GMROI, gross margin return on inventory investment, is a year's gross margin divided by the stock it took, valued at cost. A GMROI of 3 means each euro held in stock earned three euros of margin in the year. It folds margin and turnover into one number, so slow and fast lines can be compared.
Gross margin here is the margin on the goods alone, net revenue minus cost of goods, which is what a nouz statement calls CM1. The denominator is the money the stock tied up at cost, averaged over the year wherever a history of stock levels exists, and the margin is annualised when the period is shorter than a year.
It folds two numbers a buyer already watches into one: the margin on cost and the inventory turnover. A line that turns six times a year at a 40% margin and one that turns twice at a margin of two thirds both earn about €4 of margin a year for every euro of stock, which is why GMROI is the fair way to compare them before cutting either.
Worked through on the store the inventory turnover calculator opens with, €19.800 of cost of goods over 90 days against an average of €15.300 in stock turns 5,25 times a year. At the 62% margin the example store earns on net revenue, every euro of that stock earns about €8,56 of margin a year.
nouz shows it on Insights, Inventory, beside inventory turnover: last year's CM1 per euro of stock at cost. nouz reads today's stock level and keeps no history of past levels, so the denominator is today's stock value rather than a yearly average, and a store younger than a year is annualised from the days it has.
Like turnover, it rewards a lean shelf right up to the point of stockouts, and it sees nothing below CM1: a product with a high GMROI that ships heavy or comes back often can still lose money at CM2.