Margin per store and campaign cash flow: knowing which one earns and which does not
Nextica Law & Tax acts as the outsourced finance director of a retail network: a profit and loss account per store with an explainable, stable allocation of overheads, retail-specific indicators —sales per square metre, stock turnover, margin by category—, campaign budgeting and, above all, the cash flow of the months when you buy before you sell, which is where a profitable chain runs out of money.
A chain that makes money overall usually has two stores taking it from the rest. The consolidated account never says so.
What's included
1. A profit and loss account per store with the full direct costs
staff, rent, utilities, fit-out depreciation and shrinkage.
2. An explicit, written and stable basis for allocating overheads, because changing it every quarter invalidates the ranking and with it the decisions.
3. Retail-specific indicators
sales per square metre, stock turnover and margin by product category.
4. Campaign budgeting with the order sized and the expected margin by category.
5. A cash plan for the campaign cycle
how much stock has to be paid for before the first sale, and which week holds the lowest cash point.
6. Replenishment analysis
what share of the order can be topped up if the campaign runs better, and what becomes dead stock if it runs worse.
7. A quarterly review of the store ranking on the same basis, so opening and closing decisions can be taken on comparable data.
THE CONSOLIDATED ACCOUNT NEVER SAYS WHICH STORE LOSES
These three are not regulatory risks: they are what makes a chain that is profitable overall have two stores eating the result.
Overhead allocation that changes every quarter
moving the allocation key moves the store ranking, and when the ranking moves nobody believes the numbers and decisions stop being taken. An imperfect basis everyone understands is worth more than an exact one nobody can reproduce.
Known and unknown shrinkage added on the same line
the first is recorded when it happens and hits the product's margin; the second only appears when book inventory is compared with the physical count, and it is the one that tells you where to look. Without per-store counts they cannot be told apart and the problem is discovered once a year.
Deciding the campaign's cash when the invoice arrives rather than when the order is placed: between paying the supplier and selling there are weeks of stock already paid for, and that gap grows exactly when the campaign is going well.
Frequently asked questions
Which costs should be allocated per store, and how?
Direct costs always and without argument: store staff, rent, utilities, fit-out depreciation and shrinkage. Overheads —head office, marketing, logistics, systems— are allocated on an explicit, written and time-stable basis. The important word is stable: changing the allocation key changes the store ranking, and when the ranking moves every quarter nobody believes the numbers and decisions stop being taken. An imperfect basis everyone understands beats an exact one nobody can reproduce.
When is a campaign's cash flow decided?
When the order is placed, not when the invoice arrives. Between paying the supplier and selling to the customer there are weeks of stock already paid for, and that gap decides whether the campaign is funded from own cash, from credit or by cutting the order. That is why a campaign budget should always include three figures besides the expected margin: how much stock has to be paid for before the first sale, which week holds the lowest cash point, and what share of the order can be replenished if the campaign goes better than expected.
Content reviewed by
Elena Bosch Prat
Directora · Consultoría Contable y Financiera
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