Staggerlee,
Take a look at ONSL's balance sheet. You will see that at quarter end, they carried VERY LITTLE inventory, about 1/2 months sales. I DID NOT say that the margin has fallen due to shrinkage and obsolescence. I think that their risk is SO LOW, that you have not and will not see these charges to any significant degree. I do have experience with this, however, I also notice the bigger picture when you seem to not.
Wouldn't you agree, if you carry very low levels of inventory, and your turns are as high as 2 times a month, that you would see little write-offs. And if there are risks of obsolescence and shrinkage, they should be holding a reserve against the value of the inventory. I'd suspect that they do, and only adjust based on changes in size and age relative to prior periods. If they keep inventory fresh and a low levels, then these reserves should be adjusted only to a small degree each period.
I will repeat, margins have fallen primarily due to the change in mix from a consignment to an owned inventory model. GET IT?
Mo |
