How do I calculate same store sales?

Written by michael dreiser
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How do I calculate same store sales?
(business sales image by Nicemonkey from Fotolia.com)

Same-store sales is one of the key economic indicators for the health of the consumer sector of a nation's economy and a key evaluation tool for gauging the performance of companies in the retail sector. Generally measured against the same period of time in the prior year, same-store sales compare revenue trends and are used as an advance measure to evaluate both a country's economic performance and the financial performance of individual retailers. Increasing same-store sales are generally considered a positive sign of growth and expansion. Decreasing same-store sales generally indicate economic contraction and are a warning-sign for individual retailers.

Skill level:
Moderate

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Things you need

  • List of annual revenues for the past two years of the firm you wish to examine
  • List of annual revenues for stores opened in the last two years
  • List of annual revenues for stores closed in the last two years

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Instructions

  1. 1

    Separate the amount of total revenues during year one from the amount of total revenues during year two on your list of annual revenues for the past two years.

  2. 2

    Subtract from the total revenues during year one any revenue related to stores closed during the past two years.

  3. 3

    Subtract from the total revenues during year two any revenue related to stores closed during the past two years. This now gives you total same-store revenues during year one.

  4. 4

    Subtract from the total revenues during year two any revenue related to stores opened during the past two years.

  5. 5

    Subtract from the total revenues during year two any revenue related to stores opened during the past two years. This now gives you total same-store revenues during year two.

  6. 6

    Subtract total same-store revenues during year one from total same-store revenues during year two. This is your absolute dollar change in same-store revenues. It may be negative or positive.

  7. 7

    Divide the absolute dollar change in same-store revenues from the total same-store revenues by year-one. This amount, expressed as a percentage, shows you your change in same-store sales. A negative number shows declining same-store sales, while a positive number shows increasing same-store sales.

Tips and warnings

  • This article discusses calculating year-over-year same-store sales. The same method can be utilised to calculate month-over-month or week-over-week same-store sales.
  • This same method may be used to calculate same-store sales for a single retailer, a group of retailers, or the retailing sector as a whole.
  • Same-store sales are not adjusted for inflation. However, when evaluating same-store sales, investors should consider inflation's effects.

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