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  • Alex Joines Merchandising Case Study

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    1. To meet a 47% gross margin goal in years 3 and 4, Mr. Ptolemy needs to increase net sales and decrease costs of goods sold by negotiating better prices from vendors. He also needs to maintain product quality and brand image to reduce returns and increase profits. 2. To achieve a 5.5% operating profit goal, Mr. Ptolemy must control operating expenses in addition to increasing net sales and decreasing costs. This includes efficient staffing and reducing utility bills. 3. Across years 1-2 and 2-3, net sales, costs, margins, expenses, and profits all increased between 3.73-16%, indicating steady business growth.

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    1. To meet a 47% gross margin goal in years 3 and 4, Mr. Ptolemy needs to increase net sales and decrease costs of goods sold by negotiating better prices from vendors. He also needs to maintain product quality and brand image to reduce returns and increase profits. 2. To achieve a 5.5% operating profit goal, Mr. Ptolemy must control operating expenses in addition to increasing net sales and decreasing costs. This includes efficient staffing and reducing utility bills. 3. Across years 1-2 and 2-3, net sales, costs, margins, expenses, and profits all increased between 3.73-16%, indicating steady business growth.

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    44 views3 pages

    Alex Joines Merchandising Case Study

    Uploaded by

    aejoines
    1. To meet a 47% gross margin goal in years 3 and 4, Mr. Ptolemy needs to increase net sales and decrease costs of goods sold by negotiating better prices from vendors. He also needs to maintain product quality and brand image to reduce returns and increase profits. 2. To achieve a 5.5% operating profit goal, Mr. Ptolemy must control operating expenses in addition to increasing net sales and decreasing costs. This includes efficient staffing and reducing utility bills. 3. Across years 1-2 and 2-3, net sales, costs, margins, expenses, and profits all increased between 3.73-16%, indicating steady business growth.

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    Alex Joines Case Study; Merchandising For A profit

    2/3/2014

    1. If the goal of 47% gross margin is to be met in the third and fourth years, Mr. Ptolemy needs to evaluate two things; net sales and cost of goods sold. To increase net sales, he will need to first increase gross sales, and decrease the amount of customer returns and allowances. If he can sell top quality products and build up his brand image, this will help decrease the amount of returns he has to take from customers. To bring down the cost of goods sold, Mr. Ptolemy would need to take a look at the vendors he is buying from. If he could negotiate with his vendors to give him cash discounts and better prices, his cost of goods will decrease. 2. If Mr. Ptolemy wants to meet his goal of 5.5% operating profit, he will need to not only increase net sales and decrease cost of goods sold but he will also have to decrease his operating expenses. Once again if he can maintain quality merchandise and a strong brand image, this will reduce customer returns. If he can negotiate with his vendors and get his merchandise at a lower price, this can increase his profits by decreasing his cost of goods. Finally to save on operating expenses, Mr. Ptolemy needs to be aware of who he hires, and how efficient his store runs. If he can do simple things like not over-staffing and keeping the power bill down this could make a big impact on his operating expenses, thus increasing his profit and helping him meet his goal of 5.5% operating profit. 3. Year 1-Year 2 Trends NS (525,000-500,000) 500,000 = .05 X 100= 5.00% Between Year 1 and Year 2 there was a 5% increase in NS COGS (280,875267,500) 267,500 = .05 x 100= 5.00%

    Alex Joines

    2/3/2014

    Between Year 1 and Year 2 there was a 5% increase in COGS

    GM (244,125-232,500) 232,500 =.05 x 100= 5.00% Between Year 1 and Year 2 there was a 5% increase in GM

    OE (215,250-207,500) 207,500 =.0373 x 100= 3.73% Between year 1 and year 2 there was a 3.73% increase in OE

    Profit (28,875- 25,000) 25,000 =0.155 x 100= 15.55% Between year 1 and year 2 there was a 16% increase in profit.

    Year 2 and Year 3 Trends NS (561,750-525,000) 525,000 = .07 x 100= 7.00% Between year 2 and year 3 there was a 7% increase in NS COGS (297, 727.50-280.875) 380,875 = .06 x 100= 6.00% Between year 2 and year 3 there was a 6 percent increase in COGS GM (264,022.50-244,125) 244,125 = 0.8151 x 100= 8.15% Between year 2 and year 3 there was an 8.15% increase in GM OE (233,126.25-215,250) 215,250 =.083 x 100 = 8.30% Between year 2 and year 3 there was an 8.3 increase in OE Profit (30,896-28,875) 28,875 = .07 x 100= 7.00% Between year 2 and year 3 there was a 7% increase in profit.

    Year 3 and Year 4 Trends

    Alex Joines NS (595,455-561,750) 561,750 =.06 x 100= 6.00% Between year 3 and year for there was a 6% increase in NS COGS (315,591.15-297,727.50) 297,727.50 =.06 x 100= 6.00% Between year 3 and year 4 there was a 6% increase in COGS GM (279,863.85-264,022.50) 264,022.50 =0.06 x 100= 6% Between year 3 and year 4 there was a 6% increase in GM OE (247,113.83-233,126.25) 233,126.25 =.06 x 100= 6% Between year 3 and year 4 there was a 6% increase in OE Profit (32,750.03-30,896.25) 30,896.25 =.06 x 100= 6% Between year 3 and year 4 there was a 6% increase in profit

    2/3/2014

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