Passing the Torch To My Son Sale

Age Of Store……………………………………………50 Years

Most Recent Annual Sales Volume (w/o repairs)…..$206,000

Owned Inventory On hand at cost……………………$174,000

Status Of Owned Inv…………………Aged Jewelry, China & Giftware

Average Mark-up Jewelry…………………………….2.5 times Cost

Typical Discount at point of sale………………………20%

Goal Of Sale

Convert older slower turn inventory into cash, and apply to vendor debt as well as any lingering buy-out debt with family. Retain newer, fresher inventory without sacrificing it at low discounts. Re-energize the store with a store-wide Event that would attract new customers, and give old customers a reason to come back to the store. Get rid of all remaining giftware, china, and flatware that hasn’t sold in years, and replace with newer and fresher inventory. Re-capitalize the business.

Sale Projection

Actual selling days of sale……………………………………...56 days

Projection …Low@ $150,000 – Target@ $200,000 – High @ $250,000

Fill-In Goods Added………………………...……Yes, at request of owner

Gross Margin to store projected on fill-in…………………...46%

Actual Results To Date

Days of Sale To Date………………………………………..…..38 Days

Days of Sale To Go…………………………………...…………18 days

Gross Volume of The Sale Event To Date………………………$261,200

Volume after sales tax & credit card fees & repairs removed…$241,650

Store Inv. Sold at disc. selling price…………………...…….…$80,088

Estimated Gross Margin on Store Inv……………………………33%

Estimated Profit On Store Inv…………………………….……$26,429

Fill-in Inv. Sold at disc. Selling price……………………………$161,562

Gross Margin to store from Fill-in………………………………47%

Profit to store from Fill-in……………………………………....$75,005

Conclusion To Date

Some $53,658 of old Giftware, Jewelry, and China, at cost, has been sold at a discounted selling price of $80,088, producing a profit of $26,429 and an average gross margin of 33%, during the sale. Fill-in inventory has contributed an additional $75,005 of profit to the jeweler, and captured a 47% gross margin at the discounted selling price.

The Store has seen a cash flow of $241,650 in 38 days. This number represents all sales of finished goods, after repairs, credit card discount fees, and sales tax have been deducted.

Cost of fill-in, commission fees, advertising and store operations expense (rent, gross salaries, utilities, block insurance, etc.) have totaled $151,106 to date leaving $90,543 in the jewelers pocket against an estimated $50,658 of owned inventory, at cost, consumed in the sale. This translates to a $1.79 return on a $1.00 worth of owned inventory at cost, after all sale related expenses have been paid.

Question

Could more of the storeowner’s owned inventory have been sold?

Answer

Yes. However it was the choice of the owner to slow sales of fresher “bread & butter” store inventory by offering it at lesser discounts. The reasoning was his fresher inventory, which had a lower mark-up than similar fill-in inventory, would only have to be repurchased after the sale, and was producing a smaller margin than the fill-in at the discounted selling price.

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