Understanding Catalog Profit Loss

A traditional profit-and-loss (or income) statement used by a manufacturing company or a retail business is dramatically different from that used by direct marketers. While a retail or manufacturing P&L statement tends to lump together all selling, general, and administrative expenses, a catalog or Internet company's P&L statement separates all expenses by applicable category such as returns, cancellations, cost of goods, fulfillment, advertising and promotion, and overhead. The detail allows direct marketers to measure every aspect of their businesses and to compare their results against standards for their industry segment or for businesses of a comparable type and size. Direct marketers' revenue and cost segments, including gross sales, returns, cancellations, net sales, cost of goods, and gross margin are examined in detail.