Research On Profitability Improvement Of LC Department Store

Profitability refers to the ability to generate profits within a specific period, is the foundation of enterprise value management. It is almost one of the most basic and important ability concerning about an enterprise’s survival and development. Because the information is not completed to everyone, the company could not have a comprehensive picture of the market so that it is impossible to get a long-term profitability forever. However, one of the company’s most important missions is to create wealth and value for shareholders. Companies are always looking for profits and the ways to get more profits. Improving business profitability became an unavoidable proposition for long to modern enterprises.Retail industry is facing a lot of problems and getting into a dilemma. On the one hand, there is more and more competitive in the retail industry due to the homogenization of merchandised brand in shopping. The other hand is the development of e-commerce shopping platform making many stores suffering great loss. How to improve the retail store profitability and make it regaining vigor, is an urgent problem to be solved for the retail industry. Now the business model for the most of store departments is called "Brand Joint Venture Model", But in author’s company, we are using "Buyer Model" to operate the store which is different from the mainstream business model, not depending on getting rental or charges from store lessee to profit, but earning the margin in buying and selling which is back to the essence of retail. Although this way can generate high margins for the store department, but it also has its operating risk. First of all, the store has a huge risk of overstock. It faces a lot of financial pressure since there are much more costs than traditional store departments. You also need compete with other buyer department stores and oversea purchasing in on line shopping. Under this situation, the company profits are continuing falling now.This paper attempts to analysis financial data of LC, author’s company, indicating LC’s operating status through several specific profit and operation indexes to find the factors or problems influencing LC’s profitability. Concerning about these issues to provide a number of targeted measures aimed at enhancing the core competence of LC that will promote its profitability and achieve competitive difference in the future.