Assignment Brief:
Analyze and compare Costco, Wal-Mart, and Nordstrom
The general merchandise retail industry has a number of segments represented by the following companies:
| Company Name | Merchandise Concept |
| Costco Wholesale Corporation (COST) | Membership warehouse |
| Wal-Mart Stores, Inc. (WMT) | Discount general merchandise |
| Nordstrom, Inc. (JWN) | Fashion department store |
For a recent year, the following cost of goods sold and beginning and ending inventories are provided from corporate annual reports (in millions) for these three companies:
| Costco | Wal-Mart | Nordstrom | |
| Cost of goods sold | $102,901 | $360,984 | $9,168 |
| Inventories: | |||
| Beginning of year | 8,908 | 45,141 | 1,733 |
| End of year | 8,969 | 44,469 | 1,945 |
- Determine the inventory turnover ratio for all three companies. Round all calculations to one decimal place.
| Inventory Turnover | |
| Costco | |
| Wal-Mart | |
| Nordstrom |
- Determine the number of days’ sales in inventory for all three companies. Assume a 365-day year. If required, round all computations to one decimal place and use it in subsequent calculations. Round final answers to one decimal place.
| Number of Days’ Sales in Inventory | |
| Costco | Days |
| Wal-Mart | Days |
| Nordstrom | Days |
- Based on the results, which of the following statements is INCORRECT with regard to each company’s merchandising concept?
- Costco holds only mass-appeal items that are sold quickly off the shelf.
- Wal-Mart has attractive pricing, but the inventory moves more slowly than would be the case at a club warehouse.
- Nordstrom’s inventory moves slowly but at a higher margin.
- Wal-Mart’s inventory moves very quickly at higher margins.
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