RETAIL MATH PRACTICE AGENDA

Presentation on theme: "RETAIL MATH PRACTICE AGENDA"— Presentation transcript:

Slide1

RETAIL MATH PRACTICE

AGENDA

Input ReviewRetail Terms, Formulas & Example ProblemsSales Ratio VisualTechnical Topics Potential Interview Questions

General Interview Advice

FORMULA INPUTSRetail Sales- the revenue a particular item produced

Units- describes the actual productCost- how much an item cost to produceMargin- profitCan be expressedPer individual unit Total for the product

AUR- Average Unit Retail

Definition

The average price a customer is paying for an itemFormulaTotal Retail Sales $/ Total Units Sold

AUR ExampleJCrew sold 8000 units and reported weekly sweater sales to be $320,000. What was the AUR of the sweater?

320,000/8,000=$40On average, the customer paid $40 for a given sweater

AUC- Average Unit Cost

Definition

The average cost to produce an itemFormulaTotal Cost/ Total Units

AUC ExampleOld Navy buys $60,000 worth of polos

from the vendor and sells 12,000 units. What is the AUC for polos? 60,000/ 12,000= $5It cost Old Navy $5 per unit to produce a certain sweater

Percent Change in Sales

Definition

The increase or decrease in sales to compare between two periodsFormulaThis period sales – last period sales/ last period sales *100

Percent Change in Sales ExampleLast year Lord & Taylor sold $1,500 of hats. This year they sold $1,575 in hats. What is the % change in sales?

(1,575-1,500/1,500)* 100 = 5% increaseThis year, Lord & Taylor sold 5% MORE hats than they did last year.

APS- Average Per Store

Definition

The number of units sold in an average store for a given time period FormulaTotal units sold/ # of stores with inventory

APS ExampleRalph Lauren sold 7,200 pairs of dress socks last week and has a total of 30,000 stores. 8,000 of the carry the dress socks. What is the APS?

7,200/ 8,000 = 0.9This week, on average each Ralph Lauren store that carries this style sold almost 1 pair of socks

Gross Margin

Gross Margin $Gross Margin %

Definitionthe difference between retail sales dollars and the cost of those sales.Formula Retail Sales $ - CostDefinitionPercentage of sales to costFormulaRetail Sales $ - Cost / Retail Sales $

Gross Margin ExamplesTarget sells 50,000 Hanes T-shirts for a total of $200,000. Target bought the inventory for a total of $92,000. What is the margin $ and margin %?

Gross Margin $200,000-92,000= 108,000Gross Margin %108,000/200,000 = 54% marginOf the sales Target made for Hanes shirts, $108,000 / 54% of the money they received from the sale was profit

Markdown

Markdown $:Markdown %:

DefinitionReduction in the initial retail priceFormulaOriginal Cost – Reduced CostDefinitionPercentage of markdowns in relation to sales volumeFormula Original Cost- Reduced Cost/ Original Cost

Markdown ExamplesZara sells a leather jacket for $62. Since this jacket was over-bought, it goes on sale for $48. What are the markdown dollars and markdown %?

Markdown $: 62-48= $14Markdown %: 62-48/62= 22.5%Each of Zara’s jackets cost are $14 and 22.5% less than original price

Markup

Markup $Markup %:

DefinitionThe difference between retail of merchandise and the cost of that merchandiseFormulaRetail Price - Cost of MerchandiseDefinitiondetermines the retail price of merchandise sold to customersFormulaRetail Price- Cost of Merchandise / Retail Price

Markup ExampleH&M buys shorts for $20 per unit and retails it for $32. What is the markup dollars and % on the pair of shorts?

Markup $: 32-20= 12Markup %: 32-20/32 = 37.5% H&M Marks up the product by $12 or 37.5% from the cost to the ticket price.

Sell Through %

Definition

Percentage of inventory sold for a given time periodFormulaUnits Sold/ Beginning On-Hand Inventory

Sell Through % ExampleAt the beginning of the week Macy’s had 30,000 units on hand and sold 18,000 units. What was the sell through for the week?

18,000/30,000 = 60%Last week, Macy’s sold 60% of the given inventory for a particular product

Turnover

Definition

The amount of times the average inventory sells in a given time periodFormulaSales/Average InventoryAverage InventoryAverage inventory= BOP inventory + EOP inventory/ # of periods

Turnover exampleNike has an average inventory of 600 units and sold 1,525 units. What is the turnover for Nike?

1525/600= 2.54 Last year, Nike sold through all of their inventory 2.5 times

Weeks of Supply

Definition

Number of units to support the current sales trendFormulaUnit Stock on Hand/ Average Weekly Sales

Weeks of Supply Example

Neiman Marcus has $10,000 worth of inventory in denim. The total sales for the past 5 weeks are $20,000. What are the weeks of supply on hand for denim?20,000/5= 4,000 (average weekly sales)10,000/4,000= 2.5 WOSGiven current inventory levels, if Neiman Marcus were to maintain their selling rate, they have enough product to last 2.5 weeks

Sales Ratio Visual

Factors Affecting SalesPromotions/Pricing

CalendarMarketing EventsStore PlacementInventory Positioning

Tops Down vs. Bottoms Up AnalysisTwo ways to analyze the product or business

Helps you tell a story and analyze trendsTops down: looking from broad to narrowHow did the company perform? How did the women’s division perform? How did women’s sweaters perform?Bottoms up: looking narrow and then broadHow did the plum color perform of a specific shirt?How did that overall style perform?

How did women’s blouses perform?

Allocation FactorsSeasonClimate

Tastes/ Preferences of a RegionIncome Level

Pricing Considerations‘If you were to launch a new tablet into the market, how would you price the item? What would be the main financial risks?’

How much does an item cost to produce?Are you looking to hit a certain margin?Does a similar item exist in the market or is this an innovation?What is the competition pricing?

Potential Technical Questions

If you were given 5,000 units of sweaters to distribute, how would you go about allocating them to various stores?Name 3 retailers and what they are doing to set themselves apart from the competition. What are trends you see on campus? How do you keep up with trends?If you could change something about our stores, what would you change?/ What is an area you feel we could improve in?Explain brand cannibalism.

How would you describe your personal style?If you were to launch a new tablet into the market, how would you price the item? What would be the main financial risks?

Tips for Behavioral Questions…Give specific situation examplesWalk the interviewer through your thought process

STAR method!Quantify your experiencesUse personal experiences to demonstrate learning

Potential Behavioral Questions

Tell me about a time you were a leader and how the situation turned out.Describe a time you had a conflict with a boss or colleague and how you resolved the issue/ how the situation turned out.How would you rate yourself in Excel? Tell me about a time you used data to solve a problem.What you are most proud?Tell me about a time you had to think on your feet & making a quick decisionTell me about a time you have failed or underperformed in a project or task and what you did to make it right.

Final Tips

Read recent company press releases and know what is going on in the industryCompany websiteUA library resourcesLinkedInKnow why you want to work in the industry and for a specific companyFamiliarize yourself with some company metricsLast year revenueStock price

Market share