Get out your notebooks -- paper or power. Let's talk about comparable-store sales. Then we'll take a look at one specific retailer.
Comparable-store sales, also known as same-store sales, or comps, compare the sales of a company in a specific period, including only those locations that were open in both periods. The idea is to learn how much of the sales growth is occurring organically, relative to the total amount of sales growth, which includes sales at new stores. It's typically a good barometer for determining the health of a retailer, especially when used alongside other measures, such as earnings, cash, and margins.
Sorry for the lesson, but I think comps are a great indicator of a company's (retailer's) success.
In recent quarters, however, that hasn't exactly been the case for children's apparel specialist, Gymboree
Now, however, comps and earnings seem to be getting their performance more in sync at Gymboree. On Tuesday, the company announced a 22% jump in comps for November. That marks the third consecutive month of double-digit gains. Before we start doing flips, however, we should remember that the comparative month had a decrease in comps of 10%.
Despite the easy comparison, however, other factors lead me to believe that Gymboree is positioned for continued growth. In its third-quarter announcement earlier this month, the company reported a plethora of good news, including earnings growth that had tripled since the previous year, along with impressive sales and comps growth. Those results, combined with the month's gain in sales, prompted Gymboree to increase its guidance for its fiscal fourth quarter to a range of $0.40 to $0.42 per share.
While I expect continued success from Gymboree, particularly in the long term, its recent climb in share price leads me to believe it's no longer a great value. For those willing to risk paying a premium, it will likely make a nice addition to the portfolio. For those more interested in a value, it may be best to wait for a bit of a tumble.
More reading on the retailer for tykes:
Fool contributor Mike Cianciolo welcomes feedback and doesn't own shares of Gymboree.
