Net sales is sales revenue after the relevant deductions for returns, discounts and allowances.
How it works in retail
It provides a more useful basis for many retail performance ratios than the undiscounted value of transactions. Tax and shipping treatment should be identified in the reporting definition.
A retail example
A retailer records $100,000 in gross sales, $8,000 in returns and $2,000 in eligible discounts. Net sales on that basis are $90,000.
What to keep in mind
Do not mix figures from systems with different definitions. Net sales is a revenue measure and does not deduct product costs or operating expenses.
Examples are illustrative. Terminology and measurement conventions can vary by business and market.