Comparing this year's sales in stores open for at least a year with last year's sales in stores open for at least a year is supposed to reveal the strength of a retail chain. This is the premise of same store sales figures and this is what motivates members of the U.S. retail industry to go to the trouble of calculating, reporting, and analyzing same store sales monthly, quarterly, and annually.
Based on this premise of "strength," same store sales of the Old Navy chain not only had strength in September 2009, the chain seemingly developed super powers. With an impressive 13% increase in same store sales as compared to September 2008, Old Navy rocketed into positive sales territory faster than a speeding retail recovery.
To be fair to all other publicly traded U.S. retail chains, Old Navy was at a distinct advantage because it was comparing this year's September sales with last year's September, which saw an embarrassing 24% same store sales drop. And that 2008 drop was in comparison to its September 2007 sales drop of 8%, which was compared to its 3% drop in 2006, its 7% drop in 2005 and its 6% drop in 2004. In fact, Old Navy hasn't seen a same store sales increase in six years worth of Septembers.
So is this year's 13% increase really a show of Old Navy's "strength?" As much as sitting up in the intensive care unit after being hit by a bus can be viewed as strength, Old Navy did show some signs of recovery progress in September, 2009.
The problem with same store sales numbers is... more...
Comments
I wanted to compliment you on your well-structured article about a critical issue facing retailers today. Your facts were vital in getting the point across that we are being informed today through a lot of smoke and mirrors.
I am one that always sees the glass half full but as a resident of New York City, it is very disheartening to see out of business signs and store for lease signs in such abundance. “Where have all the flowers gone”? “Gone to grave yards everyone.” “When will they ever learn?”
I believe the answer is proactive, turn lemons into lemonade. Sitting by is not enough, use your retail intelligence to tweak the inventory, shake up the store layout, go narrow and deep with the winners, promote, and accept although the times have slipped backwards, they will improve. When the times improve you will be in a good place because you have momentum and can accelerator at the speed of the recovery.
Jerry Birnbach F.I.S.P.