Markdown cadence

A promotional markdown is temporary: a weekend event, a category offer, a coupon. The ticket price returns afterwards. A permanent markdown is a decision that the item will never sell at the old price again, and it is taken against the specific units remaining. Only the second is a real admission about the buy.

Retailers use the first to drive traffic and the second to clear. Confusing them when reading a company's commentary leads to the wrong conclusion about whether a season went well.

The instinct is to hold price and then cut hard at the end. In practice a shallow reduction taken early usually recovers more than a deep one taken late, because the remaining units are competing against fresher merchandise every week they sit. Planners describe this as the cost of waiting, and it is why cadence is scheduled in advance rather than decided reactively.

The end of the cadence is the beginning of the surplus chain described in where unsold apparel goes.

Markdowns flow through cost of goods sold, so a season managed badly shows up as gross margin compression rather than as a separate disclosure. That is the mechanism behind the margin movement in the 2022 analysis, and the reason inventory reductions and margin have to be read together.