I have noticed at my regular Home depot how they are always out of merchandise that their computer says is on hand. Interestingly when I was discussing this with some other contractors that shopped at other stores they indicated that they were experiencing the same phenomena. Unless I am mistaken, overcounting inventory produces a lower cost of goods sold generating a higher profit on paper. I cant say company wide, but in my midwestern area it looks to me as if profits are overstated, bonuses are therefore unearned and a rosier picture than reality is being painted.
Just something to think about
A lot of things can go wrong, like merchandise not shipped correctly, theft or "shrink" as HD calls it which is a big problem and accounts for 4 to 5 million a year.
And also dept heads not updating counts ,even if the computers say it is there.
and now they are leaning on the dept heads to actually perform their duties ... since the Nardelli
debacle , there were real fires to put out , now HD is ready to move steadily forward and fix some of
these problems ... expect to see margins increase nicely over the next 2 years , couple that
with recovery in the housing / construction sector , pent up demand from homeowners who
need to invest in maintenance and upgrades of their homes and we could see HD north of
100 in 2-3 years ... i will also be expecting to see some nice bumps in the div ... garce
true .... there is not one single retailer that does not have "shrink" ... much from shoplifting and quite
a bit from employees not doing the correct procedures and , oh yes , retail mgmt constantly
shifting and changing items around , running specials on top of specials and pretty preventing
everyone from doing a good , focused job ... pretty much facts of life that are built in , and nothing
for an investor to worry about ... one reason why prices are so high is to account for these things ,
regardless of whether it's home improvement or underwear sales .... g
We can adjust the physical count of the item(s) but we can not adjust the dollar amount of
The stores have physical inventories once a year unless the shrink or swell falls outside
the guidelines and that store has inventory every six months.
Times are tough, many people take items each day and then return them for store credit,
to be sold on the black market or on barter sites.
I have seen Virtual month ends. Factoring of accounts receivable. Vendor returns as sales. Again sell receivable. Purchase of a company keep it separate count the inventory twice once with the parent company as well a the subsidary. Factor the inventory. Lets face it auditors make a salary the perks of lunch and a ride in a high tech car gets them excited. It takes too much work to actually track an accounting transaction. Especially with all the above going on. Lets do lunch. I'll drive. Suckers!
This is not a good company, poor poor so called managers, titles only. Even the managers managers and their managers can't believe how poorly managers are trained. Because, they themselves aren't trained enough. It'l all hit you in the pocket book, wallet, just like its poverty employees..... old stiffs they can't get rid of because of age and service. Every store has issues..., I know personally...Owners have lost touch or they;re touching each other..
Many times I want to buy from HD because their prices are cheaper than Lowes but the item I want if it's in the store is in a box that obviously was opened then returned.Parts are usually missing on preopened boxes,so I end up buying at lowes.HD's here in North Jersey are always busy and preferred by contractors .
This quarter will be a good one for HD in the NE because of all of the repairing due to Hurricane Sandy.Sheetrock,flooring and insulation are flying off the shelves;not much roofing because it was a flood not wind event.A lot of damage to basements and first floors up to the waterline 4 foot,Block after block of damaged houses,the insurance checks are in and repairs are underway.