Posted in Marketing and Strategy Terms, Total Reads: 145
Definition: Comparable Store Sales
Comparable Store Sales compare a company’s sales in a recent accounting period to the sales in the same period in the previous years which can be for 30 days or every 3 months. Comparable store sales helps to gauge whether a company’s sales and performance is increasing or decreasing. It also takes into account factors like seasonal changes.
Some factors which affect the sales in a particular quarter of a year should also affect the sales in the same quarter in the other years. Comparative stores sales are an important method used by financial analysts and company management to access a company’s performance and sales.
Comparative Store Sales are also known as Same Store Sales. It is used as an indicator by financial analysts to check whether a store is making progress or not. An increasing comparative stores sales figure may indicate that the company is making progress. While a decreasing comparative store sales figure over an extended period of time may indicate that the company needs to change its strategies and procedures of operation.
Sometimes a company’s sales may increase or decrease due to various factors. The sales might increase as the company may hike the prices while the number of customers remains the same. The sales might decrease due to reduction in the number of customers buying the company’s product as they might be shopping somewhere else, due to the entrance of a competitor in the market.
Comparable store sales are reliable indicators of a company’s performance but it might be skewed at times. For example: a discount sale offered in a particular year and not offered in the next year might skew the sales results. Festivals, like Diwali falling in October in one year and in November in the following year might skew the results. Opening a large number of stores in a particular year can make the comparative store sales look more attractive.