5 ms·
Loss as a percentage of sales is an odd way of quantifying it. Loss as a percentage of net profit seems like a better figure of merit.
by beervirus 5y ago
Loss as a percentage of sales is an odd way of quantifying it. Loss as a percentage of net profit seems like a better figure of merit.
- bdowling 5y agoExactly. Inventory loss is an expense just like any other of the company (cf. rent, utilities, labor, etc.). For those retailers operating on a thin profit margin, an increase in inventory loss expense affects profits just like an increase in rent, utility, or labor expenses.
- xboxnolifes 5y agoLoss of net profit can get weird (editorially) when losses exceed profit or when net profit is negative.
- beervirus 5y agoSure, but people understand negative numbers. The pony is that if my profit margins are slim, then a smallish loss in theft can be a big deal. Comparing theft loss to gross sales just obscures the reality.
- xboxnolifes 5y agoPeople may understand negative numbers, but if I read a title that said "Retail theft accounts for -15% of net profit for Walmart", I'd be pretty confused. Hell, I'd say comparing theft to gross sales is most fitting comparison, as it's the cost that the consumer actually sees. 50% of gross sales would mean for each 2 sales of an item, 1 gets stolen. Maybe it doesn't give a good view of how much it impacts a business with theft being priced in, but it sure does paint a good picture of how much theft happens.
- bdowling 5y agoYou can easily avoid negative percentages by rephrasing. e.g., "Walmart profits are down 15% because of retail theft." Theft loss makes sense to present in relation to profits because the thieves in these cases resell the goods. The profits that the retailer would have made are literally transferred to the thief. The retailer still has its fixed expenses (rent, utilities, labor), so the theft basically comes directly out of the bottom line.