# Reading same-store sales like an analyst
A retailer reports 4% comp-sales growth and the stock jumps. Another reports the exact same 4% and the stock falls. Same number, opposite reactions. The difference is what analysts see underneath the headline: whether that 4% came from more people walking in, more of them buying, or each buying more, and whether it came from real stores or accounting choices.
This lesson teaches you to decompose that number the way a sell-side analyst does before an earnings call.
Same-store sales (also called comparable sales or comps) measure revenue growth from stores that have been open long enough to be counted in both the current and prior period. The industry convention is usually stores open at least 12 to 13 months.
Why exclude new stores? Because opening 50 new locations obviously grows total revenue. Comps strip that out to answer a sharper question: are the stores we already had getting more productive?
That distinction is the whole game. Total revenue growth mixes two things:
A retailer can post strong total sales while comps quietly go negative, meaning the base business is shrinking and new openings are masking it. That pattern often precedes trouble.
Every comp number breaks into three drivers. This is the core identity to memorize:
Comp sales = Traffic x Conversion x Average ticket
Let's define each in retail terms:
Two retailers both post +4% comps.
Retailer A: traffic +5%, conversion flat, ticket down 1%. Translation: people are coming in (maybe a good marketing campaign), but they are spending slightly less per visit, possibly trading down to cheaper items. The demand signal is healthy; watch margins.
Retailer B: traffic down 3%, conversion flat, ticket +7%. Translation: fewer people, but those who come spend more. This is often price-driven growth, either from inflation or a shift to premium products. When prices stop rising, that +7% can evaporate. Fewer bodies in the store is a warning sign for the future.
Same 4%. Completely different stories. Retailer A is winning customers; Retailer B is squeezing the ones it has left.
Always ask: is the ticket growth inflation (charging more for the same thing) or mix (customers choosing pricier items) or units (buying more stuff)? Genuine volume growth (traffic and units) is more durable than pure price. Grocery chains in the high-inflation years of 2022 to 2023 posted big comps that were almost entirely price. Analysts discounted those numbers heavily.
Here is where amateurs read the headline and stop, and where analysts start digging. Several accounting and operational choices inflate or depress comps without reflecting real productivity.
New stores enter the comp base after their anniversary. If a company opened aggressively 13 months ago, those newly-comping stores can juice the current figure, since young stores often ramp sales quickly.
Worse is cannibalization: a new store steals sales from an existing nearby one. The existing store's comp goes negative, but total company sales rise. Management may quietly exclude or adjust for this. Read the footnotes.
When a store is remodeled, it may close for weeks. Some retailers pull remodeled stores out of the comp base during the disruption, then add them back once refreshed and selling more. Cherry-picking which stores count can flatter the number. A remodel-heavy quarter deserves skepticism about the comp base definition.
This is the single most important adjustment in modern retail. There is no standard rule for whether online sales count in comps, and definitions vary widely by company.
Common approaches:
The trap: a retailer with declining store traffic can report positive "comps" purely because online grew and is folded into the number. The physical stores may be dying while the headline looks fine.
When you see a company change its comp definition to include more digital sales, treat it as a yellow flag and re-baseline. You want the like-for-like store number and the digital number separately.
The SEC's guidance on non-GAAP and operating metrics is worth knowing, because comps are a company-defined metric, not a regulated accounting figure. See the SEC's non-GAAP Compliance and Disclosure Interpretations for context on how companies must present these figures consistently.
🎬 [VIDEO: "How Retailers Report Same-Store Sales" — youtube.com — a short explainer on comp-sales definitions and why they vary across companies]
Suppose a specialty apparel chain reports +4% comps. In its investor deck it discloses:
Rough check: (-2%) + (+5%) + (+1%) is approximately +4%. (Because these are multiplicative, adding the percentages only approximates the total, but it is close enough for a first read.)
What story does this tell?
Fewer people are coming in, but the store is converting a higher share of them and each buyer spends slightly more. This could mean the retailer cut unprofitable promotions (fewer bargain-hunters, so lower traffic) while service and merchandising improved (higher conversion). That is a quality-of-earnings positive: the comp is driven by execution, not by discounting or a one-time crowd.
Now flip it. If the same +4% were traffic +6%, conversion down 2 points, ticket flat, you would suspect a heavy promotion pulled crowds in but many left empty-handed. Sales grew, but it may not repeat, and margins likely suffered.
The lesson: a comp number is an answer. The decomposition is the reasoning. Never trade the answer without the reasoning.
Knowledge check
1. Why do same-store sales metrics exclude newly opened stores from the calculation?
2. A retailer reports strong total sales growth, but its comparable sales are slightly negative. What is the most analytically important interpretation?
3. Two retailers each report identical 4% comp-sales growth, yet one stock rises and the other falls. What best explains why analysts might react so differently?
4. Select ALL correct answers about the three levers in the identity Comp sales = Traffic x Conversion x Average ticket.
Select all the correct answers.
5. Select ALL correct answers about interpreting the composition of a comp number.
Select all the correct answers.
When you analyze a real retailer, gather these in order:
1. The exact comp definition. Read the footnote. What counts as a comp store? Is e-commerce in or out? Has the definition changed year over year?
2. The driver breakdown. Traffic, conversion, ticket. Many retailers disclose at least traffic and ticket on the earnings call even if not in the release.
3. Two-year and three-year stacked comps. A +4% comp against a prior-year +15% is weak. A +4% against a prior-year -10% is barely a recovery. Stacked comps (adding consecutive years) normalize for easy or hard comparisons.
4. Store count and productivity. Sales per square foot, and how many stores are new, remodeled, or closing.
5. Digital versus physical split. Insist on separating them.