Retail Math

Retail Math and Biz Terms don’t make sense at all. Unless you went to business school or have a degree in FBM (Fashion Business Merchandising), this may be a whole new world to you.

Retail Math may sound like something made up like Retail Therapy. But it’s real. And it’s confusing. You may need a cocktail to get through it…or at least some very  strong sweet tea.

RETAIL MATH FORMULAS

$ Cost =  $ Retail  x  (100% – Markup %)

$ Retail =  $ Cost / (100% – markup %)

$ Markdown =  Original retail price – lower retail price

Gross Margin =  Sales – cost of good sold

Initial Markup % = (Expenses + Reductions + Profit) ÷ (Net Sales + Reductions)

Markup $ = Retail Price – Cost

Markup % = Markup Amount ÷ Retail Price

Margin % =  ($ Retail – $ Cost) / $ Retail

Markdown % =  $ Markdown  /  $ Net Sales

Sell through % = units sold / (units sold + on hand inventory)

Turnover = net sales for period / average stock for period

• Cost of Goods Sold from Stock Sales during the Past 12 Months
  Average Inventory Investment during the Past 12 Months

Cost of Goods Sold (COGS) = Beginning Inventory + Purchases – End Inventory

• or inventory at beginning of year + purchases or additions during the year = goods available for sale – inventory at end of year = cost of goods sold

OTB (retail) = Planned Sales + Planned Markdowns + Planned End of Month Inventory – Planned Beginning of Month Inventory

Sales per Square Foot = Total Net Sales ÷ Square Feet of Selling Space