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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Presentation Transcript
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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