Annual P&L Study 2021 - Part 2
by Tim Quebedeaux
For the second year in a row, the Best of the Best group is needed for comparisons for this year’s P&L Study. The difference this year is that they replaced Best Practices in the far-right column as the top numbers for comparison. Remember, they are the top ten in profitability among those who filled out all 5 parts of the P&L Study. This year they increased profitability from 18-25% to 19-31%. Nine of the ten Garden Centers in 2020 repeated this level of profitability in 2021… Perennially Profitable Garden Centers!
In 2021 we had 78 Garden Centers report to the study, and 47 filled in all 5 parts. If you didn’t fill in all parts, please reach out to us, we can help you improve your accountability to be able to report to all 5 parts of this remarkable Study.
The 5 parts of reporting to the P&L Study:
1) Revenues, COGS, Operating Expenses, and Wage & Wage Benefit Information
2) Physical Facility Information
3) Revenue, Transaction Count, Labor Hours Information
4) Average Inventory Information
5) Balance Sheet Information
We aim high, and want everyone to fill out every part of the study… Let’s go through Part 1 today with Parts 2 - 5 coming in the weeks ahead.
Reporting to Part 1 starts with Revenues for each of the categories from The Group's Chart of Accounts (COA). There are 19 different categories in the COA. The revenues you report should include any discounts that most POS systems account for by category. If your discounts are not included in the category totals by your POS system, or if you have any coupons or bonus bucks redeemed, you need to report those as negative numbers below your revenues.
After revenues, you will report on Cost of Goods Sold. For this, we use your Beginning Inventory plus Purchases minus Ending Inventory. This needs to be done by each category in the COA excluding the Labor line (which is revenues collected for delivery, installation, and services) as those do not have costs in COGS associated with them since that would be too hard to track. Instead, those costs are accounted for in Wage and Wage Benefits. Freight should be allocated into each category in which it occurs. If for some reason you have any unallocated freight, there is a space to report at the bottom of the COGS part. This freight will be prorated across all categories. For this year and the next few years, looking deeper into COA will reveal a bigger problem, increasing inventory. An often-occurring side effect of increasing revenues.
The next two areas remaining are Operating Expenses and Wage & Wage Benefits. Following the Chart of Accounts for The Group, there are 51 different entries for Operating Expenses. These expenses are anything not to do with product or people. This area has the most line entries, yet the smallest percentage of dollars. The Wage and Wage Benefits are all the people-related expenses. In both Operating Expenses and Wage & Wage Benefits, there are two expenses that are adjusted to fair rates for proper comparisons from center to center: Rent for Operating Expenses and Owners' compensation for Wage and Wage Benefits.
Just from reporting to Part 1 of the P&L Study, each Garden Center will be able to compare their Revenues, COGS, Operating Expenses, and Wage & Wage Benefits to others through their percent to sales by category. In addition, they will be able to compare their attained margin to other groups. Those Groups are Best Practices, Total Group, Region, mode of operation (Retail or Retailer Grower), and Sales Group (less than $1.5M, Between $1.5-2.5M, or greater than $2.5M).
Going forward I will discuss the other 4 parts of this robust P&L Study as well as reveal the High Achievers, Best Practices, and Best of the Best Garden Centers.
More story to follow... See Part 3 of the series HERE.
Got questions or need more information about The Group's the Annual P&L Study or the Weekly Department Review (WDR)? Give Tim a call or email.
Tim Quebedeaux
Cell: 770.355.6249
Email: CLICK HERE
Group Client Reminder: You can watch the March 10th GROUPtalk LIVE presentation when Tim and Steve presented 2021 P&L Study Reveal. Log into the WebSystem and go to the Clients-Only menu and down to Training - 2021 P&L Study Reveal.
Tim Quebedeaux, RetailKPI Consulting, is a service provider for The Garden Center Group and manages all Group financial sharing programs. The Weekly Department Review (WDR) and The Annual P&L Study are industry exclusives developed by The Garden Center Group and are included in your retainer!
REMEMBER: Your interaction (by phone and email) with Group Service Providers such as Tim Quebedeaux, Sid Raisch, Jean Seawright, John Kennedy, and of course Danny Summers are included in your retainer! So what are you waiting for? Take advantage of all that The Group has to offer and give them a call or send an email now!