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NARDA Releases Dealer Cost Study

4/06/2010 04:38:39 PM Eastern

Chicago - The
North American Retail Dealers Association (NARDA) has released a report that
can help dealers gauge the health of their businesses by comparing key financial
metrics against industry benchmarks.

The trade group's Cost
of Doing Business Study surveyed a sample of U.S.
retailers and servicers in the appliance, consumer electronics and mixed sales
categories on key income statement and balance-sheet metrics. The results, said
NARDA, provide a clear picture of dealer profitability, liquidity, operations
expenses and balance-sheet management, which dealers can compare against their
own results.

Among the
findings:

  • The average
    participant reported a gross profit margin of nearly 34 percent, reflecting the
    use of volume rebates to reduce the cost of goods sold, thus lowering the basis
    for calculating gross profit.

  • Inventory turns
    were down from the industry benchmark of 6 annual turns.

  • Gross margins
    helped offset these decreases with an all dealer average of $1.80 return on
    inventory (ROI), which is very close to the industry bench mark of $2.

"In today's highly
competitive marketplace, education and information are essential elements for
business success," said NARDA chairman Leon Barbachano of Allen
& Petersen Cooking & Appliance
Center in Anchorage,
Alaska. "The Cost of Doing Business Study
provides comparative information that dealers can use to assess the relative
financial health of their businesses, to identify their strengths, and work on
areas that need improvement in order to develop strategies for growth."

The report,
prepared with assistance from Management Advisors president Sandy Cloud, is
available to NARDA members for $150, to non-members for $200, and is free to
survey participants. For more information, contact NARDA at (800) 621-0298, or nardasvc@narda.com.

NARDA is a
not-for-profit trade association established in 1943 to provide "the power of
knowledge to independent retailers and servicers through progressive education,
information and services."

Its members,
located across North and South America, sell and service
consumer electronics, kitchen and laundry appliances, furniture and computers
through more than 3,000 storefronts and account for more than $10 billion in
annual sales.

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