Retail EBIT and COGS
General retail runs a 6.8% EBIT margin in the Jan-2026 Damodaran dataset (grocery formats far thinner at 2.3%). Year-on-year EBIT comparability is dominated by COGS volatility: input-cost swings, freight, and shrink flow straight through to gross profit, which then flows straight to EBIT because OpEx is comparatively stable[Damodaran].
2026 retail EBIT margins
- Retail (General): 6.80%
- Apparel: 9.11%
- Restaurant/Dining: 15.79%
- Food Wholesalers: 2.61%
- Retail (Grocery and Food): 2.29%
COGS volatility flows through
A retailer with a 35% gross margin and a 7% EBIT margin has 28% OpEx intensity. OpEx is rents, wages, marketing, and corporate overhead. Year-on-year, OpEx might move 100-200 bps. COGS might move 300-500 bps on input-cost cycles. The COGS move flows almost intact to EBIT.
LIFO/FIFO and shrink
- LIFO firms (older inventory accounting choice) report lower gross profit in inflationary periods.
- Shrink (theft, damage, mis-counts) flows through COGS and was a meaningful EBIT drag for big-box retail in 2023-2024.
- Omnichannel fulfilment costs (last-mile delivery, BOPIS) sit in either COGS or SG&A depending on the retailer's policy. Read the basis-of-presentation note.
See EBIT vs Gross Profit and top-down method.