Understanding Same-Store Sales: Calculation & Significance

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.

Calculation

Step 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.

Step 2

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

Step 3

Subtract from the 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.

Step 4

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

Step 5

Subtract from the 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.

Step 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.

Step 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.

Tip

This article discusses calculating year-over-year same-store sales. The same method can be utilized 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.

Warning

Same-store sales are not adjusted for inflation. However, when evaluating same-store sales, investors should consider inflation's effects.

Things You'll 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