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David Brown

These Jewelers Just Reported Their Healthiest Sales Increase in 2 Years

12-month rolling sales are up.

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The lead-up to the busy December trading period got off to a strong start with November showing the biggest increase in rolling 12-month sales data since October 2015.

Rolling 12-month sales of $1,614,820 are up 0.79 percent on the previous month’s figure of $1,602,166 as a result of a stronger performance for November compared to last year. The monthly results are detailed below:

 

 

As the monthly comparisons show, sales for November were up $12,654 on last year to $148,711, which represented a monthly increase of over 9 percent. This has continued the trend of the last two years, with this year’s figure representing an increase of almost 13 percent on November 2015. Gross profit is up from $61,093 in 2015 to $66,836 this year, a rise of 9.4 percent. These figures reflect the overall recent trend of fewer items being sold at a higher price and lower margin.

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The improvement in sales figures has resulted in a growing confidence to invest in inventory again. As the graph below shows, inventory levels had begun to decline slightly from the highs of late 2015 but the downtrend seems to have reversed. November represents the highest level of inventory held since our records began in 2008.

 

 

Average inventory levels per store are sitting at an average holding of just over $1.5 million, with data for stores doing under $1 million in sales per year at around $675,000 while those doing over $1 million have an average inventory holding of almost $2.4 million.

How much product are you carrying as the busy holiday period rolls around? Now is the time to have a wide selection, but most importantly, it’s the best time to have the right product. With a small percentage of your items delivering most of your sales revenue, you need to ensure that you have identified your strong sellers and that you are carrying spares of anything you need that can’t be reordered at this busy time of year.

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Have you checked your suppliers cut-off times for when you can get inventory from them? Do you have substitutes in place that your staff can go to in the event you can’t replace an item? This is critical at this time of year, especially if you run out of promotional pieces. Now is a good time to consider what alternatives you can show at a similar price point.

What about upsells? Your best product can bring customers in, but do you have a higher-priced alternative you can go to? What features and benefits does the higher-priced item provide? Are your staff members trained in the opportunity that this product can provide? Customers are open to suggestions, and it’s your staff’s job to suggest.

Now also represents a great time to move aged inventory. It’s the perfect time to identify those pieces that are tying up cash and make a decision on what you will do with them. Should they be discounted with a view to generating cash flow? Can they be used as loss leaders or “bait” to steer customers toward more profitable pieces you may want to sell? Even slow-selling or ugly items can help earn their keep by making other items seem like more attractive alternatives.

This time of year is the most critical for both your sales and your inventory management. It’s important in December to have the right product mix and a plan of action for how you want your inventory levels to look by the time January rolls around. You only get this opportunity once a year, so make the most of it!

David Brown is president of the Edge Retail Academy, a force in jewelry industry business consulting, sell-through data and vendor solutions. David and his team are dedicated to providing business owners with information and strategies to improve sales and profits. Reach him at david@edgeretailacademy.com

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David Brown

Here’s How to Succeed at Succession Planning

Be sure to consider these four areas to prevent unnecessary conflict.

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MONEY CAN BE A sensitive topic to talk about. Generally, people don’t like to discuss it even in the privacy of their own home. Yet, not talking about your financial situation can make a significant difference in how much of your wealth is passed on to other family members. Whether it’s a business being passed on or the wealth that it has created, careful planning is required.
Government legislation is constantly evolving in this area. It’s important to set up for the passing of wealth and to ensure this is compliant with the current laws.

Here are some things to consider:

1. Inform family members of what may be coming their way. Give them the opportunity to prepare for the financial impact an inheritance may have. More than one family has been undermined by a sudden arrival of wealth they didn’t expect and couldn’t handle. Such preparation can help them to plan their ownership and tax structures to handle it effectively.

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2. Be sure to involve key stakeholders. Be selective about who is involved in the decision-making process, the administration and the final beneficiaries. The process can be daunting and potentially alienate family members and cause unnecessary conflict.

3. Ensure a single unified vision. Particularly where parents are concerned, it’s important to ensure a consistent message is communicated about the ongoing management of the family business. If there is to be a successor, there needs to be an agreed upon approach as to who it will be and how it will be handled.

4. Don’t wait too long to pass on ownership and responsibility. If the business is to go to the next generation, a grooming process is recommended to ensure the transition is smooth and the successor has done their “time.” You should always be prepared for an unexpected event that may speed this process up faster than you intended — it’s better to be over-prepared in this area than under-prepared.

Whether a business is being passed on or the wealth that the business has created, it’s important that the vision is clearly communicated regarding how the legacy will be passed onto future generations. Sharing this vision can be an effective means of making sure the succession plan goes as smoothly as possible.

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David Brown

Why You Need to Talk to Your CPA ASAP

A conversation and some planning today can minimize your tax burden tomorrow.

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A CONVERSATION WITH YOUR CPA now can help minimize your tax burden later.

With the end of the financial year fast approaching, now is a good time to start thinking about your end-of-year financial results. No one wants to pay tax, and certainly no one wants to pay any more than they must. Tax evasion is a criminal act that will see you finish up in court. Tax minimization, however, is a perfectly legitimate way of keeping your tax to the most you’re required to pay.

Too often businesses wait until the financial year has ended, determine their financial result, then wonder how they can reduce their tax bill. This can be a little like closing the gate after the horse has bolted. Many tax minimization strategies can be implemented before the end of the financial year, and now is a good time to talk to your CPA about some possible approaches.

Much of this strategy can revolve around the expenses you might be planning to claim. Larger investments in assets can often have their cost apportioned over several years, and there can be an advantage, if you are planning to make this investment, in undertaking it before the end of the financial year.

Another aspect to discuss with your CPA is how income is allocated. It’s important to take advantage of different tax rates for owners and partners in a business. Again, this decision sometimes needs to be made before the financial year has ended to avoid making retrospective decisions that may be frowned upon by the IRS.

Before you talk to your CPA, try to have a handle on how your financial year is going, as this will make a difference to what they may recommend. Your accountant will want to know how the year is tracking and what performance you are budgeting on for the last month of the year. Obviously, some constructive estimating, especially around the busy December period, will be needed. Your CPA will then be able to best advise you of what actions will help your financial year-end before the 31st of December.

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David Brown

These Stores Have Seen Lower Silver Sales in the Face of Better Overall Results — How Do Your Results Compare?

Check out The Edge Retail Academy’s latest results.

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ROLLING 12-MONTH SALES for June averaged $1.897 million, up 1% from the June 2018 result of $1.879.

Storewide sales for the 12-month period averaged 6,118 units per store, down 5.5% to 6,474. Average sale per item increased from $290 per item to $310, a rise of 6.9%.

With sales increasing $18,000, gross profit grew from $859,000 to $871,000, a rise of 1.37% on the back of markups, which improved from 84% to 85%. This again illustrates how even a slight increase in margin can have a significant effect on bottom-line profit.

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We’ve spoken a lot through these results about the decline in units sold across store data, and this is most obvious when looking at the performance of silver sales. Our 12-month data through June shows average store sales of $99,000 for silver items, down from 2018’s figure of $113,000 (a 14% decline) and 2017’s figure of $136,000 (2019 result represents a drop of 27% from 2017). Unit sales match this decline with sales of silver items at 926 items, down from 1,210 in 2018 (a fall of 23.4%). The drop in units has been offset by a healthy increase in average sale of silver items, with the average increasing from $94 to $107 between 2018 and 2019 – a rise of 13.8%.

Based on this information, the typical store has seen silver’s contribution to overall sales decline from 7.7% to 5.2% in the last two years. How has silver been for your store? If silver sales have declined, has there been a trade-off in other areas? Clearly most stores have seen a rise in sales while silver has dropped, indicating that they are more than making up for it. Is this the case with your store? If silver has dropped but you haven’t made up for it elsewhere, its time to look at your store’s performance.

Inventory

Does your store still say silver? Have you continued to focus on an area that has become less profitable? Print an inventory by department list and determine what percentage of your store product is silver. Does it represent a greater percentage of your overall inventory than you are selling?

Silver will generally have a faster stockturn that most other items, so you should expect your percentage of inventory to be significantly lower than your percentage of sales in this area. If it’s not, you may be saying “silver” to your customers when you should be saying something else.

Marketing

What message are you sending your customers? Are you focused on the right type of product in your marketing? Are you still emphasizing cheaper silver product when the market wants something else?

Staff

Have your staff moved on from the bead market in what they are attempting to sell? Are they skilled up to sell higher-priced items? If the average sale in most stores has increased by 20% in the last two years, then your staff need to realize the performance goalpost has shifted for them, too. They need to be increasing their average sale to keep pace with the general trend – but they won’t know to do this if you don’t tell them. Print a salesperson performance report for your staff and compare it to a similar report from two years ago. Who has lifted their average sale? Who is still at the same level? Be prepared turn potential into profit to discuss this with them. They may not know what has been happening, and they cant change if you don’t tell them.

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