Retail industry: seasonality in sales, and financial results

Abstract

This paper aims at analyzing financial performances of retail industries prone to seasonality in sales. Specifically for the Brazilian economy, three sectors had their seasonal variation pattern identified, namely: 1) hyper- and supermarkets; 2) textile, clothing, and footwear; and 3) furniture, and household appliance. Results point out a stable sales pattern in supermarket sector in comparison to the other sectors, which have peak-and-valley patterns. Subsequently, a discriminant analysis was performed to find out differences among financial indices of Brazilian companies, according to their sales patterns. According to analysis of financial ratios, companies with higher seasonal variation performed significantly better in terms of cash ratio and return on equity, whereas the other indices, debt ratio and assets turnover, account for no statistically significant differences. Building on discriminant analysis, cash ratio was found to be the most important index for discrimination.