QUANTIFYING BASE LFL PERFORMANCE

TOTAL WK 1 WK 2 WK 3 WK 4 WK 5 WK 6 WK 7
NOTES HOT STRIKE SNOW

LFL SALES
PLAN 1,690 189 224 249 338 287 191 212

ACTUAL
LFL SALES 1,872 208 242 373 375 287 158 229

ACTUAL
VARIANCE
TO PLAN 11% 10% 8% 50% 11% 0% -17% 8%

BASE
VARIANCE
TO PLAN 9% 10% 8% 9% 11% 9% 9% 8%
BASE LFL
SALES 1842 208 242 271 375 313 208 229

In this example performance in Weeks 3 and 6 has been affected by exceptional weather, while that in
Week 5 has been affected by strike. Over the 7 week period therefore while actual performance was
1872 we will base our future sales plans on the Base Sales of 1842
BASE LFL SALES = LY LFL SALES X (1+ ‘NORMAL’ VARIANCE TO LY %)

9
PERFORMANCE OBSERVATIO
MEASURE N POSSIBLE CONCLUSION
SALES VARIANCE TO
PLAN COMPARED TO Sales variance
STOCK VARIANCE TO is lower than
PLAN stock variance Indicates a possible overstock and a potential markdown problem.
Sales variance
is higher than Indicates additional sales potential. There may be availability
stock variance problems as a result of stock shortages.
WEEKS COVER
COMPARED TO SALES Indicates a possible overstock which could lead to a markdown
VARIANCE TO PLAN problem. Target stocks may need to be decreased.

Commitment may need to be cancelled and additional promotional

Also applies to : activity may be needed to stimulate sales

WEEKS COVER
COMPARED TO RATE High Weeks
OF SALE VARIANCE TO Cover, Sales on
PLAN or above plan
Further investigation needed.
High Weeks
Cover, Sales Commitment may need to be cancelled and additional promotional
below plan activity may be needed to stimulate sales

There could be potential for additional sales. There may be current

or potential availability problems which could affect future sales.
Low Weeks
Cover, Sales on
or above plan Additional orders may need to be placed.
Current availability may be affecting sales.
Low Weeks
Cover, Sales Target stocks may need increasing. Intake scheduling may need
below plan amendment and additional orders may need to be placed
Weeks Cover is
WEEKS COVER high compared
COMPARED TO to Forward Sales are on an upward trend and Weeks Cover should drop in the
FORWARD COVER Cover coming weeks

There may not be enough stock to support the rising sales trend.
Weeks Cover is
low, Forward
Cover is low Additional orders may need to be placed
Weeks Cover is
low compared
to Forward Sales are on a downward trend and Weeks Cover is likely to rise in
Cover the coming months.
There may be more stock than is needed to cover the downward
sales trend.
Weeks Cover is
high, forward
cover is high Commitment may need to be cancelled.

PERFORMANCE OBSERVATIO
MEASURE N POSSIBLE CONCLUSION
 Terminal stock
is forecast to be
higher than The markdown forecast may need increasing or commitments may
TERMINAL STOCK plan need reducing.

Terminal stock
is forecast to be Additional orders may need to be placed or the markdown forecast
lower than plan may need to be reduced.
Margin value could still be acceptable if sales are high enough but
this indicates that are full potential is not being achieved.

If clearance sales to date are higher than forecast you may already
have cleared stock problems and the future Margin on Sales will be
higher.
Margin on Sales
% is lower than Additional promotional or clearance activity may be needed or
MARGIN ON SALES % plan or forecast Intake Margin % may need increasing.

If Intake Margin % is higher than plan there may be pricing issues.

If clearance sales to date are lower than forecast there could be

stock problems which need addressing in future and which will
reduce future Margin on Sales %
Margin on Sales
% is higher
than plan or Margin value could still be below plan if the sales plan is not being
forecast. achieved.
then terminal stock may be at risk.
The markdown
spend to date is
higher than Additional markdown may be needed to achieve the plan terminal
MARKDOWN VALUE planned stock.
The markdown
spend to date is
lower than If stock levels are at or below plan then you may be able to
planned achieve your terminal stock plan with less markdown than planned.
The promotion may not have been as successful as expected.
There may be overstocks of promoted lines.
Value or
percentage is
PROMOTIONAL lower than Margin on Sales % should be above plan. If it isn’t investigate
DISCOUNT forecast further to find out why.
The promotion might be too successful. There may not be
sufficient stock of promoted lines to sustain the promotion.
Value or
percentage is
higher than Margin on Sales % is likely to be below plan but Margin value
plan should be higher – if it isn’t investigate further to find out why
Intake Margin
% is higher If sales units are below plan check that there have been no price
INTAKE MARGIN % than plan increases which are affecting performance

Intake Margin Margin on Sales value will be at risk unless sales value has risen
% is below plan enough to compensate. Re-pricing may be needed.
Full Price Sell
FORECAST FULL PRICE Through % is
SELL THROUGH % FOR higher than
THE SEASON plan There may be potential to place additional orders to increase sales.
PERFORMANCE OBSERVATIO
MEASURE N POSSIBLE CONCLUSION

Full Price Sell

Through % is Stock or commitments may need to reduced and sales stimulated
lower than plan to prevent excess Markdown.
Sales are on
plan although
stock
availability is
less than
STOCK AVAILABILITY acceptable. Target stocks may need reducing.
Stock If weeks cover is low target stocks may need to be increased.
availability is
acceptable but
sales are below If weeks cover is acceptable the plan may have been over
plan optimistic or there may be issues with size availability.
Sales are on
plan although
option
availability is There may be potential for additional sales. Alternatively the
OPTION AVAILABILITY low. number of options may need reducing.
Option
availability is
good but sales
are below plan You may need additional options.
Sales
participation is
SALES PARTICIPATION much higher
COMPARED TO STOCK than stock
PARTICIPATION participation Increasing the stock of this area could drive additional sales.
Sales
participation is
much lower
than stock
participation It may be possible to deliver the same sales with less stock.
Sales per
Square Foot
SALES PER SQUARE higher than It may be possible to deliver more sales if more space is allocated
FOOT plan and stocks are increased

Sales per
Square Foot It may be possible to deliver the same sales from the same or less
lower than plan stock on less space
Significant
differences in
performance by
outlet type of a
OPTION SALES BY product with
OUTLET OR OUTLET wide The product may have limited appeal and needs to be consolidated
TYPE distribution. in fewer outlet types
Limited
distribution
product which
performs
exceptionally
well in all outlet
types. The product may benefit from wider distribution
As we mentioned above performance, for whatever reason, will sometimes be exceptionally good or bad.
These distortions wouldn’t be expected to occur under ‘normal’ trading conditions and in order to develop
realistic plans you need to establish what the Base Performance in Like for Like outlets is, i.e. that which
would have been achieved if there hadn’t been any exceptions. If you did use actual performance to develop
the
8.4.3plans
BASEthen they could be too high, which could lead to excess markdowns, or too low, which could lead to
PERFORMANCE
missed sales. You can’t just apply a reduced or increased planned growth to the actual figure to compensate
for the exceptions since, as we shall see later when we look at Department Planning, you have to quantify
these exceptions to determine the weekly plans.
Base LFL performance is less important when analysing current performance since the exceptions tend to be
Only the in
factored performance in outlets
to your analysis which are It
automatically. Like for Likehowever,
is useful, for the full period
when beingdepartment
a single measured should beproduct
or even included
in the base figure. If an outlet changes status during the period, even
has been affected and you need to make comparisons to other, non-affected areas.for a week, it must be excluded.
Likewise, while the effects of any planned promotions which take place each year should be included in the
base figure, the effect of any promotions which were un-planned or which will not take place in future must
be treated as exceptions.

Note that weekly distortions in performance often balance themselves out over time, with the positive impact
in some weeks being offset by the negative impact in other, and total performance might not be affected.
There is generally no way of recording exceptional performance on a system and base performance,
therefore, has to reported manually. It often helps if these narratives are supported by a diary of events and
trading conditions etc.