Profit margins and competition in fashion industry
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Profit Margins and Competition in Fashion Industry. Profit Margin. Profit: money left after expenses are deducted from sales Sales-Expenses= Profit Gross Margin: profitability after the cost of making or buying the product is subtracted from the sales

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Profit Margins and Competition in Fashion Industry

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Profit margins and competition in fashion industry

Profit Margins and Competition in Fashion Industry


Profit margin

Profit Margin

  • Profit: money left after expenses are deducted from sales

    • Sales-Expenses= Profit

  • Gross Margin: profitability after the cost of making or buying the product is subtracted from the sales

  • Profit Margin: ratio of profitability calculated as net income divided by revenues or net profits divided by sales


Profit margin1

Profit Margin

  • How much a company actually KEEPS in its earnings

  • Useful to compare companies in similar industries

  • Shows the health of a company

  • Also called Return on Sales

  • Markup vs. Profit Margin

    • Profit margins and markup calculators


Markup and profit margins

Markup and Profit Margins

  • Same figures, different terms

  • Markup: (also Markup on Cost)

    • (Retail price-wholesale price)/wholesale price

  • Profit Margin: (also markup on retail)

    • (Retail price-wholesale price)/retail price

    • (Retail sales-cost of goods sold)/retail sales


Profit margin2

Profit Margin

  • Gross Profit Margin:

    • What remains from sales after a company pays out the cost of goods sold

  • Net Profit Margin:

    • What remains from sales after paying taxes and cost of goods sold


Calculating profit margin

Calculating Profit Margin

  • Gross Profit Margin

    • Gross Profit / Total Revenue

  • Net Profit Margin

    • Net income / net revenue


Typical profit margins in retail

Typical Profit Margins in Retail

  • Higher Volume Stores = Lower Profit Margins

  • Lower Volume Stores = Higher Profit Margins

  • Typical Markup: 40% or more in retail

  • Typical Profit Margin: 2% +


Controlling expenses to increase profit margin

Controlling Expenses to Increase Profit Margin

  • Employee productivity

  • Utilities

  • Loss Prevention


Typical profit margins in wholesale

Typical Profit Margins in Wholesale

  • Vary greatly from business to business

  • Factors Affecting Profit Margins:

    • Labor

    • Materials

    • Overhead

    • Risk


Overall tips to increase profit margin

Overall Tips to Increase Profit Margin

  • Computerized systems to manage inventory

  • Effective positioning

  • Effective pricing strategies

  • Accurate buying decisions

  • Following a budget with a specific open-to-buy

  • Analyze vendor performance

  • Consider adding private label brands

  • Effective visual merchandising


Competition in fashion industry

Competition in Fashion Industry

  • Heavy competition to get into the industry

  • Competition in designs

  • Competition in brands and brand awareness

  • Competition in wholesalers

  • Competition in retailers

  • Competition for market share

  • Competition with internet


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