What it means
Total revenue growth is easy to manufacture by opening more locations. Like-for-like sales, sometimes called comparable or same-store sales, remove that flattery by counting only outlets that traded in both periods being compared.
The usual qualifying rule is that a site must have been open for at least twelve months, so it has a full prior-year figure to be measured against. Sites that closed, were refurbished for a long stretch, or opened mid-period are excluded from both sides of the comparison.
The measure matters because it separates two very different stories. A chain reporting 15% total growth and 1% like-for-like growth is buying its growth with new sites, while one reporting 7% like-for-like growth is getting more from what it already owns.
Definitions vary between companies, which is the biggest practical trap. Some include online sales in the comparable base, some exclude them, and some strip out the effect of currency movements, so comparing one retailer's figure to another's requires reading the small print.
The measure also has blind spots worth naming. It says nothing about profitability, and a chain can post attractive like-for-like growth driven entirely by discounting that destroys margin.
In practice
Real-world examples
Example 1
A supermarket group reports total sales up 6% but like-for-like sales down 1.5%, and the share price falls despite the headline growth. Analysts read the figures as a business propped up by new store openings while existing stores lose customers. The chief executive is asked to explain footfall trends rather than expansion plans.
Example 2
A restaurant chain refurbishes 12 of its 90 sites during the year, closing each for around eight weeks. It excludes those sites from the comparable base for the period they were shut, and states the exclusion clearly in its results. Without that adjustment its like-for-like figure would have looked artificially weak.
Example 3
A fashion retailer includes online orders fulfilled from stores in its like-for-like base but excludes pure e-commerce warehouse sales. The choice lifts the reported figure by around a percentage point, so it publishes both definitions to avoid accusations of flattering the number. Investors respond well to the transparency.
Think of it
Imagine tracking your personal fitness by weighing yourself while carrying a heavy backpack. To know if you are truly gaining muscle, you must take the backpack off. Like-for-like sales take off the backpack of new store openings to show your true core shape.
Formula
Calculation
Like-for-like sales growth = (comparable-period sales this year - comparable-period sales last year) / comparable-period sales last year
A coffee chain ends the year with 40 outlets, of which 34 have traded for more than twelve months and qualify as comparable. Those 34 sites generated $53,500,000 this year against $50,000,000 last year, so like-for-like growth is ($53,500,000 - $50,000,000) / $50,000,000 = 7.0%. Total group revenue was $62,000,000 this year against $54,000,000 last year, which is total growth of ($62,000,000 - $54,000,000) / $54,000,000 = 14.8%. The gap is explained by the six new outlets contributing $62,000,000 - $53,500,000 = $8,500,000 and by $4,000,000 of prior-year revenue from sites now closed or excluded, which is exactly the distinction the measure exists to make visible.Case study
Seen in the real world
Wrenfield Coffee is an illustrative chain used here to show like-for-like reporting in action. It grew from 34 outlets to 40 during the year, and the board's first draft of the annual results led with total revenue growth of 14.8%, from $54,000,000 to $62,000,000.
The finance director insisted on adding the like-for-like line. The 34 sites open throughout both years had grown from $50,000,000 to $53,500,000, or 7.0%, meaning slightly under half the headline growth came from the existing estate and the rest from new openings and the mix of closed sites.
In this fictional example the extra disclosure changed the board's thinking rather than just the report. A 7.0% comparable figure was genuinely respectable, but it also showed that the openings programme was doing more heavy lifting than anyone had assumed, which reframed the following year's capital plan around site profitability rather than site count.
Watch out
Common mistakes
- Comparing one company's like-for-like figure directly with another's. Definitions differ on online sales, refurbishments and currency, so the numbers are rarely measuring the same thing.
- Reading like-for-like growth as a profit signal. Sales driven by heavy discounting can lift the measure while gross margin falls, so the two need reading together.
- Forgetting the calendar. An extra trading week, a shifted holiday or unusual weather can move a like-for-like figure by more than any change in underlying demand.
Questions
People also ask
What qualifies as a comparable store?
Most companies require at least twelve months of trading, and many also exclude sites that were closed for major refurbishment during either period.
Is like-for-like the same as same-store sales?
Yes, the two phrases describe the identical measure, with same-store sales being the more common label in North American reporting.
Can a business outside retail use the measure?
Certainly, as any organisation with repeatable units, such as gyms, clinics, hotels or franchise territories, can apply the same comparable-base logic.