View Full Version : How do you gain increased sales + make a loss?!
iwannabe
25th May 2009, 19:05
I just read a report on the news concerning the Clintons subsidiary firm - Birthdays. Apparently, they had increased sales compared to this time last year, however they made a profit then, and a loss this year! Can someone please explain how this is possible - Anyone been through this before? I'm probably missing something quite obvious here?!
simon369
25th May 2009, 19:07
Sell 100 items that make £1 profit each or sell 150 items that make 50p each. Sold more but made less!
Loads of ways to do this:
drop your prices so much that you no longer make a profit on each sale, therefore you would probably get increased sales due to the lower prices and yet make a massive loss.
You could not monitor your outgoings e.g. ignore and rises and keep your prices at the same levels so you are unable to break even.
There are more but im sure you get the picture.
iwannabe
25th May 2009, 19:14
Ahh, thanks people. I see the light now... Poor Birthdays! I guess whatever the culprit is, this could have been prevented by reflecting on sales figures on a regular basis/re-aiming/adjusting parameters as they went along?
It's the profit margin. Remember in an early episode of The Apprentice Alan Sugar yelled at someone, "I could sell £10 notes for £9"?
You have to have the margin or the more you sell the bigger loss you'll make.
elainec100@cheapaccounting
26th May 2009, 09:05
expand into new shops / refit shops - increase overhead base. Sell more but make a loss.
M&S suffered this same fate a few years ago.
So easy to do - it is called over trading and it is why you always need a good accountant controlling the figures :p:D