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Same-store sales

Same-store sales, or "comps," are widely reported by retail and restaurant stocks. Same-store sales measure percentage changes in revenue for retailers' stores that have been open for more than a year.

Expanded Definition

Investors watch same-store sales data to get an idea of how well retailers' wares -- and brands -- are resonating with their customers. Retail companies with more than one concept often break out the figures for each of their concepts. (For example, Gap will report the comps of Gap, Old Navy, and Banana Republic.)

Comps are meant to show whether business is picking up or not. As an example: Company X will compare sales in the first quarter of 2007 to sales in the first quarter of 2008 at all of its stores open at least a year.

This isn't necessarily an apples-to-apples comparison. Here's a few things that might influence the comparative numbers: Some stores may have closed in 2008, and price increases in 2008 (rather than the selling of more merchandise) might account for larger sales figures. Or were deep discounts enacted to reduce inventory? Perhaps a month in the quarter (February) had an extra day, or the quarter ended up with an extra weekend compared to the previous year. Maybe a holiday popular with shoppers fell in the first quarter one year and in the second quarter the next year.

These are just things to consider and to research whether they say something broader about the company.

Most retailers report same-store sales at least every month, although there has been a growing trend over the last several years to report comps on a quarterly basis only. Companies that have decided to decrease the frequency of their comps reporting have often argued that the monthly reports contribute to too much volatility in their stock prices.

Monthly comps data is a good tool for investors, but should be compared to the data over time for a true read on a retailer's success; the figures should be compared to the comps of competitors as well. And of course, same-store sales data is just one metric of many to consider when formulating an investment thesis on a retail stock.

The availability of monthly data increases the volatility of the stocks of retailers. Most other stocks have new data only quarterly. But in retail, some are up and some are down in same store sales every month.

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