Profitability analysis is the process of evaluating the financial performance and viability of a retail business. It involves assessing the profitability of individual products, product categories, or entire stores. The analysis takes into account various factors, such as sales revenue, cost of goods sold, operating expenses, and gross margin.
By examining these key metrics, retailers can identify which products or categories generate the highest profits and which ones may be underperforming. This analysis helps in making informed decisions regarding pricing, inventory management, marketing strategies, and overall business operations.