Retail math · By category
Margin Formulas for Apparel Brands
Margin formulas — IMU, MMU, markdown, allowances, gross margin, COGS, and target costing — that protect the profitability of the season.
9 margin formulas
Merchandiser
Initial Markup % (IMU)
IMU % = (Retail Price − Cost) ÷ Retail Price × 100
Merchandiser
Maintained Markup % (MMU)
MMU % = (Net Sales − COGS) ÷ Net Sales × 100
Merchandiser
Markdown %
Markdown % = Markdown $ ÷ Net Sales × 100
Designer / Product Dev
Target Costing
Target Cost = Retail Price × (1 − Target IMU %)
Designer / Product Dev
Cost-to-Ticket Ratio
Cost-to-Ticket = Cost ÷ Retail Price
Merchandiser
Gross Margin %
Gross Margin % = (Net Sales − COGS) ÷ Net Sales × 100
Merchandiser
Allowances %
Allowances % = (Markdowns + Discounts + Chargebacks) ÷ Gross Sales × 100
Supply Chain / Ops
Cost of Goods Sold (COGS)
COGS = BOP Inventory + Purchases − EOP Inventory (all at cost)
Executive
EBITDA Impact of Markdown
EBITDA Hit = Incremental Markdown $ × (1 − Tax Shield)
Other categories
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RetailNorthstar runs these formulas live inside a connected apparel planning workflow — OTB through allocation, by department, class, and style.