Inventory turnover counts how many times a brand sells through and replaces its average inventory in a period, usually a year. It’s the portfolio read on whether the catalog runs tight or loose.
Turnover of 4 ≈ 91 days of inventory cover; 12 ≈ 30 days.
Average inventory must be valued at cost, not retail, and averaged across the period. Retail inflates the denominator and understates turnover; ending-only distorts seasonal brands. Monthly snapshots averaged is cleanest.
Higher turnover means less cash tied up per dollar of revenue and lower markdown risk; lower means deeper cover but more capital trapped and higher obsolescence risk. “Good” is category-conditional, and the ranges below are directional, not rules: apparel DTC around 3–5x, consumables around 8–12x, luxury and seasonal closer to 2x by design. The benchmark that matters is the brand’s own trailing baseline.
High turnover can also flatter a brand that is chronically out of stock, so pair it with stockout or fill-rate data before calling high turns a win. The portfolio figure also hides two opposite mix problems, because turnover is blended across SKUs while sell-through is the per-SKU read. Low turnover with high sell-through usually means winners are selling out while inventory is bloated by everything else. High turnover with low sell-through is the inverse: a few fast-moving heroes pull the blended figure up while a long tail of slow movers ties up cash underneath. Two heroes turning 20x alongside a tail turning 1x can blend to a healthy portfolio, but most working capital is parked in the slow half.
The figure operators want next is Days Inventory Outstanding = 365 / turnover, which feeds the cash conversion cycle and translates slow turns into working-capital dollars — the language a CFO responds to.