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Presentation
Presenter
Matt Parmaks
Senior Consultant
DMSRetail
Agenda
¾ Profitability Measurements
¾ Key Performance Indicators
¾ Commonly Used Formulas
¾ Open to Buy
¾ Sell Thru Scenarios
¾ Balanced Scorecards
¾ Operating Statement
¾ Q&A
Fundamental Business Equation
Example:
Selling Price of an Item: $60.00
Cost of an Item : $40.00
Then
GM% = (60 – 40) x100 / 60 = 33.33%
Typical Gross Margin Values
¾ Women’s Shoes: 44.2%
¾ Men’s Shoes: 44.6%
¾ Women’s Sportswear: 47.3%
¾ All Women’s Apparel: 43.6%
¾ All Men’s Apparel: 42.3
¾ Cosmetics & Drug: 38.6%
¾ Luggage: 48.1%
¾ Sporting Goods: 32.2%
¾ Furniture: 43.1%
¾ Electronics: 20.8%
Markup
Example:
This means that if you did not replenish your inventory and sales continued
at the same pace, you would deplete your inventory of that product to zero
within 4 weeks.
Inventory Turns
Usually expressed in annualized terms
Example:
Example:
There are variants of this indicator in terms of sales per square foot of merchandisable
area of choice (like walls and display units.)
Key Performance Indicators (Cont’d)
¾ Conversion rate:
# of transactions / # of customers who entered the
store
¾ Wage Cost:
Actual wage $ paid / by actual sales $ achieved
Key Performance Indicators (Cont’d)
Mark-Down Full Sell Margin Cost Units Units Sell-Thru Total Sales Total
Timeline Price Price % Left Sold % $ Margin $
Days 1-60 59.99 59.99 50.0 29.99 600 330 55 19,796.80 9,900.00
Days 61-90 59.99 41.99 28.5 29.99 270 108 40 4,534.92 1,296.00
Days 110+ 59.99 5.99 -80.0 29.99 114 114 100 682.86 -2,736.0
For
Retail Management
View of the Store
Strategy
Increase Gross
Financial Increase in $ Profit 45% Decrease Markdowns
Margin
Reduce Customer
Customer # of Complaints Decrease by 20% Add More Value
Complaints
Fast Checkout:
Loyalty:
¾ Fast Checkout: 1
¾ Attention: 4
¾ New Arrivals: 2
¾ Loyalty: 3
Mid – Year Performance
YTD Sales YTD Sales YTD Stock
EPS
Growth Growth Price TTM PE
Growth
Total Comp Change
Ann Taylor
2.4% (4.7%) (13.2%) 2.5% 18.5x
(NYSE: ANN)
Gap
1.0% (4.0%) (21.5%) (3.2%) 21.5x
(NYSE: GPS)
Limited
11.0% 3.0% (48.0%) (1.2%) 17.6x
(NYSE: LTD)
Abercrombie &
Fitch 15.0% (3.0%) 4.8% (6.5%) 16.1x
(NYSE: ANF)
Aeropostale
11.6% 1.9% 80.0% 18.6% 20.2x
(NYSE: ARO)
End
Thank You