In a typical first-round slate of eight, two or three candidates open a retail prompt with a generic profitability tree and never recover. The interviewer is not waiting for "price times volume minus COGS." They are waiting to hear whether you treat headline sales growth and same-store productivity as different questions.
That split — comps versus new space — plus a handful of unit metrics you can work on a page is what the score sheet rewards. After this piece you should be able to read a retail exhibit like a merchant, decide open/close/remodel with four-wall math, and sound like someone who has seen a 10-K.
What the room is actually testing
Retail practices (MBB industry teams, Big Four strategy shops with retail clients, boutique ops firms) use store networks because the units punish sloppy thinking. A chain can grow total sales while the fleet is rotting. A store can look "busy" and still lose money inside the four walls. Digital GMV can inflate the top line while returns and ship-from-store hollow out contribution.
| Order | What they listen for | Typical fail |
|---|---|---|
| 1 | Comps vs total sales vs square-footage growth | Celebrating +5% sales when comps are negative |
| 2 | Four-wall contribution (store P&L before HQ) | Dumping corporate SG&A into a closure model |
| 3 | Traffic × ticket × mix (or visits × basket) | "Sales down" with no split |
| 4 | Occupancy and labor as step costs per box | Treating rent like variable COGS |
| 5 | Inventory productivity (GMROI, turns, shrink) | Margin talk with no capital tied up in stock |
I stop listening when someone recommends twenty new stores before asking for mature-store four-wall and trade-area overlap.
The metrics interviewers expect you to know
Anchor on primary data, then treat the case exhibit as law. Public retailers report these every year; pretending they are exotic is a tell.
Same-store (comparable) sales. Sales from locations open long enough to compare periods — definitions differ by company, and e-commerce is often inside comps. Target's fiscal 2024 five-year summary shows comparable sales of +0.1% after −3.7% in 2023. Walmart U.S. reported fiscal 2025 comparable sales of +4.4% with fuel and +4.5% without, on a 53-week year (Q4 FY25 earnings release). If total sales rise while comps fall, the story is almost always new doors (or a calendar quirk), not a healthier fleet.
Sales per square foot. Productivity of the box. Target reports net sales per retail square foot of $431 in 2024 (rolling four-quarter average footage), down from $438 in 2023 on the same page. Specialty apparel often sits higher per foot; big-box grocery lower. Ask for it before you praise a remodel.
Gross margin and GMROI. Gross margin is (sales − COGS) / sales. Target's 2024 gross margin rate was 28.2%. Gross margin return on inventory (GMROI) is gross margin dollars divided by average inventory at cost — how many margin dollars you earn per dollar parked in stock. A store with 40% margin and two inventory turns can lose to a 32% margin store that turns four times. Interviewers love this when the prompt smells like assortment or markdown addiction.
Basket (or average ticket) and traffic. Sales ≈ transactions × basket, or traffic × conversion × ticket. "Comps down 4%" without this split is half an answer. Soft traffic with a rising basket is a different problem from flat traffic and collapsing attach.
Shrink. Inventory loss as a percent of sales — theft, process error, damage. The National Retail Federation's National Retail Security Survey 2023 put average shrink at 1.6% of sales for FY 2022 (about $112 billion industry-wide at then-current retail sales). NRF has since paused that annual shrink series; use the case's rate if given, and treat 1–2% as a sanity check for mass retail, higher for high-theft categories.
Industry backdrop, not a case input: NRF's April 2025 forecast puts 2025 core retail sales (ex autos, gas, restaurants) at $5.42–5.48 trillion, after $5.29 trillion and 3.6% growth in 2024. The U.S. Census Monthly Retail Trade Survey is the underlying government series NRF and everyone else lean on. Use it for context; use the case's numbers for the math.
Units that fail candidates before strategy starts
Total sales vs comps vs space. "+6% sales, −2% comps, +9% square footage" is a new-store story. Write it that way on the page.
Four-wall vs company P&L. Four-wall is sales, COGS, occupancy, store labor, and other store-controllable costs. HQ, brand ads, and DC overhead matter, but many of them do not disappear when you close one door. Ask which costs go away.
Owned vs leased. Occupancy is depreciation and property tax on owned boxes; rent (and maybe CAM) on leased ones. Closure math changes.
Digital GMV vs net retail. Returns, cancellations, and marketplace take rates belong in the P&L. Ship-from-store and BOPIS labor sit in the four-wall if the box does the work.
Cannibalization. New stores stacked on existing trade areas move sales, they do not create them. Ask for overlap before you "grow."
Worked mini-case: Meridian Thread
Prompt (invented company and figures). Meridian Thread is a specialty apparel chain with 85 stores. Board pack shows chain sales +5.1%. Leadership wants approval for 10 more 4,000 sq ft stores next year. You get twenty minutes and this exhibit:
| Metric | Value |
|---|---|
| Mature stores (open ≥24 months) | 72 |
| Mature-store comps | −2.8% |
| Average mature store sales | $3.6m |
| Sales per sq ft (mature) | $900 |
| Gross margin % | 48% |
| Average inventory at cost per store | $720k |
| Shrink % of sales | 2.1% |
| New-store prototype sales (year 1) | $2.4m |
| New-store occupancy | $480k |
| New-store labor | $620k |
| New-store other four-wall | $90k |
| Assumed cannibalization of nearby mature stores | 12% of each new store's sales |
Should they open the ten stores?
Step 1 — Separate the growth story.
Mature fleet sales ≈ 72 × $3.6m = $259.2m. A −2.8% comp is about $7.3m of lost sales on that base, or roughly $3.5m of lost gross profit at 48% margin — before shrink. Headline +5.1% cannot be a health story if the core is shrinking.
Step 2 — GMROI on the mature box.
Gross margin dollars per mature store = 3.6m × 0.48 = $1.728m. GMROI = 1.728m / 0.72m = 2.4. That is acceptable for fashion but not "print money." If markdowns deepen to chase comps, GMROI falls first.
Step 3 — Four-wall on the year-1 prototype (ignore HQ).
Gross profit on $2.4m at 48% = $1.152m. Four-wall contribution = 1.152 − 0.48 − 0.62 − 0.09 = −$38k per new store before shrink and cannibalization. Shrink on $2.4m at 2.1% ≈ $50k of lost inventory value (hits margin / COGS depending on how the case books it). Even if you treat only half as incremental margin damage, the prototype is underwater.
Step 4 — Cannibalization tax.
Each new store moves 0.12 × 2.4m = $288k of sales from nearby mature stores. At 48% margin that is ~$138k of gross profit relocated, not created. Ten stores relocate about $1.4m of gross profit while adding ten negative four-walls.
Step 5 — Recommendation.
Freeze the ten-store plan. Fix comps first: traffic and conversion (hours and floor coverage), ticket and attach (not blanket promo), and close or resize the bottom decile of mature stores whose sales/sq ft sit well below $900. Revisit expansion only with a year-2+ pro forma that clears a positive four-wall hurdle after cannibalization and shrink, not a year-1 vanity sales slide. Next exhibit to ask for: four-wall by vintage cohort and trade-area overlap map.
Ned's rule. If total sales and comps disagree, believe comps until proven otherwise — then price the new space at four-wall contribution after cannibalization, not at top-line addition.
How to open in the first ninety seconds
Say the decision type out loud: open, close, remodel, price architecture, or "why did profit fall." Then structure around the network, not a textbook tree:
- Total sales vs comps vs digital vs new space
- Four-wall for mature vs new vs bottom cohort
- Traffic / basket / mix on comps
- Occupancy, labor hours, sales per sq ft
- Inventory: turns, GMROI, shrink, returns
A profitability tree that only has price and volume will miss the store as a fixed-cost machine with inventory capital inside it. Manufacturer sell-in logic belongs in a consumer goods case; landlord NOI and cap rates belong in real estate unless the retailer owns the box and the prompt says so.
Practice this on a live clock
Run one retail-shaped case where headline growth and comps disagree, and force yourself to write four-wall math before the recommendation. CoachNed's live voice interview is built for that pacing: CopperCup with Ned (~18 minutes, seven-score debrief). For a five-minute typed first rep with instant scores, use /start. Everything is open for seven days, no card; then $120 for a recruiting season or $49 a month.
Frequently asked questions
What is same-store sales in a case interview?
Same-store (comparable) sales measure growth from locations open long enough to compare periods, often including e-commerce under the company's definition. Interviewers use comps to separate productivity of the existing fleet from growth that comes only from opening doors.
How do you calculate four-wall contribution?
Start with store sales, subtract COGS (and shrink if broken out), then subtract occupancy, store labor, and other store-controllable costs. Leave HQ and shared DC costs out until you know which of them actually change if the store closes.
What is a good sales per square foot number?
There is no universal "good." Mass merchants often land in the mid-hundreds of dollars per square foot (Target reported $431 in 2024); specialty formats can run much higher. Use the case's mature-store benchmark and ask how the prototype compares.
How is GMROI different from gross margin?
Gross margin is margin dollars as a percent of sales. GMROI is margin dollars per dollar of average inventory at cost. High margin with slow turns can destroy capital; lower margin with fast turns can win.
Are retail cases the same as CPG or marketing cases?
No. Retail cases center on the store network — comps, space, four-wall, labor, and inventory. CPG cases lean on sell-in, trade spend, and shelf. Marketing cases lean on incrementality and CAC. Overlap exists; the primary unit of analysis does not.
Sources
- Target Corporation — Five-Year Financial Summary (2024 Annual Report) — comparable sales, gross margin rate, net sales per square foot. Checked 2026-09-24.
- Walmart — Q4 FY25 earnings release — Walmart U.S. comparable sales definition and FY25 comps. Checked 2026-09-24.
- NRF — 2025 retail sales forecast — core retail sales outlook and 2024 baseline. Checked 2026-09-24.
- NRF — National Retail Security Survey 2023 — FY 2022 average shrink rate of 1.6%. Checked 2026-09-24.
- U.S. Census Bureau — Monthly Retail Trade time series — primary government retail sales series. Checked 2026-09-24.