Wednesday 17 August 2011

Like-for-unlike Sales?

The way retailers report their like-for-like sales should be streamlined to reflect factors including the growth of online sales, or risk obsolescence of the measure, according to the KPMG/Synovate Retail Think Tank (RTT).
Currently there are no guidelines to how retailers should report like-for-like sales, which aim to provide a measure of underlying performance by taking out the impact on sales of new or closed stores. Retailers can choose whether they include figures on stores that are being refurbished, whether they include VAT, changes to products, discounts or promotions. That makes it difficult, says the RTT, to compare figures for different retailers.
There is also need for a consistent approach to reporting sales online and from other emerging channels.
RTT recommendations in new white paper:
-       website sales be included in like-for-like sales, except in the case of new website launches
-       trading updates for like-for-like sales should cover a standard period of time, especially over Christmas
-       excluding new and closed stores from like-for-like figures but including stores that are being refurbished
-       like-for-like sales figures should be provided both including and excluding VAT
-       any discounts should be reflected in like-for-like sales at the value that the customer paid
-       future money-off vouchers should only be taken into account at the point of redemption
Assessment of the health and value creation of a retailer requires a balanced view across a much broader set of metrics covering cash generation, profitability, and productivity.

Real issue is whether a retailer is attempting to clarify or obscure its real comparability with competition.
All else is detail….

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