Nordstrom Inc (JWN)

Inventory turnover

		Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Cost of revenue	US$ in thousands	5,345,000	5,126,000	5,041,000	4,387,000	10,324,000
Inventory	US$ in thousands	1,888,000	1,941,000	2,289,000	1,863,000	1,920,000
Inventory turnover		2.83	2.64	2.20	2.35	5.38

February 3, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $5,345,000K ÷ $1,888,000K
= 2.83

Inventory turnover is a key financial ratio that reflects how efficiently a company manages its inventory levels by showing how many times the company's inventory is sold and replaced over a certain period. Nordstrom Inc's inventory turnover has fluctuated over the years, with the highest ratio of 5.38 in February 2020 and the lowest ratio of 2.20 in January 2022.

A higher inventory turnover indicates that Nordstrom is selling its inventory more frequently, which can be considered a positive sign of efficient inventory management. It means that Nordstrom is able to sell its products quickly and turn its inventory into sales, reducing the risk of holding obsolete or excess inventory.

Conversely, a lower inventory turnover may indicate that Nordstrom is struggling to sell its products, resulting in excess inventory levels that tie up working capital and potentially lead to discounting or write-offs.

Overall, Nordstrom's inventory turnover ratios suggest some variability in managing inventory levels over the years, with a general trend towards improvement. It is essential for Nordstrom to closely monitor its inventory turnover ratio to maintain efficient inventory management and optimize its working capital efficiency.