Turnover and weeks of supply

Turnover is cost of sales divided by average inventory: how many times the stock was sold and replaced in a period. Weeks of supply is inventory divided by the weekly rate of sale: how many weeks the current position would cover. A turnover of four is roughly thirteen weeks of supply.

Planners prefer weeks of supply because it is actionable at category level and reacts immediately to a change in rate of sale.

Inventory that is not moving has not yet been marked down. The slowdown appears in weeks of supply first, in markdown spend next, and in reported gross margin last, often a quarter or two later. A company reporting flat margin with rising weeks of supply is reporting the past.

That sequence is what makes the pairing of inventory and margin series useful, as in the 2022 margin analysis.

Turnover is not comparable across formats. A grocery chain turns inventory many times a year; a jeweler turns it once or twice; an off-price buyer holding packaway deliberately turns part of its stock slowly. A number is only meaningful against the same company's history or a close peer, which is the method used throughout the dashboard.