Like-for-like sales cannot give a true reflection of a company’s growth, warns retail auditor group
A GROUP OF AUDITORS has warned of the dangers of placing too much emphasis on like-for-like sales in the retail sector over the Christmas period.
The report warned that placing too much focus on like-for like sales in crowning the “Christmas winner” is masking a true reflection of how the sector’s business model is changing.
Julie Carlyle, head of retail at EY and member of the ICAEW working group said: “The much publicised differences in promotional strategies over the festive period emphasise the ability of like-for-like sales to mask real performance and raises the question, whether we should be looking at the like-for-like margin? We know there is no standard way of calculating ‘like’ figures and, therefore, challenge this as the scorecard for Christmas”.
“It is critical for retail businesses to have the right data to respond in such a rapidly changing world and this is becoming more difficult.”
The working group found that the increasing popularity of digital sales was throwing up challenges to the retailers in determining what parts of the business are generating sales.
It remained unclear whether or not customers were looking online first and then visiting the store or vice versa.
The latest report is part of a wider initiative by the ICAEW to demonstrate the value of audit. This is the second retail sector report published by the institute and the fifth auditor insight.
The latest audit insights into the retail sector can be found here.