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GuruFocus has detected 2 Warning Signs with SUPERVALU Inc \$SVU.
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SUPERVALU Inc (NYSE:SVU)
Cost of Goods Sold
\$12,788 Mil (TTM As of Feb. 2017)

SUPERVALU Inc's cost of goods sold for the three months ended in Feb. 2017 was \$2,472 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Feb. 2017 was \$12,788 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. SUPERVALU Inc's Gross Margin for the three months ended in Feb. 2017 was 14.96%.

Cost of Goods Sold is also directly linked to Inventory Turnover. SUPERVALU Inc's Inventory Turnover for the three months ended in Feb. 2017 was 2.98.

Definition

Cost of goods sold (COGS) refers to the Inventory costs of those goods a business has sold during a particular period.

SUPERVALU Inc Cost of Goods Sold for the trailing twelve months (TTM) ended in Feb. 2017 was 4417 (May. 2016 ) + 3303 (Aug. 2016 ) + 2596 (Nov. 2016 ) + 2472 (Feb. 2017 ) = \$12,788 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin.

SUPERVALU Inc's Gross Margin for the three months ended in Feb. 2017 is calculated as:

 Gross Margin = (Revenue - Cost of Goods Sold) / Revenue = (2907 - 2472) / 2907 = 14.96 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A company that has a moat can usually maintain or even expand their Gross Margin. A company can increase its Gross Margin in two ways. It can increase the prices of the goods it sells and keeps its Cost of Goods Sold unchanged. Or it can keep the sales price unchanged and squeeze its suppliers to reduce the Cost of Goods Sold. Warren Buffett believes businesses with the power to raise prices have moats.

Cost of Goods Sold is also directly linked to another concept called Inventory Turnover:

SUPERVALU Inc's Inventory Turnover for the three months ended in Feb. 2017 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Average Inventory = 2472 / 829.5 = 2.98

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Inventory Turnover measures how fast the company turns over its inventory within a year. A higher inventory turnover means the company has light inventory. Therefore the company spends less money on storage, write downs, and obsolete inventory. If the inventory is too light, it may affect sales because the company may not have enough to meet demand.

Usually retailers pile up their inventories at holiday seasons to meet the stronger demand. Therefore, the inventory of a particular quarter of a year should not be used to calculate inventory turnover. An average inventory is a better indication.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

SUPERVALU Inc Annual Data

 Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17 COGS 33,943 34,451 31,444 29,124 28,081 14,803 14,623 11,379 11,033 10,693

SUPERVALU Inc Quarterly Data

 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 COGS 3,611 -226 4,597 3,479 2,609 2,460 4,417 3,303 2,596 2,472
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