Same-Store Sales

What Are Same-Store Sales?

Same-store sales, or comparable-store sales, are an important measurement in the retail industry used to check whether customers keep on causing purchases at stores that to have been operating for no less than 12 months.
While many companies depict same-store sales in light of stores that have been open for something like 12 months, the comparable sales data utilize 13 months — in view of the current month and prior year period. A few companies utilize a longer duration, stretching out the time period to up to 18 months.
Same-store sales was a term that initially centered around department stores, yet it is likewise applicable to different industries and has taken on various names in various sectors. Fast-food companies, for instance, are continually adding new stores in the U.S. also, universally, and most allude to their measurement as same-restaurant sales.

Why Are Same-Store Sales Important?

Same-store sales can show whether foot traffic to their stores is expanding. While a company might open many new stores over time, contrasting sales in light of stores that have been operating for essentially a year can show organic growth. This keeps the number from getting mutilated by more current stores that created unique sales from a company's core average. It keeps the comparison consistent.
The sales data can likewise be seen as an economic indicator. Higher same-store sales figures for some companies propose that consumers have more disposable income and are spending that money to buy garments, shoes, fast food, hardware, and different things. Investors and analysts will generally view at same-store sales as a leading indicator on potential spending habits of consumers.

When Are Same-Store Sales Data Released?

Companies regularly release their same-store sales data for the previous month or quarter on a month to month or quarterly basis. For instance, January sales data will generally be released around the principal seven day stretch of February. For the quarter that closures in March, sales performance data are typically released at some point in April, when a company releases its quarterly financial statement.

How Are Same-Store Sales Data Compiled?

Sales at a company's stores that have been opened for essentially a year are gathered and are calculated on a year-over-year basis toward the finish of every month or quarter.

Step by step instructions to Interpret Same-Store Sales

Contrasting same-store sales of companies in the same industry is desirable over looking at those from stores in various industries. These can be clothing retailers, gadgets venders, and fast-food restaurant operators. A strong sales result could show that a company's strategy is working, be it in marketing another line of products or services, opening new stores, cutting back on expenses, hiring new employees, or regardless. Weak sales could likewise result as a reaction to those activities and others — opening too many stores at the same time, introducing a product line that was expensive to market and had a poor gathering, or terrible timing.
Like with retail sales, sales at comparable stores for some companies would spike during certain times of the year, for example, during the Christmas holiday season and just before the beginning of the school year.

Same-Store Sales Example: Wendy's (NYSE: WEN)

Below is a graph of the same-restaurant sales for Wendy's. The fast-food operator left on a strategy including opening new stores in the U.S. what's more, different countries, and it likewise presented another breakfast menu.
The company opened new stores over several years, however the spike in same-restaurant sales didn't occur until 2021. Wendy's accumulates its same-store sales data in light of outlets that have been open for one year as well as for a considerable length of time. The comparison shows that two-year sales growth has consistently dominated one-year sales growth, demonstrating that longer-term sales growth is strong and new customers keep on rushing to its restaurants.

How Does the Stock Market React to Same-Store Sales?

A strong same-store sales report for a company could lead to a higher stock price, while a weak one could drag down its share price. In any case, it's just a single part of a company's operational performance. Other company measures, like revenue and profit, likewise influence the price of a stock.