What is 'Same-Store Sales'

Same-store sales is a financial metric that companies in the retail industry use to evaluate the total dollar amount of sales in the company's stores that have been operating for a year or more. Same-store sales statistics provide a performance comparison for the established stores of a retail chain over a given time period, such as a fiscal year or quarter or a calendar year or quarter, comparing revenues for the current period to the same period in the past, for example, comparing first-quarter 2016 revenues to first-quarter 2015 revenues.

BREAKING DOWN 'Same-Store Sales'

Examining same-store sales figures is helpful to investors in determining what portion of a company's current sales revenues are a result of sales growth in existing locations and what portion is accounted for by the opening of new stores.

Same-store sales are also referred to as comparable-store sales, SSS or identical-store sales.

Same-store sales figures are expressed as a percentage that indicates the relative amount of revenue increase or decrease. For example, a same-store sales figure of 7% indicates that total dollar revenues at a retail chain's existing locations increased by 7% over the same given time period from the previous year.

Why Same-Store Sales Figures Matter

Same-store sales figures are important points of analysis for the management of a retail chain and for investors evaluating the chain's current and likely future performance. Market analysts frequently use same-store sales to determine the effectiveness of the management of a retail chain in producing revenue growth from existing assets.

Investors and market analysts prefer to see significant increases in same-store sales figures. If the bulk of a company's revenue increase comes from opening new stores, this can indicate that demand for the company's products is flattening out and that little future revenue growth can be expected once the company reaches a saturation point in terms of total locations.

Additionally, same-store sales figures can be helpful to retail chain management in making future decisions regarding existing stores and new locations. Increases or decreases in same-store sales commonly result from either price changes, changes in a store's number of customers or changes in the number of items the average customer purchases. Company management often drills down into same-store sales figures to determine the exact cause of the change in revenues, which can be helpful to the company in making decisions. For example, a decline in sales revenues might result from a new or existing competitor offering lower prices on key items that the company's stores sell. Also, it is important to know if an increase in revenues is primarily the result of attracting new customers or the result of approximately the same number of customers making larger purchases.

Example

A retailer may impress investors by reporting a certain revenue increase. What underlies the numbers, however, tells the real story. Same-store sales growth may have been tepid or even declined, while most of the revenue increase came from opening new stores, which may also eventually lose money. Moreover, same-store sales figures may say something about the quality of management and the underlying finances of the company. For instance, the company may have taken on debt to finance the new store openings, deteriorating the quality of its financial position. A reliable management team would acknowledge poor same-store sales growth, identify the reason for the weakness and decide whether to close stores or make changes to the business to increase popularity. 

RELATED TERMS
  1. Comparable Store Sales

    Comparable store sales is a retail store's revenue in the most ...
  2. Base Year

    A base year is the first of a series of years in an economic ...
  3. Chain Store Sales

    An indicator that provides information on the monthly sales volumes ...
  4. Gross Sales

    A measure of overall sales that isn't adjusted for customer discounts ...
  5. Organic Sales

    Organic sales are revenues generated from the firm's existing ...
  6. Unit Sales

    Unit sales are a measure of the total sales that a firm earns ...
Related Articles
  1. Investing

    Domino's Continues Its Same-Store Earnings Streaks

    Domino's (NYSE: DPZ) cannot be stopped: Global demand for its pizzas, pastas, sandwiches, and other dishes has been growing impressively, and that pattern continued in the fourth quarter. The ...
  2. Financial Advisor

    Understanding Chipotle's Recent and Exponential Growth (CMG)

    Learn what is fueling Chipotle's rapid growth. Understand how same-store sales and opening new restaurants are supporting its revenues.
  3. Investing

    Domino's Streak of Strong Sales Growth Continues

    Clearly, the Noid has been defeated. Domino's (NYSE: DPZ) continues to deliver results that defy the market conditions dragging down sales in much of the restaurant industry. The company posted ...
  4. Investing

    Dollar General Has Big 2017 Expansion Plans

    Dollar General (NYSE: DG) added about 900 new stores in 2016, and revamped roughly the same number of existing locations. Don't expect that activity to slow down in the coming year; in fact, ...
  5. Investing

    GameStop Reports Q4 Sales Slump; Will Shut Stores

    GameStop's (NYSE: GME) stock dropped slightly following the release of the company's fourth quarter and fiscal 2016 results, and an announcement that it would be closing some of its outlets. ...
  6. Investing

    5 Retailers Set to Close More Stores in 2016 (FINL, GPS)

    Discover retail stores that have already announced plans to close stores in 2016. Some expect a new economic downturn, which may lead more stores to close.
  7. Investing

    Weakness At Target A Reason For Concern (TGT)

    With an economic slowdown in the mix, Target may feel the pinch more than investors expect.
  8. Investing

    The World's Top 10 Retailers (WMT, COST)

    Read about some of the top retail companies in the world, and learn a little about the products they sell and the markets and customers they serve.
  9. Investing

    Earnings Preview: J.C. Penney (JCP)

    Shares of J.C. Penney (NYSE: JCP) headed higher in recent days in anticipation of the company's first-quarter earnings release. Investors are clearly betting that J.C. Penney, which is scheduled ...
  10. Investing

    A Holiday Hangover for Target

    Target got a stocking stuffed with coal and lower-than-expected sales figures this holiday season.
RELATED FAQS
  1. What components are factored in determining net sales?

    Understand the key components that factor into determining a company's net sales. Learn about the underlying drivers of those ... Read Answer >>
  2. What key conditions might explain a company's declining net sales in spite of increasing ...

    Explain why a company reports a decline in net sales even though it generates an increase in revenues during the same reporting ... Read Answer >>
  3. What has the retail sector evolved to its current structure?

    Find out about the retail sector, the size of United States and global retail markets and why online retailers are changing ... Read Answer >>
  4. How does a strong value chain management team help a company?

    Understand what makes up a company's value chain and the point of a value chain. Learn how a strong value chain management ... Read Answer >>
  5. Value chain analysis: What are the advantages and disadvantages?

    Learn about the five activities that make up a generic value chain, and understand the advantages and disadvantages of value ... Read Answer >>
  6. Determining a Firm's Percentage of Credit Sales

    Find out where to look for information about determining a company's percentage of credit sales. Read Answer >>
Hot Definitions
  1. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  2. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  3. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  4. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  5. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  6. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
Trading Center