Retail Merchandising and Buying

Income Statement or Profit & Loss Statement:

Net Sales

-Cost of Goods Sold

=Gross Margin

- Operating Expenses

=Net Profit/loss

Net Sales $=Gross Sales $-Reductions $

Net Sales %=Gross Sales %-Reduction %

Gross Sales $=Net Sales $ + Reduction $

Gross Sales %=Nets Sales % + Reduction %

Gross Sales $= # of Units Sold X Retail selling price

Gross Sales $ = Net Sales

100%-Reductions %

Reduction $=Customer Return $ + Employee Discount $ + Markdown $ + Shortage $

Reduction $=Gross Sales $ X Reduction %

Reduction %=Reduction $ X 100

Gross Sales $

GM $=Net Sales $-Cost of Goods Sold $

GM %=GM $ X 100

Net Sales $

OR GM $=Net Sales $ X GM %

OR Net Sales $ = GM $

GM %

COGS %=COGS$ X 100

Net Sales $

OR COGS $=Net Sales $ X COGS %

OR Net Sales $=COGS $

COGS %

COGS $=Invoice(Billed) Cost + Transportation Costs + Alterations Costs – Discounts

Total Billed Cost = # Units Purchased X Invoice(Billed) Cost

Discount $=Billed Cost X Discount %

Operating Expense %=Operating Expense $ X 100

Net Sales $

OR Expense $=Net Sales $ X Expense %

OR Net Sales $=Expense $

Expense %

Operating Expense $=Direct Expense $ + Indirect Expense $

Operating Expense $=Fixed Expense $ + Variable Expense $

PROFIT OR LOSS %= Profit or Loss $ X 100

Net Sales $

OR PROFIT $=Net Sales $ X Profit %

OR Net Sales $=Profit $

Profit %

Departmental Net Sales %=Departmental Net Sales $ X 100

Total Store Net Sales $

Departmental Net Sales $=Total Store Net Sales $ X Departmental Net Sales %

Build to LY or % change=TY-LY X 100

LY

Build to Plan or % change=TY-Plan X 100

Plan

MARKUP FORMULAS ( IMU, CMU)

MU $= RETAIL $-COST $

RETAIL $=COST $ + MU $

COST $=RETAIL $-MU $

MU%=RETAIL %-COST %

Retail %=Cost % + MU %

Cost %=Retail %-MU %

MU %=MU $ x100

RETAIL $

OR

MU %=RETAIL $-COST $ X100

RETAIL $

COST $= RETAIL $ X COST %

RETAIL $=COST $

COST %

CUMULATIVE MARKUP %=TOTAL RETAIL $-TOTAL COST $ X100

TOTAL RETAIL $

TOTAL RETAIL=#UNITS X $ RETAIL PRICE

TOTAL COST=#UNITS X $ COST PRICE

MARKDOWN FORMULAS

MARKDOWN $= ORIGINAL RETAIL PRICE-NEW RETAIL PRICE

MARKDOWN $=RETAIL PRICE X % OFF

MARKDOWN %=MARKDOWN $ X 100

NET SALES $

Planned or Actual MD $=MD % (Planned or Actual) X Net Sales $ (Planned or Actual)

TOTAL SALES=SELLING PRICE X UNITS SOLD

TOTAL POS MDS=MD $ X UNITS SOLD

TOTAL PERM MDs=MD$ X UNITS ON HAND

MARKDOWN % TO CUSTOMER=MARKDOWN $ X 100

ORIGINAL RETAIL SELLING PRICE $

MARKDOWN % TO JOURNALIZE=MARKDOWN $ X 100

ACTUAL RETAIL SELLING PRICE $

WEEKS OF SUPPLY (WOS)=TOTAL UNITS ON HAND AT BEGINNING OF WEEK

UNITS SOLD IN THAT WEEK

SELL THRU % (ST%)=UNITS SOLD IN THAT WEEK X 100

UNITS ON HAND AT BEGINNING OF WEEK

BUILD=THIS WEEK UNIT SALES-LAST WEEK UNIT SALES X 100

LAST WEEK UNIT SALES

TO GET TO NEXT MONTH’S BOM:

CURRENT MONTH BOM

-REDUCTIONS TO STOCK

+ADDITIONS TO STOCK

=NEXT MONTH BOM

CURRENT MONTH BOM

-SALES

-MDS

+RECEIPTS

=NEXT MONTH BOM

SHORTAGES OR OVERAGES

$ SHORTAGE OR OVERAGE=PHYSICAL INVENTORY-BOOK INVENTORY

SHORTAGE OR OVERAGE % = SHORTAGE OR OVERAGE $ X 100

NET SALES $

PLANNED SHORTAGE/OVERAGE $=PLANNED SHORTAGE/OVERAGE % X NET SALES $

METHODS OF PLANNING SALES

AMOUNT OF SALES $ INCREASE = PREVIOUS TIME PERIOD ACTUAL $ SALES X PLANNED INCREASE %

AMOUNT OF SALES $ DECREASE=PREVIOUS TIME PERIOD ACTUAL $ SALES X PLANNED DECREASE %

PLANNED SALES $ INCREASE= PREVIOUS TIME PERIOD ACTUAL SALES $ + PLANNED SALES $ INCREASE

PLANNED SALES $ DECREASE= PREVIOUS TIME PERIOD ACTUAL SALES $- PLANNED SALES $ DECREASE

$ SALES INCREASE/DECREASE = CURRENT PLANNED SALES $-PREVIOUS ACTUAL SALES $

% SALES INCREASE OR DECREASE=$SALES INCREASE OR DECREASE X 100

PREVIOUS ACTUAL SALES $

OR

% SALES INCREASE OR DECREASE = CURRENT PLANNED SALES $ - PREVIOUS ACTUAL SALES $ X 100

PREVIOUS ACTUAL SALES $

Total Season Sales $ =Planned Sales $

Month Sales %

Monthly Sales $ = Total Season Sales x % to total of month

$ PER SQUARE FOOT METHOD

$ per Square foot= Sales $

# of Square feet

TURNOVER

TURN = SALES

AVERAGE INVENTORY

AVERAGE INVENTORY MONTH=BOM MONTH 1 + BOM MONTH 2

2

AVERAGE INVENTORY QUARTER=BOM MONTH 1 + BOM MONTH 2 + BOM MONTH 3 + BOM MONTH 4

4

AVERAGE INVENTORY SEASON=BOM 1+ BOM 2 + BOM 3+ BOM 4 + BOM 5 +BOM 6 + BOM 7

7

AVG INVTY YEAR=

BOM 1+BOM 2+BOM 3+BOM 4+BOM 5+BOM 6+BOM 7+BOM 8+BOM 9+BOM 10+BOM 11+BOM 12+BOM 13

13

AVG INVENTORY=PLANNED SALES FOR PERIOD

TURN

GMROI (GROSS MARGIN RETURN ON INVESTMENT)

GMROI=GM $

AVERAGE INVENTORY AT COST

AVERAGE INVENTORY AT COST=AVG INV X COST COMPLEMENT OF MU %

=AVG INV x (100-MU%)

Or =AVG INV x (1-.MU)

COST COMPLEMENT=(100-MU%)

SETTING INVENTORY (STOCK) LEVELS

STOCK TO SALES

STOCK TO SALES RATIO=STOCK

SALES

BOM STOCK = STOCK TO SALES RATIO x PLANNED SALES $

WEEKS OF SUPPLY

NUMBER OF WEEKS OF SUPPLY = WEEKS

TURNOVER

BOM STOCK = AVERAGE WEEKLY SALES X WEEKS OF SUPPLY

BASIC STOCK METHOD

BASIC STOCK AT RETAIL=AVG INVENTORY – AVG MONTHLY SALES

Average Monthly Sales=Sales for Time Period

# months in period

BOM STOCK = BASIC STOCK + PLANNED SALES FOR MONTH

CALCULATING OPEN TO BUY/RECEIPTS/PURCHASES

PLANNED OR PROJECTED SALES FOR CURRENT MONTH

+PLANNED OR PROJECTED MARKDOWNS FOR THE CURRENT MONT

+ PLANNED OR PROJECTED BOM NEXT MONTH (EOM Current Month)

-PLANNED OR PROJECED BOM CURRENT MONTH

=PLANNED OR PROJECTED PURCHASES CURRENT MONTH

Or

Planned or Projected Sales for Current Month

+Planned or Projected MDs for Current Month

+Planned or Projected EOM for Current Month (BOM for Next Month)

-Planned or Projected BOM for Current Month

=Planned or Projected Purchases Current Month

Plan OTB-Actual Spent/On Order = Over/Underbought

CASH DISCOUNTS

DISCOUNT $=COST $ ORDERED X DISCOUNT %

ORDER COST $=TOTAL COST $ - DISCOUNT $

Month = 4 or 5 weeks

Quarter=3 months or 13 weeks

Season=6 months or 26 weeks

Year=12 months or 52 weeks