Naledi Threads Business Plan — Key Performance Indicators

The sell-through, basket, margin and stock-turn indicators monitored weekly, with the thresholds that trigger action.

Key Performance Indicators

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The following are the operating measures on which this plan should be managed. Three of them — gross margin on completed months, cash on hand and creditor days — carry more information about survival than any revenue figure.

Indicator

Definition

Target

Why it matters

Trading density

Revenue ÷ gross lettable area

R52 773/m² by Year 5

The single comparable measure against the national benchmark

Achieved gross margin

Gross profit ÷ revenue

52.2% by Year 5

Three points below plan costs R76 056 of Year 3 EBITDA

Markdown as a share of sales

Markdown value ÷ revenue

Below 3.4% by Year 5

The largest controllable drag on the initial mark-on

Shrinkage

Stock loss ÷ revenue

Below 0.9% by Year 5

Each 0.5 point is R12 676 at Year 3 revenue

Units per transaction

Units sold ÷ transactions

Above 1.62

Each 0.1 is R156 494 of Year 3 revenue at no extra cost

Stock turn

Cost of sales ÷ closing inventory

3.8x by Year 5

Overbuying is the primary cause of independent fashion failure

Occupancy cost ratio

Occupancy ÷ revenue

Below 10% at maturity

The constraint that eliminates every regional mall

Creditor days

Payables ÷ purchases × 365

40 days by Year 5

Each Year 1 day released R2 925 of cash

Cash on hand

Month-end bank balance

Never below R100 000

The Year 1 trough is R116 922

Debt service cover

EBITDA ÷ interest and capital

Above 1.25x from Year 2

Negative in Year 1 by construction