This page is for a buyer, a retail planner, or anyone new to retail who needs to read a single style's own trading week and say, in plain numbers, whether it is doing well. This lesson mainly teaches the money flow: it introduces margin, markup, sell-through rate, stock cover and average selling price as one connected set of tools, each answering a question the others cannot.
Fairway Stores buys Order A wholesale from Northline Apparel at USD 8.00 per piece and sells it at its own shop price of USD 19.90. Knowing that single pair of numbers is not enough to run a buying desk. A buyer also needs to know how fast the style is selling, how long the remaining stock will last, and what price customers are actually paying once some pieces go on markdown. Without these five calculations together, a buyer sees only a snapshot of the price ladder, never the season actually moving through the shops.
You need: no previous lesson. A basic idea of what a percentage is, and Order A's own fixed chain (FOB USD 3.20, landed cost USD 3.70, wholesale USD 8.00, shop price USD 19.90), are enough to start.
By the end of this lesson you can:
Not covered here: sell-through rate and stock cover across a whole season (lesson T20-C01-L02), markup, margin and average selling price in depth (lesson T20-C01-L03), and like-for-like growth (lesson T20-C01-L04).
| Term | Meaning |
|---|---|
| Margin | Profit divided by the selling price, shown as a percentage of what a company sells for. |
| Markup | Profit divided by the cost, shown as a percentage of what a company paid. |
| Sell-through rate | The share of stock actually sold within a planned period, used to judge whether a forecast was right. |
| Stock cover | The number of weeks a brand's current stock is expected to last before it runs out, given its normal sales rate. |
| Average selling price | The total money taken from a style's sales divided by the number of pieces sold, once full-price and markdown sales are both counted. |
Margin, markup, sell-through rate, stock cover and average selling price are five separate calculations, and no single one of them tells a buyer everything. Margin and markup both describe profit, but against two different bases, cost or selling price. Sell-through rate and stock cover both describe how fast stock is moving, but one looks backward at what has already sold and the other looks forward at what remains. Average selling price shows what customers actually paid once markdowns are mixed in with full-price sales, which neither margin nor markup shows on its own. A buyer who only ever checks one of the five is reading half the season.
| What can differ | The shapes you will meet | Why it matters |
|---|---|---|
| Export order sold wholesale to a department-store chain | Fairway Stores buys Order A wholesale from Northline Apparel at USD 8.00 and tracks margin, sell-through and stock cover on its own shop price of USD 19.90 every week. | The buyer's own margin and markup are fixed once the buying price is set, but sell-through, stock cover and average selling price change every week as the season runs. |
| A domestic buyer sourcing straight from the factory | A local brand such as Cedar & Co. buys directly from Delta Garments on open account, skipping the wholesale step, and runs the same five calculations against its own shop price. | Fewer steps in the buying chain still leave the same five questions to answer: profit against cost, profit against price, speed of sale, weeks of cover, and actual price paid. |
| A style still selling only at full price early in the season | In the first few weeks after Order A reaches the shops, every piece sells at the full shop price of USD 19.90, so average selling price equals the shop price exactly. | Average selling price only drops below the shop price once markdown sales begin, which a buyer must watch for separately from margin and markup. |
| A style already carrying some markdown stock mid-season | By week six, some of Order A's pieces have already been marked down to clear slower sizes, so average selling price sits below the shop price even though the shop price itself has not changed for every piece. | A buyer who only checks the shop price, and never the average selling price, overstates how much money the season is actually bringing in. |
Fairway Stores buys the full 15,000 pieces of Order A from Northline Apparel at USD 8.00 per piece and sets its own shop price at USD 19.90. By the end of week six, Fairway Stores has sold 9,000 of the 15,000 pieces at illustrative sales figures kept for teaching purposes only. Of those 9,000 pieces, 8,200 sold at the full shop price and 800 sold at a markdown price of USD 15.92, a price reduction used to clear slower sizes. Fairway Stores' own buying team pulls all five calculations from this one checkpoint to decide whether the style needs a markdown across more stores or is still trading to plan.
Margin and markup describe the same USD 11.90 of profit against two different bases and will never match. Sell-through of 60.0% and stock cover of 4.0 weeks describe the same 6,000 remaining pieces from two directions, one backward-looking and one forward-looking. Average selling price of USD 19.55 already sits below the USD 19.90 shop price, because 800 pieces have already sold at a markdown.
The methodA common mistake is reading margin or sell-through rate alone and stopping there. A style can show a healthy 59.8% margin on paper while its stock cover of 4.0 weeks quietly signals that the remaining pieces will not clear before the season ends, unless the sales rate improves or more stock is marked down. What this costs a buyer who checks only margin is real: a decision to hold the shop price steady, made without looking at stock cover, can leave thousands of pieces unsold at season end, at which point a much deeper markdown becomes necessary than if action had been taken at week six. All five calculations must be read together, not picked from selectively, or a style's real position in the season stays hidden.
A buyer runs five small calculations on the same style every week. Two of them, margin and markup, describe the same profit measured against two different starting points, the selling price and the cost. Two more, sell-through rate and stock cover, describe the same remaining stock from two different directions, how much has already sold and how many weeks the rest will last at the current pace. The fifth, average selling price, shows what customers actually paid once full-price and reduced-price sales are mixed together. None of the five replaces any of the others, and a buyer who checks only one is working with an incomplete picture of the season.
Fairway Stores holds a trading review at the end of week six on Order A. The buyer preparing the report has the full checkpoint data: 9,000 of 15,000 pieces sold, 800 of those at a markdown price of USD 15.92, and 6,000 pieces remaining. The buyer's first draft of the report states only the margin.
Here is the note the buyer first prepared:
Is this note enough for management to judge how the season is actually going? Decide before opening the answer.
No, the note is not enough on its own. Two facts missing from the buyer's note decide this.
First, margin never moves during a season on the same wholesale cost and the same full shop price, so reporting it alone tells management nothing new about how week six is trading. The margin of 59.8% would read exactly the same whether the season is selling out early or barely moving.
Second, the sell-through rate of 60.0% and the stock cover of 4.0 weeks are the numbers that actually describe week six. With 6,000 pieces remaining and a weekly sales rate of 1,500 pieces, the stock will clear in about four more weeks if the current pace holds; if the season has more than four weeks left to run, management needs to know now, not later, whether a markdown decision is coming.
The corrected note should report sell-through rate, stock cover and average selling price alongside margin, since only those three actually change from one trading review to the next.
Using Order A's own fixed figures and the week-six checkpoint:
Forty percent of Order A's own pieces sit outside what a margin-only report actually describes, since margin never changes while sell-through, stock cover and average selling price move every week. A buying team that reports margin alone and misses a stock cover warning by even one trading review risks reaching week ten or twelve with several thousand pieces still unsold, at which point a deeper, more costly markdown becomes the only remaining option.
Open the course workbook's "Core retail maths" sheet. It lists a style's own cost, selling price, order quantity, pieces sold, remaining stock and weeks elapsed, then calculates margin, markup, sell-through rate, stock cover and average selling price automatically from those inputs. Enter a different style's own weekly checkpoint to see how the same five calculations apply to any order.
[Download the Retail maths reference workbook](../../templates/T20-C01-retail-maths-reference-workbook.xlsx)
1. Fairway Stores' margin on Order A stays at 59.8% for the whole season while the season is trading. What does this tell a buyer about how the season is actually going?
2. A style has an order quantity of 12,000 pieces. By week four, 4,800 pieces have sold. What is the sell-through rate, and what weekly sales rate does it imply?
| EN | AR | FR | TR | Meaning |
|---|---|---|---|---|
| Margin | الهامش | Marge | Marj | Profit divided by the selling price, shown as a percentage of what a company sells for. |
| Markup | الزيادة على التكلفة | Majoration (marge sur coût) | Kâr yüzdesi (markup) | Profit divided by the cost, shown as a percentage of what a company paid. |
| Sell-through rate | معدل البيع الفعلي | Taux d'écoulement | Satış oranı | The share of stock actually sold within a planned period, used to judge whether a forecast was right. |
| Stock cover | تغطية المخزون | Couverture de stock | Stok kapsama süresi | The number of weeks a brand's current stock is expected to last before it runs out, given its normal sales rate. |
| Average selling price | متوسط سعر البيع | Prix de vente moyen | Ortalama satış fiyatı | The total money taken from a style's sales divided by the number of pieces sold, once full-price and markdown sales are both counted. |
You now know the five calculations a buyer runs every week. The next lesson takes two of them, sell-through rate and stock cover, and shows how a factory reads the same numbers to decide whether a reorder is coming. Back to the course map