Profitability is getting tougher to achieve according to the BMF’s annual Merchant Industry KPI Report, which compares financial performance ration from a representative sample of merchant businesses across the country.
When compared with the previous year’s findings, the 2007 figures show a definite tightening of the market. Productivity rose in the 12 month period – sales per employee was up 3% and gross profit rose 1.6%. However, average payroll per employee also increased by 1.7%.
Similarly, sales values were 5% up and margins remained flat at around 30%, but net profit saw a significant downturn from 5.2% to 3.4%. The stockturn figure also rose from 4.9 to 5.82, suggesting an increase in sales by volume if not by value, however, the general findings of the survey, according to the BMF, were that “sales are becoming harder to find”.
BMFF secretary Peter Matthews comments: “The main value of this report is that it provides a snapshot of key business indicators which merchants can use to test their own performance levels against industry norms. But comparison with the 2006 results definitely suggests the combined effects of input price inflation and growing competition are taking their toll on merchants’ profitability.”