Advertisement

Like-for-like sales

One way of making meaningful year-on-year comparisons, especially with retail stocks, is by looking at 'like-for-like' sales growth.

When you look at a company's performance from one year to another, it is often difficult to see real gains or losses at a glance. A company might say that its turnover is up 10% on last year, but if it has doubled the amount of stores it owns or made bolt-on acquisitions since then, this may not best represent the state of the underlying business.

Advertisement - Article continues below

One way of making meaningful year-on-year comparisons, especially with retail stocks, is by looking at 'like-for-like' sales growth. This means excluding from the most recent numbers sales made in new stores or stores gained from acquisitions over the previous financial year - and adding back in any that might have come from stores disposed of over the same year. What you have left is a figure that shows how well the company's previously existing business has done over the period.

In the year 2001 to 2002, for example, pub operator JD Wetherspoon's opened 87 pubs and overall sales rose 24%. However, if you discount the new revenue streams (from the 87 new pubs), you will see that like-for-like sales - ie, those at its previously existing outlets - increased by only 5%.

Advertisement
Advertisement

Recommended

Visit/glossary/bonds
Glossary

Bonds

A bond is a type of IOU issued by a government, local authority or company to raise money.
19 May 2020
Visit/spending-it/glossary/601300/quantitative-investing
Glossary

Quantitative investing

Quantitative investing uses sophisticated computer-based mathematical models to identify and carry out trades.
8 May 2020
Visit/glossary/quantitative-easing-qe
Glossary

Quantitative easing (QE)

Quantitative easing (QE) involves electronically expanding a central bank's balance sheet.
8 May 2020
Visit/glossary/600702/emerging-markets
Glossary

Emerging markets

An emerging market is an economy that is becoming wealthier and more advanced, but is not yet classed as "developed".
24 Jan 2020

Most Popular

Visit/economy/uk-economy/601427/covid-bounce-back-loans-and-inflation
UK Economy

What bounce back loans can tell us about how we’ll pay for all this

The government will guarantee emergency "bounce back loans" for small businesses hit by Covid-19. Inevitably, many businesses will default. And there'…
1 Jun 2020
Visit/investments/commodities/601433/commodities-possibly-the-biggest-opportunity-in-todays-markets
Commodities

This looks like the biggest opportunity in today’s markets

With low interest rates and constant money-printing, most assets have become expensive. But one major asset class hasn’t. John Stepek explains why com…
2 Jun 2020
Visit/economy/global-economy/601420/james-ferguson-the-virus-the-lockdown-and-what-comes-next
Global Economy

The MoneyWeek Podcast: James Ferguson on the virus, the lockdown, and what comes next

Merryn talks to MoneyWeek regular James Ferguson of Macrostrategy Partnership about what's happened so far with the virus; whether the lockdown was th…
28 May 2020