American Eagle Outfitters Inc (AEO)

Inventory turnover

		Feb 3, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	Jan 30, 2021	Oct 31, 2020	Aug 1, 2020	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019	Feb 2, 2019
Cost of revenue (ttm)	US$ in thousands	5,203,560	4,995,710	4,971,600	5,043,480	5,016,650	5,051,760	4,979,810	4,801,800	5,153,160	4,550,151	4,336,189	4,170,561	4,273,721	4,307,920	4,355,521	4,284,033	3,913,393	3,845,157	3,777,390	3,457,464
Inventory	US$ in thousands	640,662	769,315	636,972	624,851	585,083	797,731	687,046	682,100	553,458	739,808	503,507	405,445	559,961	421,196	421,729	446,278	647,329	534,762	456,160	424,404
Inventory turnover		8.12	6.49	7.81	8.07	8.57	6.33	7.25	7.04	9.31	6.15	8.61	10.29	7.63	10.23	10.33	9.60	6.05	7.19	8.28	8.15

February 3, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $5,203,560K ÷ $640,662K
= 8.12

American Eagle Outfitters Inc has shown varying levels of inventory turnover over the past few years, as indicated by the data provided. The inventory turnover ratio measures how efficiently a company manages its inventory by showing how many times it sells and replaces its inventory during a specific period.

Looking at the trend, the inventory turnover ratio has fluctuated between 6.15 and 10.33 over the past few years. A higher inventory turnover ratio signifies that American Eagle Outfitters Inc is selling its inventory more frequently, which is generally seen as positive as it indicates that the company is efficiently managing its merchandise.

The highest inventory turnover ratio of 10.33 was recorded on May 2, 2020, which indicates that the company sold and replaced its inventory around 10 times during that period. This high turnover rate suggests that American Eagle Outfitters Inc was effectively managing its inventory levels at that time.

Conversely, the lowest inventory turnover ratio of 6.15 was seen on Oct 30, 2021. This lower turnover rate may indicate that the company was holding onto inventory for longer periods before selling it. A lower inventory turnover ratio could be a sign of overstocking or slow-moving inventory, which may impact the company's liquidity and profitability.

Overall, American Eagle Outfitters Inc should aim for a balance in its inventory turnover, ensuring that it maintains optimal inventory levels to meet customer demand while avoiding excess inventory that could tie up capital. Tracking and analyzing the inventory turnover ratio over time can provide valuable insights into the company's operational efficiency and inventory management practices.