Understanding Margin and Turnover
Q: Mr. Pruitt, Perhaps you can help me better understand margin and turnover. Which is most important?
A: The answer is both. At Blacks we refer to margin and turnover as performance indicators. Of course, we would like to see both high margins and high turnover, but different types of stores have different performance standards.
Learn what the standards are for your type of store and set your plans on these targets. In our experience, the normal margin range for men’s stores is 49% to 52%. Both traditional and high-fashion stores tend to fall within this range, although fashion businesses have higher initial markups (IMUs), but take more markdowns later on.
The standard turnover range for men’s stores is 2.2 to 2.6 times a year. Traditional stores have slower turn than fashion operations because they carry more basics and stock items, while fashion stores peak and decline over the seasons.
The bottom line is that planning and execution are the name of the game. If your store is not falling within these normal ranges, and you don’t know how to get there, it might be time to get some outside help.
