'Same store sales' need a bit of clarification. There is no GAAP or industry definition for
'same store', and retailers devise their own. Some, under pressure from loose standards by their peers, have gradually altered their own definition of 'same store' in recent years.
Internet sales - Target, Kohl's, and I believe Macy's include online sales in their 'same store' reporting. GAP Stores, for one, does not. So far this year, Kohl's internet sales have something like doubled versus last year. They report that in same store. Gap's internet sales are up as well (as are most retailers, it seems) but they don't include those sales as part of their 'store sales'. Just examples.
Remodels - Most chains now include the impact of store remodels and/or store expansions in 'same store'. Target has remodeled - and in many cases added selling space - to over 300 existing store this year. Those are in 'same store', and Target expects to report continued strong 'same store sales' partly as a result. Walmart only includes their remodeled stores as 'same store' if the selling space is not materially increased (they have a 5% tolerance).
New Stores - many chains count new stores as 'same stores' if they are 'replacements' in the same market - meaning if they close one poor-performing store but open another in the same market, the new store in included as 'same store' versus the old. Again, Walmart only does this if the new store isn't any larger - but most other chains don't have that limitation.
The point of this is, there's a lot of emphasis on 'same to sales' ('like to like' for those in the UK). We hear from analysts how it's such an important measurement - some even say the most important. But when we put that kind of emphasis on such a subjective measure (while sales and earnings are audited, the extraction of 'same' is just an analyst's concoction), it seems we're bound to see gaming by those who most want to impress - or perhaps mislead.
Anyway, when we see 'same store' comparisons across chains, we might take the time to understand just what we're looking at. Some retailers are conscientious about not misleading us - for example telling us how the actual stores are doing and their online business results - while others just want to put the best face possible on their report.
The bottom line, of course, is how much of those sales translate to earnings. That's something to watch. Also, since some of these retailers fell off sharply during the recession, this boost may be a recapture of lost business for some - or a real pick-up for others. It's helpful to compare not just to the last year or two, but to pre-recession performance to get a full understanding of how they are doing. several of these strong 'same sale' performers are now only getting their actual earnings back to pre-recession profitability.
Shifting gear a bit - a minor note:
Looking at this year's calendar. This year there is one more day between Thanksgiving and Christmas than last (though some retailers are saying already that Christmas on the Saturday vs the Friday last year will actually hurt them). Next year it gets even better, with Christmas falling on the Sunday. 2012 will be the best of all for 'selling days' with Thanksgiving falling on the 22nd. Does this matter? Perhaps strangely enough, yes. We might think that people would spend the same for the season regardless of shopping days, but we don't. (Jumping a bit: Roosevelt recognized this when he had Thanksgiving re-defined as the 4th Thursday of November vs the 'last' Thursday -- that full extra week kicks in for years like 2012, when there's a substantial boost).
Most retailers report - as Costco is indicated as doing above - on a retail calendar (that reference to the 'four week period ending Nov. 28), so any 'calendar' pick-up is seen in the December reporting.
'same store', and retailers devise their own. Some, under pressure from loose standards by their peers, have gradually altered their own definition of 'same store' in recent years.
Internet sales - Target, Kohl's, and I believe Macy's include online sales in their 'same store' reporting. GAP Stores, for one, does not. So far this year, Kohl's internet sales have something like doubled versus last year. They report that in same store. Gap's internet sales are up as well (as are most retailers, it seems) but they don't include those sales as part of their 'store sales'. Just examples.
Remodels - Most chains now include the impact of store remodels and/or store expansions in 'same store'. Target has remodeled - and in many cases added selling space - to over 300 existing store this year. Those are in 'same store', and Target expects to report continued strong 'same store sales' partly as a result. Walmart only includes their remodeled stores as 'same store' if the selling space is not materially increased (they have a 5% tolerance).
New Stores - many chains count new stores as 'same stores' if they are 'replacements' in the same market - meaning if they close one poor-performing store but open another in the same market, the new store in included as 'same store' versus the old. Again, Walmart only does this if the new store isn't any larger - but most other chains don't have that limitation.
The point of this is, there's a lot of emphasis on 'same to sales' ('like to like' for those in the UK). We hear from analysts how it's such an important measurement - some even say the most important. But when we put that kind of emphasis on such a subjective measure (while sales and earnings are audited, the extraction of 'same' is just an analyst's concoction), it seems we're bound to see gaming by those who most want to impress - or perhaps mislead.
Anyway, when we see 'same store' comparisons across chains, we might take the time to understand just what we're looking at. Some retailers are conscientious about not misleading us - for example telling us how the actual stores are doing and their online business results - while others just want to put the best face possible on their report.
The bottom line, of course, is how much of those sales translate to earnings. That's something to watch. Also, since some of these retailers fell off sharply during the recession, this boost may be a recapture of lost business for some - or a real pick-up for others. It's helpful to compare not just to the last year or two, but to pre-recession performance to get a full understanding of how they are doing. several of these strong 'same sale' performers are now only getting their actual earnings back to pre-recession profitability.
Shifting gear a bit - a minor note:
Looking at this year's calendar. This year there is one more day between Thanksgiving and Christmas than last (though some retailers are saying already that Christmas on the Saturday vs the Friday last year will actually hurt them). Next year it gets even better, with Christmas falling on the Sunday. 2012 will be the best of all for 'selling days' with Thanksgiving falling on the 22nd. Does this matter? Perhaps strangely enough, yes. We might think that people would spend the same for the season regardless of shopping days, but we don't. (Jumping a bit: Roosevelt recognized this when he had Thanksgiving re-defined as the 4th Thursday of November vs the 'last' Thursday -- that full extra week kicks in for years like 2012, when there's a substantial boost).
Most retailers report - as Costco is indicated as doing above - on a retail calendar (that reference to the 'four week period ending Nov. 28), so any 'calendar' pick-up is seen in the December reporting.
