Ollie's Bargain Outlet Hldg (OLLI)

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	May 1, 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
Cost of revenue (ttm)	US$ in thousands	1,874,863	1,805,654	1,753,213	1,727,178	1,696,084	1,657,681	1,622,415	1,556,653	1,548,403	1,535,769	1,539,092	1,606,204	1,531,316	1,458,129	1,392,848	1,258,675	1,236,362	1,210,517	1,173,518	1,123,639
Inventory	US$ in thousands	505,790	532,370	498,331	497,988	470,534	523,728	494,133	517,033	467,306	471,800	373,550	355,193	353,704	394,896	327,164	343,755	335,181	385,296	354,576	329,065
Inventory turnover		3.71	3.39	3.52	3.47	3.60	3.17	3.28	3.01	3.31	3.26	4.12	4.52	4.33	3.69	4.26	3.66	3.69	3.14	3.31	3.41

February 3, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $1,874,863K ÷ $505,790K
= 3.71

Inventory turnover is a crucial financial ratio that measures how efficiently a company manages its inventory. In the case of Ollie's Bargain Outlet Holding, the inventory turnover has shown some variability over the past few periods, ranging from a low of 3.01 to a high of 4.52.

A higher inventory turnover generally indicates that Ollie's is selling its inventory more quickly, which can be a positive sign of effective inventory management and efficient operations. On the other hand, a lower inventory turnover may suggest excess inventory levels or slower sales, potentially leading to higher storage costs and potential obsolescence risks.

It is worth noting that the trend in Ollie's inventory turnover has been somewhat fluctuating but relatively stable around the 3.5 range, indicating a moderate level of efficiency in managing its inventory. However, the recent peak of 4.52 in January 2021 suggests a period of exceptionally high sales or lower inventory levels relative to the sales volume.

Overall, a sustained or improving inventory turnover ratio is generally favorable as it signifies that Ollie's is effectively balancing its inventory levels with customer demand, thereby optimizing its working capital and potentially improving profitability. Monitoring inventory turnover over time can help identify trends and assess the company's ability to efficiently convert inventory into sales, which is critical for long-term financial health and operational performance.