Like-for-like (LFL) sales comparisons were designed to make retailers' trading updates more transparent when looking at the movement in sales compared to this time last year. Normally they would ignore any sales coming from shops that have been open for less than a year and vice versa; sales in last year’s figures from shops that have now shut would be excluded. So in theory you are comparing consistent metrics.
However, many issues can complicate LFL sales comparisons; what if a shop has been recently refurbished, what if there have been more promotions this year compared to last year, what if Easter falls into a different month compared to last year?
And what on earth should we do at the moment when trying to compare this year to the 'normality' of last year?
Most retailers I have worked for don’t use calendar months for their financial calendar, they normally use either a 4-5-4 week arrangement. This is when the first month in their financial calendar will consist of 4 weeks, the next month 5 weeks, and then a 4 week month again. And this is repeated again for each of the 4 quarters. (Or some similar arrangement such as 4-4-5… you get the idea).
This is preferable for retailers since the trading days within each month are very relevant. Under normal circumstances a Saturday would probably be the best trading day of the week on the high street, so by using a 4 or 5 week model for the month it will be comparable when looking at this year and last year, as the number of Saturdays will always be the same.
Complications can arise on the timing of Christmas and Easter. Since the day of Christmas changes every year, it can sometimes fall into different weeks and depending if your peak trading period is before Christmas, or whether it comes from the Boxing Day sales, you can lose a day or 2 of peak trading in/out of December compared to the previous year.
While, at least the day of the week doesn’t change with Easter, it does of course change date every year and can sometimes be in a different month entirely!
So, while LFL sales are a useful indicator for tracking your growth and performance, sometimes manual intervention will be needed. Closer analysis is normally required to compare the peak trading periods. The sales data from specific weeks, and sometimes specific days needs to be extracted and lined up exactly with last year’s data to get an accurate comparison. If this resonates with you and you would like some help with this analysis, get in touch or book a free call to discuss.