Are things getting better in magazines as some are saying?
The best financial measure for magazines in newsagencies is Gross Margin on Purchases (GMOP).
Cost =(Purchases - Returns)
GMOP = (Profit on magazine sales)/Cost
This formula measures how good people are in handling the department and the suppliers.
For example, say a hundred of a title are delivered at $1.00. The agency sells five at 25% margin.
Profit is 5 x $1.00 x 25% = $1.25
Newsagent A: When they got one hundred, instantly return ninety. That freed up $90 which he brought another magazine title.
Their cost is (100-90) x $1 x 75% = $ 7.50.
Their GMOP = $1.25/$7.50 = 16.7%
Newsagent B: Kept all the titles
Their cost is 100 x $1 x 75% = $ 75.00.
Their GMOP = $1.25/$75.00 = 1.67%
As you can see a good operator can have a dramatic effect. There are other factors too in the newsagency, such as do they ring up items as department sales, shop theft, are they accurately recording returns, etc. The figures in a newsagency as a result are consistent over time but wildly different between newsagencies. This by the way is mucking up every newsagent supplier.
Still there are items that are the same for all newsagencies such as suppliers. If a magazine sells about five, then the hundred copies above should never have been delivered.
So over time how is it going now.
I decided to check last financial year and compare it to previous years by supplier using a few newsagencies databases.
Here are my results.
| Year | GG | NET |
|---|---|---|
| 2010-2011 | 17.4% | 20.5% |
| 2009-2010 | 18.2% | 21.9% |
| 2008-2009 | 19.3% | 23.1% |
I do not see it getting better, do you?
