What are Like-For-Like Sales?
Like-for-like sales are sales posted by a business or company that indicate direct comparison to a previous year, while eliminating all sales made due to acquisitions, losses, or other circumstances that were not present the previous year. This is often seen as a more accurate form of sales comparison between one year and another, since it ignores other details that could inflate or deflate the comparable business done by the company. Like-for-like sales are usually used in retail businesses, though the term has been extended into other industries where “sales” may not be literal, but profit is still thoroughly measured.
The term “like-for-like sales” seems to have originated in the United Kingdom (UK) in the 1980s, though it has spread to common usage throughout much of the English-speaking world. “Like-for-like” basically means similar or comparing two more-or-less identical types of things, rather than comparisons that could be described as two things that are dissimilar or not “like” each other. In this sense, like-for-like sales are intended to represent only sales or business by a company that can be directly correlated to identical or similar types of sales from the previous year.
This type of sales analysis can therefore typically only be done by a company that is in its second or more year of business. Smaller businesses or those not prone to making acquisitions or closures are not likely to use this type of analysis, since basic analysis of one year’s sales to another will generally be like-for-like sales by default. Larger companies that do often expand, contract, and acquire new properties are more likely to produce numerous types of sales figures and reports, including like-for-like sales numbers. If a business had 10 stores one year and opened another 10 stores in the first month of the next year, for example, it would probably use like-for-like analysis of sales to accurately state growth in overall sales.
Otherwise, the company would be comparing the sales of 10 stores one year with the sales of 20 stores the following year. In like-for-like sales analysis, the 10 new stores would be ignored, and only the 10 original stores would be used for analysis. The following year, however, the 20 stores could be compared to the 20 stores the year before to establish like-for-like numbers. If, however, three stores closed, then the remaining 17 stores would only be compared to the sales numbers for those 17 stores the previous year to generate like-for-like sales numbers.
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