This Is Why Same-Store Sales Numbers Matter

For example, Zumiez, a retail chain of board-sports
accessories, recently reported overall sales down 1.5% between this
October and the previous October. That might not sound good, but its
same-store numbers were even worse: They fell by 8.9%.

The same-store numbers are the most meaningful, because they reflect
sales at stores that have been open for more than a year. Without this
measure, a company could report rising sales year after year just by
opening new stores, when in fact each store might be seeing its sales
level shrink. The same-store number is what you should focus on.

Here are some recently reported numbers for some companies you may know:

Data: Motley Fool CAPS, Yahoo! Finance.

Making sense of it

Of course, things are
rarely as simple as they may appear, right? It's true with same-store
sales numbers, too. So look at the big picture. Noting that these
numbers reflect the sales change since October 2008, think about what
the economy looked like a year ago. Last year's sales were starting to
look pretty ugly on the eve of the financial crisis.

Since 2008's numbers were weak, you should expect that this year's
numbers would likely look better in comparison. When you learn, for
instance, that Nordstrom's October 2008 same-store sales were down
15.7%, its recent 6.5% rise doesn't look quite as impressive as it
would in isolation.

Retailing can be a tough business, so you'd do well to learn which
metrics to study when evaluating retailers. That way, you'll have a
better chance of picking the best stocks you can find.

© 2009 UCLICK, L.L.C.