Profit margins in retail question please

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chassyp | 08:20 Thu 21st Jun 2012 | Business & Finance
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I am confused!
I am reading that retail profit margins are 4% or 5% for example! Does this mean, after deductions such as overheads and wages etc?? Many thanks for any help.


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Surely 'profit' must mean after all outgoings have been taken?

BTW in the garment sector retail profit margins are vastly greater than the % you quote.
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I appreciate your reply. I guess the retail profit margin is different in all businesses depending on overheads then? Does anyone know what the retail margins would be in general? Say for household goods!
I presume the turnover/profit margins go headlong in battle against overheads and outgoings?
It'll vary depending on the business too - for white goods, a company like Argos buys in vast bulk so can drive down their purchase prices.
if you are talking about company performance overall then yes, that will be after overheads are taken out. Profit margin will then be shown before and after tax. Retail profit margins will vary between company and product type being sold. Next are around 14% where as Tesco are about 4%.

Dont get confused with turnover and profit margins as these are completely different. Think of profit margins as the money you have left once everything is paid for. You can have a very high turnover but not make any profit.
depends if it's Net or Gross profit. the former is after expenses are taken into account. Generally though when they say "margin" they mean gross profit as a percentage of the whole.
4 or 5% sounds very small so I'd say it must be on very expensive items, eg you'd want to make 100% on a Mars Bar but you'd be happy with 5% on Billionaires gin palace for example!

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