Behind the numbers

The Furniture Store Performance Report gives retailers benchmarks to measure their own store's profitability, employment practices and merchandise performance along with sourcing, buying and advertising information.

More detailed numbers on store operations are available in Furniture/Today's Furniture Store Performance Report, published as a special section in the Sept. 11, 2006, issue, and also online at www.furnituretoday.com.

Figures in the Furniture Store Performance Report are for fiscal years ending between Dec. 31, 2005 and May 31, 2006.

Definitions and terms

Administrative staff for the purposes of the Furniture Store Performance Report includes store managers, assistant managers, merchandising or advertising managers, buyers, etc.

Close ratio is calculated by dividing the average number of customer visits per week resulting in a purchase by the average number of customer visits per week.

Fringe benefits include all payroll taxes, workers' compensation, retirement plans, group health insurance, disability insurance, etc.

Gross margin = net sales minus cost of goods sold (including freight and shrinkage, excluding handling).

Gross margin percentage = gross margin divided by net sales.

In-house credit consists of deferred payment plans offered and managed by the store.

Medians are the middle point for any range of figures. When medians are given, it means that one-half of the furniture stores reported figures above the median and one-half reported figures below the median. Unlike averages (means), the median is not distorted by unusually high or low figures that may be reported.

Motion chairs include glider rockers, swivel chairs as well as recliners. Price-point data was collected for recliners only.

Number of customers per sales employee per week is computed by dividing the number of customers visiting the store in an average week by the number of sales employees. Both full-time and part-time sales employees are summed in the calculation, but part-time sales employees are first divided by two.

Number of purchasers per sales employee per week is computed by dividing the number of customers making a purchase at the store in an average week by the number of sales employees. Both full-time and part-time sales employees are summed in the calculation, but part-time sales employees are first divided by two.

Occasional tables include sofa tables, Parsons tables, coffee tables and end tables as well as cocktail tables. Price-point information was collected for cocktail tables only.

Occupancy costs include real estate taxes, utilities (HVAC, electricity, water, sewer), building rent and depreciation, interest on mortgage indebtedness, personal property taxes, depreciation on furniture, fixtures and equipment, amortization of leasehold improvements, property and casualty insurance, building repairs, cleaning and maintenance supplies. Delivery vehicle costs are excluded.

Payroll expenses include all wages or salaries, commissions, bonuses and fringe benefits.

Return on sales = net profit (after tax) divided by total sales.

Return on assets = net profit (after tax) divided by total assets.

Return on net worth = net profit (after tax) divided by net worth (total assets minus total liabilities).

Sales per sales person is calculated by dividing merchandise sales by the number of sales employees.

Sales per square foot is calculated by dividing merchandise sales by the total square footage dedicated to selling space.

Sales staff for the purposes of the Furniture Store Performance Report includes interior designers as well as full-and-part-time sales staff.

Stock turns = cost of goods sold divided by annual average inventory (derived by adding the inventory at the beginning of the year to the inventory at the end of the year and dividing by two).

Third-party financing refers to deferred payment plans offered by the store and managed by a third party.