6. 3.

2018 Retail Math for fashion industry

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Retail Math Equations for the Apparel Industry

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Retail Math for fashion industry

Please utilize these fashion retail math formulas at your own risk. The
Apparel Search Company is "not" comprised of mathematicians. We have
simply listed formulas that we have collected over the years. In addition, we
have supplemented the listing with information that we have received from
our viewers. If you have additional formulas or you think any of the above
formulas are incorrect, please let us know.

$ Cost

Cost of Goods Sold (COGS)

$ Retail

$ Markdown

GMROI

Gross Margin

Markdown $

Markup

Margin %

Markup cancellation

Percent change in sales

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6. 3. 2018 Retail Math for fashion industry
If you are a clothing retailer and
you have retail math formulas Planned Stock
that are not listed on this page,
PLEASE let us know them so we Sell Through %
can make this section more
complete. Stock Sales Ratio

Shrinkage

Turnover

Sponsored Content Breakeven Analysis

Weeks of Stock

You may also want to learn about retail store assortment planning from our
fashion terms section.

Help us improve; you can e-mail additional formulas or good examples to go

with our formulas to us from our contact page.

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

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The above formula is an example of a company that sells finished goods. The
formula can be applied to one week, one month or a year, but must be the
same for each value of the formula. The formula for a manufacturer includes
raw goods and unfinished product in inventory. There is no formula for a
service firm, which relies exclusively on market research of competitors and
deciding a pricing strategy that allows profitability.

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Here is another way of stating the same formula:

inventory at beginning of year + purchases or additions during the year =

goods available for sale - inventory at end of year = cost of goods sold

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

$ Markdown = Original retail price - lower retail price

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6. 3. 2018 Retail Math for fashion industry

GMROI (Gross Margin Return On Investment) = (GM% x turnover) / (1 -

markup %)

an example of how to calculate ones return on investment, (ROI).

Last August the stores sales were $ 1,814,476, beginning inventory was
4,875,911, and ending inventory was 4,693,452. August maintained a mark-
up of 28%.

The formula for reaching the ROI in this scenario would be as follows.

Last Years August sales $1,814,476 x 28% = $508,053.28

Beginning Inventory $4,875,911 + Ending Inventory 4,693,452 = 9,569,363

divided by 2 = 4,784,681

508,053.28 divided by 4,784,691.5 = 10.6 % ROI (Return on Investment)

Gross Margin = Sales - cost of good sold

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

Markdown % = $ Markdown / $ Net Sales

Markup = The difference between the cost of an item and its selling price.

Markup cancellation = Reduction from original markup %

You can calculate the percent of change (percent of increase or percent of

decrease) from the following formula.

This Period of Sales - Last Period of Sales / Last Period of Sales x100% = percent
of Change
Example, Apparel Search sold $1500. worth of blue shirts last year. This year we sold
$1575. worth of blue shirts. What is the percent of increase on the blue shirts we sold?
($1575 - $1500) / $1500 x100% = 5%
The increase was 5%
Example, A shirt on ApparelSearch.com is sold at a 20% discount off the original price of
$32. What is the Sales Price?
Let the sales price by "x" dollars.
($32 - X) / $32 x 100% = 20%
($32 -X) / $32 = 0.2
$32-X = $6.4
X = $25.6
Therefore, the sales price of the shirt is $25.60
Example, The original price of a leather jacket was $500. It is now on sale for $440.
What is the percent of decrease?
Let "X" be the percent of decrease.
X/100 = (500-440)/500
500X = 6000
X= 12
Therefore, there was a 12% decrease.

Planned Stock = planned monthly sales x stock sales ratio

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

Sell-through is a percentage of units sold during a period (for example 1

month).

It is calculated by dividing the number of units sold by the beginning on-hand

inventory (for that same time period).

Example:

During the month of August you sell 100 shirts. You received 300 shirts in
receipts. You end August with 900 units shirts of stock (End of Month Stock).
What was your Beginning On-Hand units of shirts and what was your Sell-
through?

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6. 3. 2018 Retail Math for fashion industry
Beginning of Month stock (BOM) = EOM 900 units - Receipts 300 units +
Sales 100 units = 700 units

Sell-through = Sales 100 units / Beginning Inventory (BOM) 700 = 14.3%

Sell-through in August.

BOM means Beginning of Month

EOM means End of Month

Stock Sales Ratio = B.O.M. $ Stock / Sales for period

Note: B.O.M = beginning of month

Shrinkage = Difference between book and physical inventory

"inventory turnover." Turnover is the number of times you sell your average
investment in inventory each year.

Turnover = net sales for period / average stock for period

Here is another way of stating the same formula:

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

Inventory turns: The retail sales for a period divided by the average inventory value for
that period. Most retailers are in the range of two to four turns a year.

Average Stock = sum of each periods Beginning of Period stock + the last
End of Period stock / # of periods

Breakeven = Fixed Costs / (Revenue

Variable Costs)

Breakeven Analysis: Simply stated, this formula indicates how much sales
volume must be accomplished in order to cover all costs (fixed and variable),
and begin generating a profit. In other words, it is the point in sales volume
at which you have no profit and no loss. This is most commonly applied to a
business that sells product.

Weeks of Stock

Inventory divided by average weekly sales for a given period of time.

If you have $10,000. worth of inventory in sweaters, and your total sales of
sweaters for the past 5 weeks is $20,000. the calculation would look as
below:

$20,000 divided by 5 = average weekly sales of $4,000.

$10,000. divided by $4,000.00 = 2.5

This means that if you did not replenish your sweater inventory and sales
continued at the same rate, you would deplete your inventory of sweaters to
zero within 2 1/2 weeks.

By the way, what are the odds that the your inventory would sell at the "same
rate" week after week. Maybe this is why clothing stores are always out of
my size.

If you do not find enough on this page, you can find books about
retail math in the Math for Merchandising Books section.

Please utilize these formulas at your own risk. The Apparel Search Company
is "not" comprised of mathematicians. We have simply listed formulas that
we have collected over the years. In addition, we have supplemented the
listing with information that we have received from our viewers. If you have
additional formulas or you think any of the above formulas are incorrect,
please contact us.

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6. 3. 2018 Retail Math for fashion industry

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