Are strong retail sales always a true measure of a companys performance?
Absolutely not. Sales growth can often mask poor profitability or even deeper financial, structural and management weakness. Retailers obsessed by the top line risk losing sight of the costs incurred. A common retail tactic is to shift goods through sales or specials, but you need to do the math: the headline number goes up, but you might be selling at a loss. What else should be considered? Real commercial performance is assessed by a range of measures, or key performance indicators (KPIs). These can include gross margin percentages, gross margin dollars, sell-through percentages, cash flow and working capital days. For suppliers, sell-through percentages are important. Knowing how many of your branded goods have been sold as opposed to how many are on the shelves will impact your future business. What is more important: short-term concerns or long-term objectives? Right now, it’s short-term. Christmas and especially Chinese New Year are very good economic indicators. Retailers should
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