Retail Management for Spas | Chapter 5.1 | Retail Sales Percentage of Total Spa Revenue

All of the information needed for financial evaluation can be found on the retail department schedule in Exhibit 1. This departmental schedule covers revenue, adjustments, cost of goods sold, gross margin, direct expenses, and the final income/loss departmental contribution. This is a generic schedule designed to fit all spas; individual spas will have modified schedules to meet their own needs and requirements. Several of these items are evaluated monthly.

Retail Sales Percentage = Net Retail Revenue / Total Spa Revenue

At the Urban Spa …Reuben decided he needed to examine his preliminary financial statements more closely. He arranged to have a morning meeting with Mae and the two of them began combing over the financial statements, before the final statements are published.

“Let’s start with the retail revenue as reported in the March Statement of Income,” Mae said.

“We were right on target!” Reuben said. “Look, we have a retail revenue of $10,000 with total spa revenue of $78,000. The $10,000 in retail revenue is exactly what we had planned for.”

“That’s true,” agreed Mae. “And that number would have been good if the spa had done the business that it had forecast or even great if it had had 10 percent fewer guests than had been planned. Do you remember anything out of the ordinary that month?”

Reuben thought for a moment and then said, “Was that the month we got the last-minute bridal shower of 50 ladies because the spa downtown wouldn’t offer them a private reception room for before the services? That was quite the coup for us.”

Mae nodded. “It must have been. It probably partially explains why our overall treatments were up by 20 percent over what had been forecast. The forecast for the month of total spa revenue was only $65,000. So total spa revenue was up, but the retail revenue stayed flat. If the spa revenue had been at forecast, then the spa retail would have been at 15.4 percent of total sales. As it was, it was at only 12.8 percent of spa revenue.”

“But isn’t it a good thing that total spa revenue was up?” asked Reuben.

“Yes, but I think what Fiona feels is that since spa revenue exceeded the forecast and we were giving more treatments, the spa retail should have been up a like amount—especially since the bride did register here at the spa and many of her guests made purchases.”

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