Weeks of cover and GMROI: two stock metrics explained
One tells you how long stock will last, the other whether stock earns its keep. Formulas, uses and limits.
KEY TAKEAWAYS Summary by the editors
- Weeks of cover (or weeks of supply) is available inventory divided by average weekly unit sales, expressed in weeks.
- A forward-looking version divides stock by forecast weekly sales, which suits seasonal peaks and promotions better than a backward-looking average.
- GMROI is gross profit divided by average inventory cost, and a value above 1 means the inventory generates more gross profit than it costs to hold.
- Neither metric is an order decision on its own: weeks of cover ignores lead time, minimums and case packs, and GMROI depends on how profit and inventory cost are defined.
- Stockouts, promotions and seasonality distort both metrics, so compare like with like and review them by category and over time.
Weeks of cover tells you how many weeks current stock would last at the present or forecast rate of sale. GMROI (gross margin return on inventory investment) tells you how much gross profit each unit of money tied up in stock produces. Merchandisers use the first to manage availability and the second to judge whether inventory is worth its cost. Both are simple ratios, and both mislead when their inputs are carelessly chosen.
What is weeks of cover and how is it calculated?
The basic formula is available inventory divided by average weekly units sold. Inventory Planner gives an example: 100 shirts with 20 sold per week gives 5 weeks. The forward-looking variant divides stock by forecast weekly sales, so the same 100 shirts with 25 expected per week during a promotion gives 4 weeks. The backward version reflects past demand, while the forward version depends on forecast quality. Retailers choose the version that matches the question: how long has this been selling, or how long will it last.
What are the limits of weeks of cover?
- Stockouts distort the sales rate: days without stock understate demand.
- Promotions and peaks skew the average, so the result may not represent normal sales.
- The standard formula uses sellable stock and excludes incoming purchase orders, which must be tracked separately.
- It does not account for lead time, demand variability, supplier reliability, minimum order quantities or case packs, so it should be compared with replenishment time.
- There is no universal target: appropriate cover varies by product and demand pattern.
- If average sales are zero, the formula gives no useful result and the product needs review.
What is GMROI and how is it calculated?
ShipBob's guide defines GMROI as gross profit divided by average inventory cost, where gross profit is revenue minus cost of goods sold. A value above 1 means inventory is generating profit, and results should be compared with industry benchmarks rather than judged in isolation. As a purely illustrative example, if a category earns a gross profit of 300 on average inventory held at cost of 150, GMROI is 2.0: each unit of money invested in stock returned two units of gross profit. Note that the same guide's own worked example contains an arithmetic error, a reminder to recalculate any figure you rely on.
| Question | Weeks of cover | GMROI |
|---|---|---|
| What it measures | How long stock will last | Gross profit earned per unit of inventory investment |
| Formula | Available inventory divided by average weekly units sold (or forecast) | Gross profit divided by average inventory cost |
| Main use | Availability, replenishment, markdown timing | Category and SKU profitability, buying and range decisions |
| Main distortions | Stockouts, promotions, ignored lead times | Definitions of profit and cost, seasonality |
| Time view | Short term, weekly | Longer period, often monthly average |
How do the two metrics work together?
A category with very high weeks of cover and a low GMROI is a candidate for markdown or buying less. A category with low cover and a high GMROI may deserve more stock, subject to lead times. Looking at both prevents two errors: chasing availability for products that do not earn their stock, and cutting stock in products that sell profitably. Seasonal swings matter, so ShipBob suggests monthly analysis for short-shelf-life products, which is relevant for fashion.
How should these metrics be used in practice?
- Define stock (sellable only or including on order) and sales (net of returns or gross) once, and keep the definition fixed.
- Report both metrics by category, season and channel, because company-wide averages hide problems.
- Adjust weekly sales for in-stock days where stockouts are frequent.
- Compare cover with replenishment lead time before deciding on a reorder.
- Review GMROI against internal history and comparable businesses, not against a single external benchmark.
How are AI planning tools connected to these metrics?
Planning software increasingly forecasts demand and recommends orders, and weeks of cover and GMROI often appear as targets or constraints in those tools. Uphance's discussion of AI demand forecasting for apparel observes that it works best for replenishment styles with two or more seasons of clean history, and that accuracy for new fashion drops is lower than demos suggest. That limits how far cover targets can be automated for new products.
For wholesale-led brands, there is an added complication. Early-season demand is a set of purchase orders, so cover should be calculated against committed orders as well as forecast sales, and wholesale-committed units should be separated from stock available to direct channels. Without that separation, cover figures look healthier than they are.
- Check whether the tool uses sellable stock and whether it includes stock on order.
- Check how stockout days are treated in the sales rate.
- Ask how the tool treats wholesale commitments versus free stock.
- Review the recommended quantity against your own lead time and minimums.
What does a worked example look like?
Consider an invented knitwear category. At the start of a week it holds 600 units of sellable stock and sold an average of 100 units per week over the past four weeks, so backward cover is 6 weeks. A promotion is planned that is forecast to lift sales to 150 units per week, so forward cover is 4 weeks. If replenishment takes 8 weeks, the category will run out before new stock arrives, and the reorder should have been placed earlier. This is the point of comparing cover with lead time.
For GMROI, suppose the same category earned gross profit of 90,000 over the year on average inventory at cost of 45,000, giving a GMROI of 2.0. If a second category earned 60,000 on average inventory of 80,000, its GMROI is 0.75, meaning it earns less in gross profit than it costs to hold. The numbers are illustrative, but the reading is real: the second category deserves scrutiny of its range, pricing or depth of buy.
| Category | Cover (weeks) | GMROI | Possible reading |
|---|---|---|---|
| Knitwear | 4 (forward) | 2.0 | Healthy return, but risk of running out before replenishment |
| Accessories | 20 | 0.75 | Overstocked and low return: review depth and markdown plan |
Pairing the two figures, with lead times, gives a more balanced view than either alone.
Frequently asked questions
What is a good weeks of cover figure in fashion?
There is no universal target. Appropriate cover depends on the product, the demand pattern and the replenishment lead time, so it should be set per category and season.
What does a GMROI above 1 mean?
It means inventory generates more gross profit than it costs, according to ShipBob's guide. Whether a given figure is good depends on the sector and should be benchmarked.
What is the difference between weeks of cover and inventory turnover?
Weeks of cover looks at how long current stock lasts at a given sales rate. Turnover measures how often stock is sold and replaced over a period. Both relate stock to sales but frame it differently.
Why can weeks of cover be misleading after a stockout?
Days without stock record no sales, which lowers the average rate and makes remaining stock look like it will last longer than it will once the product is available again.
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