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Zale Corp (NYSE:ZLC)
Cost of Goods Sold
\$883 Mil (TTM As of Jan. 2014)

Zale Corp's cost of goods sold for the three months ended in Jan. 2014 was \$309 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Jan. 2014 was \$883 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Zale Corp's Gross Margin for the three months ended in Jan. 2014 was 52.95%.

Cost of Goods Sold is also directly linked to Inventory Turnover. Zale Corp's Inventory Turnover for the three months ended in Jan. 2014 was 0.35.

Definition

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

Zale Corp Cost of Goods Sold for the trailing twelve months (TTM) ended in Jan. 2014 was 209.861 (Apr. 2013 ) + 195.507 (Jul. 2013 ) + 168.827 (Oct. 2013 ) + 308.83 (Jan. 2014 ) = \$883 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Explanation

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

Zale Corp's Gross Margin for the three months ended in Jan. 2014 is calculated as:

 Gross Margin = (Revenue - Cost of Goods Sold) / Revenue = (656.449 - 308.83) / 656.449 = 52.95 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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:

Zale Corp's Inventory Turnover for the three months ended in Jan. 2014 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Average Inventory = 308.83 / 883.7785 = 0.35

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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 own currency.

Zale Corp Annual Data

 Jul04 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 COGS 1,129 1,163 1,216 1,188 1,090 949 802 862 906 904

Zale Corp Quarterly Data

 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 COGS 163 328 217 197 167 331 210 196 169 309
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