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Cramer: Whole Foods Needs to Understand Only Comparable Sales Matter
Originally published May 11 at 6:44 a.m. EST
Look, it's a simple stat. It's called comparable store sales growth. When a retailer has it, institutions buy its stock. When it doesn't, they sell it.
Yep, comparing like-for-like, determining how your stores did this year vs. last year. There's really not much more to it.
Positive numbers signal health. Negative numbers equal sickness; prognosis negative.
For years, I have tried not be bound by comparable store sales. Periodically I will say, you know what, that outfit is so good, I will simply overlook that their comparable store sales are faltering. In fact, the experience at that store is so good, I will just waive my rules and focus on other metrics, ones that are more touchy-feely--a really good shopping experience--or are about items on the come, like affinity programs or new ways to pick up or order online or be delivered. I'd get subjective.
Every time I have done that, every time I have left my discipline, I have been wrong. Comparable store sales, like organic growth numbers don't lie. They give you the real health of a company.
And that's why I didn't care about all of the mumbo jumbo on the Action Alerts PLUS charity portfolio holding Whole Foods (WFC) call last night. Yeah, big affinity program; terrific. More cost cuts; fabulous. A big boost in the dividend; amazing and unexpected. All sorts of new board members, including Cramer faves Ken Hicks from Footlocker (FL) and Ron Shaich from Panera Bread (PNRA) ; fantastic. A new, engaged, chairwoman; dynamite. A new CFO from the exacting Kohl's (KSS) ; bravo. Still one more buyback; extraordinary. The highest sales per square foot of any retailer; super.