The Container Store's Same-Store Sales Since 2008

When it comes to retail stocks, few metrics are more important than same store sales, which measure how much sales at a retailer's existing locations increase or decrease each quarter compared with the year-ago period. This metric allows investors to see what portion of new sales actually comes from sales growth and what portion comes from new store openings. It's for this reason that I've started aggregating same-store-sales data from a number of leading retailers. What follows, in turn, are The Container Store's (TCS +0.00%) comparable sales dating back to 2008 -- that is, as far back as the home-organization retailer has made available.

Before getting to the actual data -- which is contained in a table at the end of this article -- it's worth pointing out why same-store sales are so important.

First and foremost, they show whether a company's existing locations are continuing to gain traction with customers. Few retailers do as good of a job as Costco at illustrating the relationship between the age of a location and the sales therefrom. There's a strong positive relationship between how long a Costco location has been open and how much merchandise it sells. A notable exception to the upward trend is evident at stores open for between seven and eight years. But this makes sense when you consider that these locations opened in 2007 and 2008 -- that is, just as the financial crisis started wreaking havoc on the U.S. retail sector.

While The Container Store has a different business model from Costco, this same relationship holds true throughout the retail industry. When I spent my requisite years in retail, for instance, I remember vividly that sales goals stemmed in large part from the age of a specific location. Namely, newer units were expected to grow at a faster pace than older units, which, as in the Costco example, had already saturated the surrounding market.

A second reason that same-store sales matter is that there's a point at which a retailer can no longer grow by adding new stores -- or, at least, by adding new stores of the same format. In this situation, increasing same-store sales is the principal avenue for top-line growth. This is the position, for instance, that Wal-Mart is increasingly finding itself in. Because it's already scattered its Supercenters throughout the country's metropolitan areas, it's now shifting to smaller stores that serve more narrowly defined purposes, such as its Neighborhood Markets and Wal-Mart Express locations. These aside, if Wal-Mart wants to move the needle on growth, the only way it will do so is by boosting sales at existing locations.

Finally, same-store sales matter because they're a reflection of a company's financial health; and a company's financial health dictates its credit rating. This matters because a company's credit rating has a direct impact on its borrowing costs; companies with higher ratings are charged lower interest rates to borrow relative to companies with lower ratings. At the beginning of 2008, for instance, Moody's downgraded its rating outlook for J.C. Penney, "citing recent negative comparable-store sales and an uncertain overall economic outlook." It accordingly follows that same-store sales can not only affect a retailer's top line; they can also influence its expense base via higher borrowing costs.

With that introduction out of the way, what follows (after the brief following paragraph) is a table of The Container Store's same-store sales going back to 2008.

Data source: The Container Store's quarterly earnings releases and regulatory filings.