We might question why wouldn't we give Walmart same store growth credit for any of their ‘same stores’ outside
of the US. Walmart stores that have been open for more than one year outside the US aren’t included in those same store sales comparisons. From what we can see, the same store sales growth outside the US is something close to 7%, which would mean that ‘global same store’ growth is easily positive. We don't see mention of that. This has nothing to do with expansion – these stores have all been open more than a year.
'SSS' happens to be a metric that’s unusually camouflaged. Some companies – Target and Kohl’s for example – include their internet sales business in ‘same stores’. Others like the Gap (and perhaps Walmart, though I can’t seem to confirm this) do not count internet sales as ‘same stores’. Some, like Walmart, don’t include existing stores that have been materially expanded as ‘same store’, while others like Target and Kohl’s do count them in the metric. Likewise where poor-performing stores have been closed and another reopened in the ‘same market’, some chains count the newly opened store as ‘same store’ vs the closed dog, despite actually being a brand new capex-funded store, with not only presumably more favorable location, but often with greater square footage. Those retailers compare the new store's sales to the year-ago sales of the closed dog, enhancing that 'same store' metric.
A key component of Target’s same store sales growth this year has been its store remodel program, where capex has been directed to remodeling and expanding existing stores versus building new stores. It’s been aggressive – they’ve remodeled something like 340 stores – and as a result of these remodels and/or expansions they expect to report continued strong ‘same store’ growth for the next few quarters. Where significant capex has been expended to reconfigure or increase the selling space of a location, many owners, including us minority owners, might want to know that fact, or at least not have the impact buried in ‘same stores’. Remodels/expansions probably come under the ‘then you add on all other metrics’ category. We still may congratulate management on a job well done, but we won’t be lulled into thinking that they’re just executing better on the same space. We might actually hold the performance of those stores to a higher standard, considering the new investment we’ve put into those stores.
Something like half of Kohl’s same store growth this year is from its rapidly growing internet business. It’s good that they’re getting that business, for sure, but we should recognize it for what it is. Meanwhile the Gap reports flat same store sales. They note that internet sales are up 15% however. In their case, they don’t inflate ‘same store’ with that internet component – they report the numbers ‘straight up’. Yet what’s the headline for Kohl’s vs the Gap?
The bottom line for all this is just that, the bottom line. Where we see retailers - some retailers anyway - continually gaming their reported 'same store' numbers with internet business, remodels, store expansions, and new 'replacement' stores, we might question their commitment to transparency to their owners.
of the US. Walmart stores that have been open for more than one year outside the US aren’t included in those same store sales comparisons. From what we can see, the same store sales growth outside the US is something close to 7%, which would mean that ‘global same store’ growth is easily positive. We don't see mention of that. This has nothing to do with expansion – these stores have all been open more than a year.
'SSS' happens to be a metric that’s unusually camouflaged. Some companies – Target and Kohl’s for example – include their internet sales business in ‘same stores’. Others like the Gap (and perhaps Walmart, though I can’t seem to confirm this) do not count internet sales as ‘same stores’. Some, like Walmart, don’t include existing stores that have been materially expanded as ‘same store’, while others like Target and Kohl’s do count them in the metric. Likewise where poor-performing stores have been closed and another reopened in the ‘same market’, some chains count the newly opened store as ‘same store’ vs the closed dog, despite actually being a brand new capex-funded store, with not only presumably more favorable location, but often with greater square footage. Those retailers compare the new store's sales to the year-ago sales of the closed dog, enhancing that 'same store' metric.
A key component of Target’s same store sales growth this year has been its store remodel program, where capex has been directed to remodeling and expanding existing stores versus building new stores. It’s been aggressive – they’ve remodeled something like 340 stores – and as a result of these remodels and/or expansions they expect to report continued strong ‘same store’ growth for the next few quarters. Where significant capex has been expended to reconfigure or increase the selling space of a location, many owners, including us minority owners, might want to know that fact, or at least not have the impact buried in ‘same stores’. Remodels/expansions probably come under the ‘then you add on all other metrics’ category. We still may congratulate management on a job well done, but we won’t be lulled into thinking that they’re just executing better on the same space. We might actually hold the performance of those stores to a higher standard, considering the new investment we’ve put into those stores.
Something like half of Kohl’s same store growth this year is from its rapidly growing internet business. It’s good that they’re getting that business, for sure, but we should recognize it for what it is. Meanwhile the Gap reports flat same store sales. They note that internet sales are up 15% however. In their case, they don’t inflate ‘same store’ with that internet component – they report the numbers ‘straight up’. Yet what’s the headline for Kohl’s vs the Gap?
The bottom line for all this is just that, the bottom line. Where we see retailers - some retailers anyway - continually gaming their reported 'same store' numbers with internet business, remodels, store expansions, and new 'replacement' stores, we might question their commitment to transparency to their owners.
