December 07, 2016

Start Your Rebuild By Obtaining Facts

You might think that 2016 isn't representative of a "normal year".

You might be right.

That's why you look at multi-year trends.

Look at what is going on with this business, via the 2x comp segment framework I've been talking about for the past four years.
  • In this case, the "Election" probably hurt October/November comps. So we openly acknowledge the fact. But then we move on.
  • 8 of 12 months in 2015 had negative comps.
  • 10 of 12 months in 2016 had negative comps - toss out "Election" months, and 8 of 10 months in 2016 had negative comps.
So when we look at the data objectively, we see a business that after removing Oct/Nov "Election" impact posted negative monthly comps in 16 of the past 22 months.

In other words, this business was dying for nearly two years. This business need to be rebuilt, period. Look at the facts below.
  • 16 of the past 22 non-Election months had negative comps.
  • Excluding "Election" months, Nov/Dec/Jan posted positives in 7 of 8 months over the past three years.
  • Outside of "Election" months, Feb-Oct yielded positives in 4 of 26 months.
Outside of Christmas, this business is broken.

This is a common story.

Worse - go analyze gross margin dollars less marketing discounts/promos in Feb-Oct and Nov-Jan ... for so many companies, growth in Nov/Dec/Jan is fueled by 40% off to 60% off promotions, destroying profitability.

When you see a business with metrics that look like this, you see a business in dire need of being rebuilt. Focus on the initiatives below, and get busy!