NWG // FINANCIAL INFORMATION // THE GROUP
Note 15 - Inventory
Accounting policies
Inventory is recognized at the lower of cost , as determined by applying the first-in / first-out principle ( FIFO ), and net realizable value . The net realizable value is calculated as the estimated selling price less estimated selling expenses . Rightof-return assets are included in the stock value for finished goods and are measured at the value of the costs of goods sold at the point of sale . Deductions are made for internal profits generated through intra-Group sales .
Key estimates and assumptions
The value of inventory is dependent on assessments in respect of the calculation of the net realizable value of the stock . These assessments may lead to impairment losses on the stock .
In the Corporate operating segment , the risk that the net realizable value will be lower than the cost is low , since as a large portion of the collection comprises timeless basic products for which there is a demand season after season .
In the Sports & Leisure operating segment about 26 % of sales are made through the promo sales channel , where the product range mainly comprises basic products with limited fashion risk and thus a lower risk for obsolescence . For sales made through the retail sales channel orders are sent to the factory upon receipt of a purchase order from the customer , which significantly limits the risk that the net realizable value will be lower than the cost .
In the Gifts & Home Furnishings operating segment most of the inventory volume consists of classic and best-selling products , many of which have a product cycle of more than 20 years . This limits the risk that the net realizable value will be lower than the cost .
SEK million |
2020 |
2019 |
Raw materials |
36.0 |
49.3 |
Work in progress |
7.9 |
12.6 |
Goods in transit |
128.2 |
195.0 |
Finished goods |
2 710.9 |
3 301.0 |
Total |
2 883.0 |
3 557.9 |
Inventory consists of clothes , gift items and accessories for resale as well as raw materials . As of 31 December 2020 , the total obsolescence deductions , as an expression of the difference between the lower of cost and fair value , amounted to SEK 144.2 ( 136.7 ) million and the provision in relation to finished goods amounted to 5.0 % ( 4.0 %). The part of the stock which is recorded to net sales value amounts to SEK 401.3 ( 340.3 ) million .
ANNUAL REPORT // 091