Retail Definitions:
MMU - Maintained Markup
Maintained Markup (MMU) is the difference between the cost of your merchandise and your net sales AFTER you have applied markdowns. In other words, it’s what is left of your initial markup (IMU) as it is impacted by markdowns. Not every item will sell at the initial price and applying markdowns is an essential part of moving old goods out of your store.
Maintained markup is the key to a profitable retail business, because it’s the actual measure of how much money you’re making on your merchandise. Comparing your month-to-month MMU is one of many very useful indicators of your overall financial health.
Rather than run these calculations manually for each and every category of products in your store every month, our Retail ORBIT® software plugs directly into your POS system to provide these numbers on demand. By analyzing monthly trends in your retail data expressed through Retail ORBIT®, our certified M1 Retail Experts can offer knowledgeable advice on how to maximize your MMU.
What markup has the retailer been able to maintain over time?
Here’s a scenario below where we are analyzing the MMU for 2 different cases. In each case, the retailer is selling $50,000 worth of inventory (at retail value after IMU). In Case 1 (Class A), the markdown dollars total $5,000 and in Case 2 they are double at $10,000. So, Case 1 is realizing more of the potential profit by $5,000. While markdowns are a critical ingredient to moving inventory, you must be mindful of your MMU as this translates into cash in your bank account at the end of each month.
How is MMU calculated?
Arriving at MMU as a percentage actually requires 3 separate calculations that factor in the markdown % at retail and at cost in relation to the IMU.