How would you clear the jackets and protect margin?
You are interviewing for a trading role at a fictional UK apparel retailer.
The question
There are 100 jackets at £80 full price and £32 landed cost each. Sell at least 75 in two weeks at a gross margin of at least 40% on units sold. All prices exclude VAT. The gross margin calculation leaves out selling expenses and the value of stock still on hand.
| Hold full price | Broad markdown | |
|---|---|---|
| Price per unit (£) | 80 | 56 |
| Forecast units sold | 40 | 85 |
Track units left as a separate figure.
“Pick a markdown plan and update your recommendation when the target and forecast change.”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: How do the options compare?
What would you do here? Open the move you’d make.
Use gross profit divided by sales and report units left
The strong move. That keeps the gross profit amount, the margin rate and the stock outcome distinct.
Treat a 30% price cut as a 30-point margin-rate drop
Tempting, but it misses something. The margin rate uses the new sales value and the cost of the units sold.
Subtract the cost of all 100 jackets from each plan’s sales
Tempting, but it misses something. The stated margin calculation includes the cost of the sold units. Report the rest as stock.
See how a strong candidate says it
“Holding gives £3,200 sales, £1,920 gross profit, 60% margin and 60 jackets left. The broad markdown gives £4,760 sales, £2,040 gross profit, 42.86% margin and 15 left.”
Why it works: Selling more units can increase gross profit even as the margin rate falls.
Step 2: Which option meets the opening targets?
What would you do here? Open the move you’d make.
Hold at £80 because the margin rate is higher
Tempting, but it misses something. The full-price option clears too few units for the stated target.
Take the broad markdown under the opening assumptions
The strong move. Its forecast clears at least 75 and its gross margin exceeds 40%.
Lower the price again to clear the final 15
Tempting, but it misses something. The plan already meets clearance. A deeper discount needs a new forecast and margin calculation.
See how a strong candidate says it
“I would use the £56 broad markdown under the opening forecast. It clears 85 and makes 42.86% margin. The full-price option keeps a higher rate and clears 40, below the 75-unit target.”
Why it works: The decision checks both constraints and explains the cost of clearing more stock.
Step 3: Can you meet the tighter margin floor?
The buyer raises the gross margin floor to 45%. Store A can sell 30 jackets at £80. A separate channel B can sell 50 at £56 without displacing the A sales.
What would you do here? Open the move you’d make.
Keep the broad markdown because it sells more units
Tempting, but it misses something. At 42.86%, the broad markdown misses the new margin floor.
Add the two channel margin rates and divide by two
Tempting, but it misses something. The channels have different sales values. Weight the margin by revenue.
Use the selective plan with separate channel demand
The strong move. The combined plan meets the new margin floor and the 75-unit target.
See how a strong candidate says it
“I would keep 30 sales at £80 in A and forecast 50 at £56 in B. That is 80 units, £5,200 sales and £2,640 gross profit. Gross margin is 50.77%, above the new 45% floor.”
Why it works: A single plan can preserve full-price sales in one place and clear stock in another.
Step 4: What would you watch after the revision?
Channel B revises its forecast to 40 discounted units. A separate web segment adds five incremental sales at £56. Stock is available and the 30 full-price sales in A are unchanged.
What would you do here? Open the move you’d make.
Check whether discounted sales are on pace for 45
The strong move. The team needs 45 discounted sales if full-price sales remain at 30.
Keep the original forecast of 80
Tempting, but it misses something. The updated channel B forecast takes five units out of the combined plan after the web addition.
Check only that gross margin is above 45%
Tempting, but it misses something. A high margin can coincide with missing the clearance target.
See how a strong candidate says it
“The plan now sells 75. Sales are £4,920 and gross profit is £2,520, a 51.22% margin. With 30 full-price sales we need all 45 discounted sales. I would check the pace and margin early in the two-week window.”
Why it works: The revised plan meets both goals, with no spare units above the clearance target.
The answer, in short
- Decision
- Choose the price and channel mix that meets both targets.
- Because
- The same markdown can change stock clearance, gross profit and margin rate in different ways.
- What would change it
- An updated channel forecast or a higher margin floor would change which plan qualifies.
Common traps
- Weight margin by sales value.
- Keep unsold units visible beside the margin calculation.
Check your answer
- I compared pounds, rate and units.
- I selected a plan against both goals.
- I updated the channel mix.
- I stated the clearance threshold.
Last reviewed Nov 11, 2026