Traffic and ticket, and which one is doing the work

It traded at 32.72 this morning, +0.52% on the session. Comparable sales is the headline everyone reads and it hides the only distinction that matters.

The split

Same store sales growth comes from two places. More people, or the same people paying more. Both produce an identical headline. They describe completely different businesses.

Traffic growth is durable. It means the offer is winning and the growth compounds, because those customers return. Ticket growth through pricing is real revenue but it is borrowing from a finite allowance, and each round of it makes the next one harder.

What to look for

• The traffic and ticket split, disclosed separately, quarter by quarter rather than in a single period
• Within ticket, how much is price and how much is mix, because trading customers up is not the same as charging them more
• Whether traffic is negative while the headline is positive, which is the configuration that unwinds

That third one is the pattern worth being alert to. It reads as strength for several quarters while the customer base is quietly shrinking, and then it stops reading as strength very suddenly.

Why I am flat

I do not think this business is in trouble. I think the composition of its growth has been shifting in a direction that makes the next few quarters harder to predict than the last few, and that is not a market I want to size into.

Price rises stop working at a level nobody can identify in advance, and everyone can identify afterwards.

What would change it

Traffic turning positive and staying there for a couple of quarters, with pricing doing less of the work. That would tell me the offer is winning rather than the pricing team is. It is a slow signal and I am content to wait for it.