I would like inventory turn data for the big retailers.  Inventory
turns is as it sounds the number of times in a year that a retailer
turns over or sells its inventory.  The retailers I am interested in
are Barnes & Noble, Blockbuster, Borders, Circuit City, Comp USA, FYE,
Kmart, Media Play, Micro Center, Office Depot, Office Max, Sears,
Staples, Target, Tower Records, Walgreen, Toys R Us, Costco and
Walmart.  I don's have to have the data for every one listed, but need
at least 80% and will take additional data.  I am also interested in
industry averages for various categories like electronics(TVs,
stereos, etc.), CDs and DVDs, CD & DVD storage products (portfolios,
towers, etc), hardware, clothing, books, magazines, groceries, etc.

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Clarification of Question by francism-ga on 17 Aug 2003 13:39 PDT

Respree-ga,

Thank you for taking the time to provide a very detailed response.  As
you indicated, inventory turns are hard to calculate.  There is a
report on the web at

http://www.sourcetrix.com/docs/Whitepaper-Inventory_Planning.pdf

and it list inventory turns for Walmart and Kmart to be 7.29 and 4.39
respectively.  I have been unsuccessful contacting the author or
getting data from the listed sources, but was hoping one of the Google
Researchers could get to the data used to create the report.

francism-ga

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Request for Question Clarification by omnivorous-ga on 20 Aug 2003 09:31 PDT

Francism --

Respree's given you an accurate description of the process that most
researchers would use to calculate inventory turns -- the SEC Edgar
documents.  It's probably about 15 minutes for each of the 19
companies that you're requesting data for -- or about 7 hours.

That would provide the most up-to-date and detailed information.  

If I were to look another place for the information (at the risk that
a retail analysis would be slightly older), I'd try Standard & Poor's,
most-likely at the library but possibly online:
http://www.stockinfo.standardpoor.com/

Best regards,

Omnivorous-GA

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Request for Question Clarification by omnivorous-ga on 20 Aug 2003 09:32 PDT

Francism:

LOL -- if it were 20 minutes per company it'd just be over 6 hours. 
My apologies for the bad math there.

Best regards,

Omnivorous-GA

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Clarification of Question by francism-ga on 20 Aug 2003 13:17 PDT

Omnivorous-ga,

Thank you for your thoughts and insight.  I am not interested in
paying a fair and appropriate fee for 6 hours of analysis.  If a
researcher cannot find existing data, then I prefer to go without the
information.

Thank you again,

francism-ga

Francism --

This retail inventory analysis relies heavily on Value Line data for
2001 and 2002, taken from Value Line reports at the public library
(and it shortened the process from the rather longer time that it
would have taken to pull companies up individually).  It was
supplemented by  information from the SEC Edgar website for K-Mart.

First, let me indicate which companies are private.  These are the
companies for which there's NO financial data available publicly:
* CompUSA: purchased by Mexican retailer Grupo Sanborn S.A. de C.V. 
In turn, Grupo Sanborn is 79% owned by Grupo Carsa:
Hoover's Online
CompuUSA
http://www.hoovers.com/free/co/factsheet.xhtml?ID=15490

* Fry's Electronics: privately owned by the Fry brothers
Hoover's Online
Fry's Electronics
http://www.hoovers.com/free/co/factsheet.xhtml?ID=40949

* Media Play: part of Musicland, which is owned by Sun Capital:
Hoover's Online
The Musicland Group
http://www.hoovers.com/free/co/factsheet.xhtml?ID=15523

* MTS, the parent of Tower Records, is owned by the Solomon family:
Hoover's Online
MTS, Inc.
http://www.hoovers.com/free/co/factsheet.xhtml?ID=40325

Micro Center, owned by Micro Electronics, Inc. and the Baker familiy:
Hoover's Online
Micro Electronics, Inc.
http://www.hoovers.com/free/co/factsheet.xhtml?ID=43050



DETERMINING INVENTORY TURNS
------------------------------------------------------

As Respree-GA has noted, there can be differences in inventory
valuation techniques.  The firms listed below don't even follow the
same valuation conventions -- some using LIFO, some FIFO and some
average cost.

However, I've taken the Value Line and SEC data and created inventory
turn data for 2001 and 2002 by doing the following:
1. used end-of-year inventory values
2. started with revenues, then reduced them by the gross margin to get
net COGS (cost-of-goods sold)
3. then divided net COGS by end-of-year inventory numbers to get turns
for 2001 and 2002


This data is taken from Value Line investment reports, available at
most public libraries, except for K-Mart (K-Mart Holding Co., the
trading vehicle for K-Mart, which is still in bankruptcy proceedings).
   For Kmart, I've used FY 2002 -- which makes projections for this
troubled company a problem for a 12-month period.  However, it's the
best available data:
SEC Edgar
Kmart 
http://www.sec.gov/Archives/edgar/data/1229206/000095012403002591/k78680exv99w1.txt

The Excel spreadsheet which shows the calculations is posted here. 
The retailers are grouped by type of retailers -- the way that Value
Line lists them.  So, as a result you have the general retailers first
-- then specialty retailers and finally the office supply retailers. 
You may wish to download this file as uploads get removed
periodically:
http://www.mooneyevents.com/retailers.xls

If there are any issues with this Answer, please request a
clarification before rating the response.

Best regards,

Omnivorous-GA

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Request for Answer Clarification by francism-ga on 20 Aug 2003 14:36 PDT

Omnivorous,

Thank you for taking the time to put together a very complete answer. 
Your results match well with those of the study I referenced.  I
expected the turns to be significantly higher for several of the more
innovative retailers like Circuit City and Office Depot.

One company that you did not include was FYE

http://www.twec.com/

They often get mistaked for FRY.

Thank you again.

Francism

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Clarification of Answer by omnivorous-ga on 20 Aug 2003 14:54 PDT

Francism --

The reason Fye didn't get included was that I didn't initially see
them and assumed that it was probably a typo meant to indicate the
computer equipment retailer in California.  My apologies.

The Fye 2003 financials are here:
Fye Annual Report
http://media.corporate-ir.net/media_files/nsd/twmc/reports/TWEC_2002_AR_financials.pdf

And they indicate COGS of $935.3 million for 2002 -- with inventory of
$409.1 million or 2.29 turns; $815.1 million in COGS for 2003 -- with
inventory of $378.0 million or turns of 2.16.

There are always surprise in this research.  My surprise is the low
number of turns for the booksellers, among other things.  I'm familiar
with the retail financials, but still they were surprisingly low.

By the way, don't hesitate to re-post the question about retail
categories.  I was surprised how much valid data I found on this
question concerning supermarket gross margins:
http://answers.google.com/answers/main?cmd=threadview&id=204979

Best regards,

Omnivorous-GA

Omnivorus did an outstanding job answering the question.  He/she not
only did a significant amount research, but he also did a great job
analyzing the data and providing insight relative to the results.

Francism

Hello:

I don't have an answer for you, but would like to offer you a few
comments about comparing inventory turns.

The basic formula for calculating how many times inventory turned is:

[Cost of Sales (COS)] divided [Average Inventory]

For example:  If COS is $100,000 and the average inventory level is
$25,000, your inventory turned 4 times during the period (typically
measured annually)

With that said, there are inherent problems with comparing inventory
turns from company to company and a number of factors that affect the
calculation.

The problem is actually with both the numerator and denominator.

In the 'perfect' world, everybody does their accounting the same, we
have no theft, no obsolete goods, no accounting irregularities, no
judgmental management calls, etc.  However, in the real world, there
are a number of discretionary judgments management makes when
reporting their financial results.

COS:  Typically, this is meant to designate the actual cost of
merchandise sold for an accounting period.  A retailer pays $10 for a
pair of shoes.  It costs $2 for freight to get it from the supplier to
the retailer.  The COS when this item is sold is $12.  They sold it
for $25.00 and made a profit of $13.00.  It is common, but not
required, for companies to make certain reclassifications of operating
expenses to COS.  Among them are selling, distribution and occupancy
cost; all of which have can be argued have nothing to do with cost of
the product.  Others will argue that it is part of the COS.  My point
is that this is a 'discretionary' call by management as to which
method they choose to report their financial results.

AVERAGE INVENTORY:  Public companies are required to financial results
only four times a year.  Obviously the fewer points you have to
measure inventory, the 'less' accurate your average inventory becomes
(as opposed to obtaining an average based on ending inventory each
month).  Inventory valuation can fluctuate wildly due to seasonality
(i.e. gearing up big holiday season, or gearing down just before a
physical inventory). Additionally, inventory is measured 'net' of any
reserves for shrinkage and obsolete items on a quarterly basis, so
there is no way to determine how much the inventory has been devalued
by an arbitrary management decision.  Some management may be more
conservative than others, but the point is that you cannot determine
what the 'gross' inventory was, which is what you should be basing the
turn calculation on.

Of course, when a company calculates its own internal inventory turns,
they know exactly what these skewing factors are, so they can make an
accurate turn calculation.  However, if you try to set them side by
side with other companies, it becomes less meaningful because they are
not required by law to disclose all these omitted aforementioned
details.

Hope I didn't discourage you, but just wanted to give you a little
'food for thought.'

I hope this information has been helpful to you.

Hi francism-ga:

My pleasure.  I'm not a researcher, but I'm sure if this answer is out
there, they can find it for you.

While everything in the article you mentioned makes sense, I'm
actually surprised there was no discussion similar to what I had
commented on.  Clearly, the author has a comprehensive understanding
about what he/she is writing about.

Having been a corporate controller for a $500 public company
(wholesale and retail) for many years, I've made these subjective
decisions on inventory reserves myself, so I do have a bit of
experience in this arena.  The Securities and Exchange Commission
(SEC) does not require the disclosure of inventory reserves on a
quarterly basis (although, on the annual 10K's they do), so what
happens is that you don't have enough publically disclosed information
to make an accurate inventory turn calculation.  At best, you get a
(somewhat skewed) 'general idea.'

If the information is not out there for the companies you need, at
worst, you could try to do the calculation yourself (although it would
take quite a bit of time and patience).  The quarterly and annual
reports can be found through the EDGAR (Electronic Data Gathering And
Retrieval) System at the SEC.
  http://www.sec.gov/cgi-bin/srch-edgar

Look for Form Type's 10-Q (quarterly) and 10-K (annual). Then search
the term "current assets," and that should take you right to the
balance sheet, followed by the income statement.

Good luck.