Aus,
I was in Office Depot the day after Christmas. They carry about six different MB cards, all SanDisk. They had four 80 MB in stock, four of one other flavor (can't remember which), all the rest out of stock.
Office Depot generally places edi orders over the weekend, and expects shipment within five working days (by the following Friday), so their out of stock situation would usually mean a problem with a supplier. This is a generalized rule of thumb, but most retailers are looking for six inventory turns a year. Many more than that, and you will probably be out of stock many times and lose sales, less than that and you have excess inventory that just represents money sitting around on shelves. Some retailers are getting more efficient, ordering twice a week so their inventory burden is lower, with mixed success.
Admittedly, the Office Depot visit was a snapshot, nothing like an inventory of their 800 stores. Some may be grossly over inventoried. But out of stocks are signs of good sales, not a good sign if you want to remain a primary vendor.
Other thoughts. As SanDisk only recognizes revenue after the product is sold through the retailer, and many of the retailers seem to be out of stock, this should be a good quarter. Also, in a declining price environment, the revenue recognition for prior sales should delay the recognition of price declines. In other words, if the manufacturing costs (ans subsequent selling price) are going down, sales from 60 days ago, at todays COGS, should produce a higher gross margin.
John |
