Like-for-Like Sales: What Is It?

As an adjusted growth indicator, like-for-like sales incorporate revenues from stores or items with similar features, leaving out any significant variations that could distort the numbers. Similar-store sales, comps, same-store sales, or identical-store sales are other terms for like-for-like sales.

Recognizing Similar-to-Like Sales

Like-for-like sales are a financial analysis technique that helps determine which divisions, products, or retail locations are driving a company’s growth and which are not. Additionally, it does not include unrelated elements like a sizable overseas acquisition that can artificially inflate or deflate the data.

Companies and investors can learn which products drive a company’s growth or downfall using like-for-like sales data. It is frequently utilized when performing detailed sales comparisons, like comparing sales in particular areas or between two merchants offering the same product. It benefits businesses that run many retail locations, such as Walmart Inc.’s Sam’s Club and Walmart stores.

Segments are usually bundled to display their percentage growth rates for a specific period when examining like-for-like sales. Similar data can be compared to the same quarter last year, the previous quarter, or several consecutive quarters, just like in any financial analysis.

Like-for-Like Sales Benefits

Retail organizations frequently use the like-for-like metric to compare newly launched establishments against existing ones. An indication that established stores drive growth can be found in a retail company’s like-for-like solid sales growth rate and high overall revenue growth rate. A corporation may be getting attention from customers for new products or stores if its average like-for-like store sales growth rate is higher than its overall revenue growth rate.

Similar sales data assists businesses in determining whether a specific item or location is boosting profits and whether it is expanding as planned. Additionally, it can assist businesses in determining if it makes sense to expand their operations or launch a new site. Additionally, similar-for-similar sales might show whether a new store cannibalizes sales from existing ones.

Ways to Increase Like-for-Like Revenue

They increase like-for-like sales, resulting in higher profits and a more robust bottom line. To enhance like-for-like sales, businesses might utilize various tactics.

Sales and promotions are potent tools for boosting revenue and attracting customers while differentiating the company from rivals. These events must be appropriately organized to preserve earnings and entice clients to make more purchases. When done correctly, new consumers’ conversion rates and customer loyalty rise.

Businesses can also boost like-for-like sales by obtaining consumer data and applying it to grow their clientele and boost revenue. By gathering customer data, businesses may determine what matters to customers and how to construct future promotions and deals. Incentive or rewards programs are one way to do this; they collect client data in exchange for benefits and early or exclusive access to sales. Most significantly, businesses may continue to engage with customers by introducing new goods and providing incentives to promote purchases.

Particular Points to Remember

The most significant time to examine a company’s performance, particularly its like-for-like sales data, is usually during its fourth-quarter reporting since it compares the previous and full fiscal year.

Apart from disclosing sales income based on geographical or comparable-store sales, businesses could employ additional segmentation strategies that are worthwhile to investigate. Global businesses must specifically manage foreign exchange rates, which impact sales revenue. Many of these businesses will give information on currency conversions and how sales and net income were affected.

Real-Life Illustration

Like-for-like or same-store sales frequently control openings and closings, including those at sites that have been in operation for a year or longer. The isolation of growth catalysts also depends on this.

In the first quarter of 2021, McDonald’s Corp. reported a 7.5% increase in global comparable sales, a 13.6% increase in comparable store sales in the United States, and an overall 9% gain in sales and revenues.

What does it indicate to us? Despite opening numerous new locations, McDonald’s saw only little growth in revenue at its current locations.

Conclusion

• This sales figures show the revenues of stores or goods with comparable features while excluding outliers that could affect the results.
• A comparison of figures over time reveals the elements contributing to a company’s growth or downfall.
• Many aspects that contribute to success or failure can be identified via sales analysis.
• Like-for-like sales provide firms with information about current stores versus newly opened stores.
• Companies can boost like-for-like sales by offering promotions or specials and gaining valuable insights from customer data.