Comparable Store Sales?

Comparable store sales alludes to the revenue created by a retail location in the latest accounting period relative to the revenue it produced in a comparative period in the past.

Comparable store sales, or "comps," are additionally alluded to as "same-store sales" or "indistinguishable store sales."

Figuring out Comparable Store Sales

Investors and analysts investigating a retail company's financial statements depend on comparable store sales to give an image of how laid out stores have performed over the long run relative to the performance of new stores. In effect, comparable store sales is a measure of sales growth and revenue from a company's store operations.

For chains that are developing quickly and opening new outlets, same-store sales figures permit analysts to separate between revenue growth that comes from new stores and growth from further developed operations at existing outlets. Comparable store sales are most ordinarily used to compare the latest year's holiday shopping season to the previous year's. It can likewise be utilized to compare the current week's, month's, quarter's, or alternately year's sales to last week's, month's, quarter's, or alternately year's sales.

Illustration of Comparable Store Sales

A retail company's 10-Q report for a quarter might show that it brought in $18 million in revenue. In any case, this data will be futile on the off chance that it is utilized as an independent number. To comprehend this figure, an analyst will compare it to sales created over the previous quarter of the same accounting year or a previous accounting year.

Assuming comparable store sales are up from a previous period, it is an indication that the retail company is moving in the right bearing. An increase in comparable store sales could be perceived to mean that the retailer is effective in holding its customers and may be better off zeroing in on its existing locations and stressing less over expansion. Supported negative same-store sales more than several quarters or even years might be an indicator that the retailer is in a difficult situation.

Computing Comparable Store Sales

Comparable store sales are normally communicated as a percentage of an increase or diminishing in revenue. This model shows how you would ascertain the change in comparable store sales from one year to the previous year.

1. Find the net sales figures for every one of the years 2018 and 2017.
2. Take away any revenue connected with stores closed during the past a long time from the net sales earned in 2017.
3. Revenue connected with stores closed during the past two years ought to likewise be deducted from 2018 revenue.
4. Deduct any revenue connected with stores opened during the past a long time from the total revenue produced in 2017 to show up at the total comparable store sales for 2017.
5. Like #3 above, revenue connected with stores opened during the past two years ought to be deducted from 2018 revenue to show up at the total comparable store sales for 2018.
6. Deduct total comparable store sales in 2017 from total comparable store sales in 2018. This is the absolute dollar change in same-store revenues, which might be negative or positive.
7. At long last, partition the absolute dollar change in comparable store sales by the total comparable store revenues in 2017. This amount, communicated as a percentage, shows the change in comparable store sales.

The Bottom Line

By looking at sales across changed periods, company management and investors can decide how well a retail store is doing. Comparable store sales not just give an image of how specific locations are performing, they can likewise recount how a retailer is proceeding as a whole. A negative number shows declining same-store sales, while a positive number shows expanding same-store sales. Negative or positive same-store sales may be due to expanding or falling prices or a change in the number of customers who frequent the stores.

Regularly, stores with short of what one year of sales history are excluded from comparable store sales computations.

Features

• A negative comparative store sales number shows a company's sales are declining, while a positive number shows sales are expanding.
• Analysts utilize comparable store sales as a measure of sales growth to assess how laid out stores have performed over the long haul compared to new stores.
• Comparable store sales (or same-store sales) allude to a company's revenue produced by a retail location in the latest accounting period compared to the revenue it created in a comparative period in the past.