Glossary

A basis point is one hundredth of a percentage point, so a margin that rises by half a percentage point has risen 50 basis points.

Constant-currency growth restates the current period's sales at the prior period's exchange rates, so the change reflects trading rather than currency movements.

The currency translation effect is the difference between reported growth and constant-currency growth: the part of the change that comes from converting foreign subsidiaries' sales and profits into the reporting currency at different rates.

Direct-to-consumer covers sales a brand makes to the end customer through its own stores, its own websites and apps and, in some reporting, concessions it operates in department stores.

Float-adjusted weighting sets each company's weight in an index by the market value of the shares available for trading, excluding stakes held by founders, families, governments and other strategic holders.

Free cash flow is cash from operations less capital expenditure and, under IFRS 16, often less lease payments as well.

Full-price sell-through is the share of units bought, or received into stock, that sells at the original ticket price before any markdown.

Gross margin is gross profit, sales less cost of goods sold, as a percentage of sales.

Guidance is the range or point a company publishes for a future period's sales, margin, profit, earnings per share or capital expenditure.

Inventory days is inventory divided by cost of goods sold for a period, multiplied by the number of days in that period.

Like-for-like sales measure the change in revenue from stores and channels that traded in both periods, usually at constant currency, excluding openings, closures and stores whose space changed materially.

A markdown is a permanent reduction of the ticket price to clear stock, as opposed to a temporary promotion.

Net new space is the sales contribution from stores opened, enlarged, closed or reduced over the period, netted against each other.

Open-to-buy is the budget a buying team still has available to commit to stock for a period: planned sales, planned markdowns and planned closing stock, less stock on hand and orders already placed.

Operating margin is operating profit, or EBIT, as a percentage of sales: gross margin less store, distribution, marketing and central costs.

Organic growth is sales growth excluding currency translation and changes in scope: acquisitions, disposals and, at some companies, transfers of stores or licences.

A pro forma comparison restates the prior period as if a business acquired or sold during the year had been owned, or absent, throughout.

Test and reorder is a buying method in which a range is first placed in small quantities, often in selected stores, and further units are ordered only for the options that sell.

Wholesale is revenue from selling product to third-party retailers, distributors and marketplaces, which then sell it to consumers.

Working capital in retail is mainly inventory plus trade receivables less trade payables, often reported as operating or trade working capital.