Markdown

Also: clearance, price reduction

A markdown is a permanent reduction of the ticket price to clear stock, as opposed to a temporary promotion. Retailers measure it as markdown cost against sales, or as the share of units sold below full price. It is a direct charge to gross margin; companies seldom disclose the amount and usually describe only its direction, so its effect is read through gross margin commentary.

// IN PRACTICE

Markdown risk is set at buying: a range bought deep on long lead times carries more clearance risk than one bought shallow and replenished in season. Store teams meet it in re-ticketing and in the space given to sale stock during clearance.

// EXAMPLE

Urban Outfitters names occupancy and delivery leverage as raising the margin, and Anthropologie markdowns, tariffs and inbound freight fuel surcharges as lowering it, and sizes none of them.

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