Question: So - called same - store sales are a very important measure for companies as diverse as McDonald s and Home Depot. As the name
Socalled samestore sales are a very important measure for companies as diverse as McDonalds and Home Depot. As the name suggests, examining samestore sales means comparing revenues from the same stores or restaurants at two different points in time. Why might companies focus on samestore sales rather than total sales?
If a company is growing by opening new stores, then presumably total revenues would be rising. Comparing total sales at two different points in time might be misleading. Samestore sales control for this by only looking at revenues of stores open within a specific period.
If a company is growing by opening new stores, then presumably total revenues would be decreasing. Inventory would be shifted from existing stores to new stores. The supply chain disruption would cause new store sales to decrease.
If a company is growing by opening new stores, then presumably total costs would be rising. The increased cost would be derived from the increased stress of the existing supply chain. Comparing total sales at two different points in time is a leading indicator for identifying increases in total sales.
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