Retail sales drop 3.3% is called a 'plunge' ...
Discussion
http://business.timesonline.co.uk/tol/business/ind...
Since when has a drop in revenue of <10% been a 'plunge' or plummet?
Clearly, sales growth is the aim, but why is a 3.3% fall in sales reported as a drastic plunge in retail trade?
Since when has a drop in revenue of <10% been a 'plunge' or plummet?
Clearly, sales growth is the aim, but why is a 3.3% fall in sales reported as a drastic plunge in retail trade?
Yes, but now their share prices 'soar' because profits survived teh 'plunge'!!
It is the use of 'soar' and 'plunge' that makes me laugh - it is supposed to be the business pages of The Times FFS - they should be reporting the facts without the histrionics.
Sales reduced and share prices increased would be more appropriate.
It is the use of 'soar' and 'plunge' that makes me laugh - it is supposed to be the business pages of The Times FFS - they should be reporting the facts without the histrionics.
Sales reduced and share prices increased would be more appropriate.
There is more to the whole question of numbers, such as the real drop, margins and the cost of employing people.
BUT, I have a massive problem with any business who complains that a 10% drop in sales is sending them crashing to the rocks of financial doom! Its just not good enough - we expect more from our business managers and leaders. Not complaints and moaning.
An large business has a spread of staff, projects and initiatives across the board. With permanent and contract staff as well as critical and not so critical projects. The idea is to retain a level of flexibility so that you can react and respond quickly to changing circumstances. Maybe this is an increase in sales, maybe its a drop in sales - if its a drop, you can drive out cost QUICKLY and ensure that its not a massive problem. Its how big businesses operate and totally expected.
So when we have some of these companies complaining about a 10% drop in sales, I have to question exactly what have they been doing for the last 12 months? Not exactly a surprise is it? The media have been going on about it for ages. Even if you didn't do anything until 6 months ago, look at this way - could you drive out 10% of your costs in your business? Reduce your expenses costs by a little, drop the hotels being used to cheaper ones, use cheaper airlines where possible. Cut hours for contract workers by a little, reduce management perks a little, etc etc....
It isn't difficult and maybe you don't manage to reduce costs by 10%, but it would make a massive impact as to what is happening with overall revenue to the company. If you are public company, then you have a duty to do this for your shareholders, so from the MASSIVE OVERSIMPLIFICATION that I am making, it seems that they are just not doing enough.
The companies that I have worked for in the last 5-7 years have kept a VERY close eye on what is happening on a weekly basis. Currently my senior management (CEO etc) watch the numbers on a daily basis and have a detailed review weekly. This way they can react, change and adjust things as necessary. Sticking your head in the sand for 6 months and hoping it goes away doesn't seem the best way to approach this current situation.
Its like the car dealers in the UK - 10% drop in total number of cars sold in the UK in 2008 - yeah, it dropped off dramatically at the end of the year, but quite why so many crashed in August & September I am not sure. At that point it was only a small drop, the bigger drops were for the later months. Like I said before - if your business cannot handle a 10% drop in sales then there is something significantly wrong to start with. There should be contingency to cover this anyway.
BUT, I have a massive problem with any business who complains that a 10% drop in sales is sending them crashing to the rocks of financial doom! Its just not good enough - we expect more from our business managers and leaders. Not complaints and moaning.
An large business has a spread of staff, projects and initiatives across the board. With permanent and contract staff as well as critical and not so critical projects. The idea is to retain a level of flexibility so that you can react and respond quickly to changing circumstances. Maybe this is an increase in sales, maybe its a drop in sales - if its a drop, you can drive out cost QUICKLY and ensure that its not a massive problem. Its how big businesses operate and totally expected.
So when we have some of these companies complaining about a 10% drop in sales, I have to question exactly what have they been doing for the last 12 months? Not exactly a surprise is it? The media have been going on about it for ages. Even if you didn't do anything until 6 months ago, look at this way - could you drive out 10% of your costs in your business? Reduce your expenses costs by a little, drop the hotels being used to cheaper ones, use cheaper airlines where possible. Cut hours for contract workers by a little, reduce management perks a little, etc etc....
It isn't difficult and maybe you don't manage to reduce costs by 10%, but it would make a massive impact as to what is happening with overall revenue to the company. If you are public company, then you have a duty to do this for your shareholders, so from the MASSIVE OVERSIMPLIFICATION that I am making, it seems that they are just not doing enough.
The companies that I have worked for in the last 5-7 years have kept a VERY close eye on what is happening on a weekly basis. Currently my senior management (CEO etc) watch the numbers on a daily basis and have a detailed review weekly. This way they can react, change and adjust things as necessary. Sticking your head in the sand for 6 months and hoping it goes away doesn't seem the best way to approach this current situation.
Its like the car dealers in the UK - 10% drop in total number of cars sold in the UK in 2008 - yeah, it dropped off dramatically at the end of the year, but quite why so many crashed in August & September I am not sure. At that point it was only a small drop, the bigger drops were for the later months. Like I said before - if your business cannot handle a 10% drop in sales then there is something significantly wrong to start with. There should be contingency to cover this anyway.
Its all to do with the margin you actually make. on lots of consumer end stuff
TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
johnfm said:
http://business.timesonline.co.uk/tol/business/ind...
Since when has a drop in revenue of <10% been a 'plunge' or plummet?
Clearly, sales growth is the aim, but why is a 3.3% fall in sales reported as a drastic plunge in retail trade?
Since journalists were replaced by blonde bimbos who studied "media and communications" at university and have no idea of what words actually mean. Since when has a drop in revenue of <10% been a 'plunge' or plummet?
Clearly, sales growth is the aim, but why is a 3.3% fall in sales reported as a drastic plunge in retail trade?
off_again said:
There is more to the whole question of numbers, such as the real drop, margins and the cost of employing people.
BUT, I have a massive problem with any business who complains that a 10% drop in sales is sending them crashing to the rocks of financial doom! Its just not good enough - we expect more from our business managers and leaders. Not complaints and moaning.
An large business has a spread of staff, projects and initiatives across the board. With permanent and contract staff as well as critical and not so critical projects. The idea is to retain a level of flexibility so that you can react and respond quickly to changing circumstances. Maybe this is an increase in sales, maybe its a drop in sales - if its a drop, you can drive out cost QUICKLY and ensure that its not a massive problem. Its how big businesses operate and totally expected.
So when we have some of these companies complaining about a 10% drop in sales, I have to question exactly what have they been doing for the last 12 months? Not exactly a surprise is it? The media have been going on about it for ages. Even if you didn't do anything until 6 months ago, look at this way - could you drive out 10% of your costs in your business? Reduce your expenses costs by a little, drop the hotels being used to cheaper ones, use cheaper airlines where possible. Cut hours for contract workers by a little, reduce management perks a little, etc etc....
It isn't difficult and maybe you don't manage to reduce costs by 10%, but it would make a massive impact as to what is happening with overall revenue to the company. If you are public company, then you have a duty to do this for your shareholders, so from the MASSIVE OVERSIMPLIFICATION that I am making, it seems that they are just not doing enough.
The companies that I have worked for in the last 5-7 years have kept a VERY close eye on what is happening on a weekly basis. Currently my senior management (CEO etc) watch the numbers on a daily basis and have a detailed review weekly. This way they can react, change and adjust things as necessary. Sticking your head in the sand for 6 months and hoping it goes away doesn't seem the best way to approach this current situation.
Its like the car dealers in the UK - 10% drop in total number of cars sold in the UK in 2008 - yeah, it dropped off dramatically at the end of the year, but quite why so many crashed in August & September I am not sure. At that point it was only a small drop, the bigger drops were for the later months. Like I said before - if your business cannot handle a 10% drop in sales then there is something significantly wrong to start with. There should be contingency to cover this anyway.
Because a business does not operate in isolation. They have to compete to win sales. So they have smaller margins and higher costs than the fantasy scenario you present.BUT, I have a massive problem with any business who complains that a 10% drop in sales is sending them crashing to the rocks of financial doom! Its just not good enough - we expect more from our business managers and leaders. Not complaints and moaning.
An large business has a spread of staff, projects and initiatives across the board. With permanent and contract staff as well as critical and not so critical projects. The idea is to retain a level of flexibility so that you can react and respond quickly to changing circumstances. Maybe this is an increase in sales, maybe its a drop in sales - if its a drop, you can drive out cost QUICKLY and ensure that its not a massive problem. Its how big businesses operate and totally expected.
So when we have some of these companies complaining about a 10% drop in sales, I have to question exactly what have they been doing for the last 12 months? Not exactly a surprise is it? The media have been going on about it for ages. Even if you didn't do anything until 6 months ago, look at this way - could you drive out 10% of your costs in your business? Reduce your expenses costs by a little, drop the hotels being used to cheaper ones, use cheaper airlines where possible. Cut hours for contract workers by a little, reduce management perks a little, etc etc....
It isn't difficult and maybe you don't manage to reduce costs by 10%, but it would make a massive impact as to what is happening with overall revenue to the company. If you are public company, then you have a duty to do this for your shareholders, so from the MASSIVE OVERSIMPLIFICATION that I am making, it seems that they are just not doing enough.
The companies that I have worked for in the last 5-7 years have kept a VERY close eye on what is happening on a weekly basis. Currently my senior management (CEO etc) watch the numbers on a daily basis and have a detailed review weekly. This way they can react, change and adjust things as necessary. Sticking your head in the sand for 6 months and hoping it goes away doesn't seem the best way to approach this current situation.
Its like the car dealers in the UK - 10% drop in total number of cars sold in the UK in 2008 - yeah, it dropped off dramatically at the end of the year, but quite why so many crashed in August & September I am not sure. At that point it was only a small drop, the bigger drops were for the later months. Like I said before - if your business cannot handle a 10% drop in sales then there is something significantly wrong to start with. There should be contingency to cover this anyway.
rich1231 said:
Because a business does not operate in isolation. They have to compete to win sales. So they have smaller margins and higher costs than the fantasy scenario you present.
I am blatantly aware of the massive oversimplification that I present, but again, I re-iterate my point. They have known this was coming, the economic pointers have been clear that even a layman like me can understand them. Sales of 'stuff' has dropped off quickly and dramatically since June / July - so why is it such a bloody surprise? Why can't their businesses soak up a lot of this 'plunge' with the contingency that they have built in? a 3.3% drop in sales year-on-year is a lot, but that still means that they shifted 96.7% of what they did last year. This might be at a lower margin and with increased costs, but that is still a lot of money....off_again said:
rich1231 said:
Because a business does not operate in isolation. They have to compete to win sales. So they have smaller margins and higher costs than the fantasy scenario you present.
I am blatantly aware of the massive oversimplification that I present, but again, I re-iterate my point. They have known this was coming, the economic pointers have been clear that even a layman like me can understand them. Sales of 'stuff' has dropped off quickly and dramatically since June / July - so why is it such a bloody surprise? Why can't their businesses soak up a lot of this 'plunge' with the contingency that they have built in? a 3.3% drop in sales year-on-year is a lot, but that still means that they shifted 96.7% of what they did last year. This might be at a lower margin and with increased costs, but that is still a lot of money....
ks isn't it?Graham said:
Its all to do with the margin you actually make. on lots of consumer end stuff
TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
That the line between success and failure is such a fine one, suggests a poor business plan to start with. TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
rev-erend said:
Sounds like a reason to shed excess staff or weed out the chaff..
Plenty of them in retail.
Biggest overheads most retailler will have are:Plenty of them in retail.
1. Property rent/mortgage
2. Business rates (which are HUGE
Business, commercial and retail rates are a disgrace and are killing small businesses, but nowhere more so than in traditional high streets.
Mr POD said:
Graham said:
Its all to do with the margin you actually make. on lots of consumer end stuff
TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
That the line between success and failure is such a fine one, suggests a poor business plan to start with. TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
Maybe these retail guru's need to take a look at other markets - lets see, mmm, software? Gross margins can be anything from 50% to 90% without a problem. Gross margin for the company I work for is around the 80% mark and we own all of our own IPR. Don't get me wrong, thats GROSS and the cost of sales is high, but even with that taken into account, we are still talking about net margins around the 30%..... sounds like they would faint at those types of margin.
Mr POD said:
Graham said:
Its all to do with the margin you actually make. on lots of consumer end stuff
TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
That the line between success and failure is such a fine one, suggests a poor business plan to start with. TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
If you make 'normal' profit (under 10%) then you have a bad business model.
It's very difficult to make a small profit but employ excess staff so you can lay them off when times get hard (that would be a bad business model).
Digga said:
Biggest overheads most retailler will have are:
2. Business rates (which are HUGE)
Business, commercial and retail rates are a disgrace and are killing small businesses, but nowhere more so than in traditional high streets.
2. Business rates (which are HUGE)
Business, commercial and retail rates are a disgrace and are killing small businesses, but nowhere more so than in traditional high streets.
But then, there are all those 6 figure town hall salaries to pay, and the copper bottomed final salary pensions that go with them, these are essential to the success of retail / commercial businesses in town centres - naturally
off_again said:
Mr POD said:
Graham said:
Its all to do with the margin you actually make. on lots of consumer end stuff
TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
That the line between success and failure is such a fine one, suggests a poor business plan to start with. TV, play station, printers etc you can be making only 2-3% on the goods... a drop of 3.3% puts you in to a loss making situation...
Didnt some one in the industry say that car retail was in some cases only on a 1% margin
The diference between making a profit and making a loss would seem fair to be called a plunge...
Maybe these retail guru's need to take a look at other markets - lets see, mmm, software? Gross margins can be anything from 50% to 90% without a problem. Gross margin for the company I work for is around the 80% mark and we own all of our own IPR. Don't get me wrong, thats GROSS and the cost of sales is high, but even with that taken into account, we are still talking about net margins around the 30%..... sounds like they would faint at those types of margin.
And if lots of people decided to get into your business, what do you think will happen to your margins?
turbobloke said:
Digga said:
Biggest overheads most retailler will have are:
2. Business rates (which are HUGE)
Business, commercial and retail rates are a disgrace and are killing small businesses, but nowhere more so than in traditional high streets.
2. Business rates (which are HUGE)
Business, commercial and retail rates are a disgrace and are killing small businesses, but nowhere more so than in traditional high streets.
But then, there are all those 6 figure town hall salaries to pay, and the copper bottomed final salary pensions that go with them, these are essential to the success of retail / commercial businesses in town centres - naturally
It also has a high street which has been slowly dieing on its arse for years. Now, with added impetus from the credit crunch, it's plummeting nicely into oblivion...
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