What is a 'Like-For-Like Sales'
Like-for-like sales is an adjusted measurement of a company's revenue growth. This comparison of current and prior period sales takes into consideration only those activities that were in effect during both time periods. Like-for-like sales is a method of valuation that attempts to exclude any effects of expansion, acquisition or any other event that artificially enlarge a company's sales.
!--break--Like-for-like sales help companies and investors determine the sales performance over a certain period of time when compared to the same period of time one year earlier, such as comparing the second quarter of 2012 to the second quarter of 2011. Like-for-like sales are typically represented as percentage growth rates. For example, Burberry Group plc reported a 3% decline in like-for-like sales in the first quarter of 2016.
Pro forma financial results are often reported by firms to control for the effects of nonrecurring events that distort the reality of ongoing results. Large acquisitions, divestitures, or changes attributable to currency fluctuations often result in pro forma financial statements that display like-for-like sales. In June 2016, Nike Inc. reported full fiscal year revenue growth of 6%, but disclosed 12% growth when adjusting for currency. The company's significant exposure to the Chinese market meant that currency depreciation in that market resulted in lower sales when translated in the dollars. General Mills Inc. reported third quarter sales in fiscal 2016 that fell roughly 5.5% year-over-year, but the company attributed four percentage points to currency headwinds and three percentage points to the divestiture of its Green Giant brand products. Critics of like-for-like sales figures cite the lack of an industry standard for determining the measurement. These figures do not fall under generally accepted accounting principles (GAAP), which makes it is challenging for investors to compare like-for-like sales among peers.
Same Store Sales
Same store sales are an example of like-for-like figures that are commonly reported by retail and restaurant chains. These businesses typically report values called same store sales or comparable sales that control for openings and closures by including only locations that have been in operation for more than 12 months. This leaves out valuable information for analysis, but it also helps isolate certain growth catalysts. McDonald's Corp. reported 6.2% comparable sales growth for the quarter that ended in March 2016, while consolidated revenues fell 1%. This figure controlled for franchise openings and closures but also for currency fluctuations. The Home Depot Inc. reported 6.5% comparable store sales for the first quarter of 2016, with total sales rising 9%.