Retail Inventory and Sales Metrics: Formulas and Interpretations

Inventory available at the start of a reporting period.

Beginning Inventory

Inventory remaining at the end of a reporting period.

Ending Inventory

Inventory physically available for sale at a specific moment.

On-Hand Inventory

Sales revenue before returns, discounts, and allowances.

Gross Sales

Sales revenue after returns, discounts, and allowances.

Net Sales

Write the formula for Average Unit Retail (AUR).

Net Sales ÷ Units Sold

Write the time-period Sell-Through formula.

Units Sold ÷ (Beginning Inventory + Receipts)

Write the lifecycle Sell-Through formula.

Units Sold ÷ Units Received

Write the formula for Weeks of Supply (WOS).

On-Hand Inventory ÷ Average Weekly Sales

Write the formula for retail Inventory Turn.

Net Sales ÷ Average Inventory at Retail

Write the formula for Units per Store per Week (UPSW).

Units Sold ÷ Stores ÷ Weeks

Write the formula for Dollars per Store per Week (DPSW).

Net Sales ÷ Stores ÷ Weeks\

Concept Question: A second retailer has lower total net sales but higher UPSW and DPSW. Explain how both can be true and which retailer is more productive.

Concept Answer: Total sales measure scale, while UPSW and DPSW normalize for store count and time. A retailer with fewer stores can have lower total sales but higher per-store productivity. The retailer with higher UPSW and DPSW is more productive on a per-store, per-week basis.

Interpretation: Based on your sell-through, WOS, and turn, write 2-3 sentences describing the department's inventory health.

Interpretation Example: Cite the actual ST%, WOS, and turn you calculated. Explain that sell-through shows the share of available inventory sold, WOS shows how long current inventory may last, and turn shows how efficiently average retail inventory generated sales. Use the three together rather than judging inventory from one metric alone.

A category has 47% time-period sell-through, 8.2 WOS, and retail turn of 0.88 for the period. What do these metrics suggest about inventory performance?

The 47% sell-through indicates that less than half of available inventory sold during the period. At 8.2 WOS, more than eight weeks of inventory remain at the current sales rate, while a 0.88 turn means average inventory has not generated one full turn of sales during the period. Together, the metrics suggest relatively heavy inventory.

Retailer X has $2.4M in net sales across 80 stores. Retailer Y has $1.9M in net sales across 45 stores over the same number of weeks. Retailer Y has higher UPSW and DPSW. Explain how this is possible and which retailer is more productive.

Retailer X can have higher total sales because it operates many more stores. UPSW and DPSW divide performance by store count and time, so Retailer Y can generate less total volume while producing more sales and units from each store each week. Retailer Y is more productive on a per-store basis.

A buyer sees strong net sales but declining AUR. Give two possible explanations and identify another metric you would review before making a decision.

Strong net sales with declining AUR could mean more units are selling at lower price points or that promotions/markdowns are reducing the average selling price. I would also review units, sell-through, margin, or inventory before deciding whether the lower AUR is healthy.