Episode 19: VBA Assessment  Series: Online Retail's Forecast (Part 1)

Announcer: Welcome to this episode of “60-second Retail” -a BDO podcast keeping you in-the-know on events and trends in retail and consumer products industry impacting your bottom line, in just a few short minutes.

Natalie: Hello, my name is Natalie Kotlyar. I am the National Leader for the Retail and Consumer Products industry group at BDO USA. In this episode, we will be discussing BDO’s proprietary VBA Assessment tool with Anthony Alfonso, Principal & Leader of the Valuation & Business Analytics group at BDO USA, we will be discussing which retail sectors have been impacted the most during this pandemic.

Natalie: Hello Anthony.

Anthony: Thanks Natalie.

Natalie: We have an amazing tool here at BDO, that helps our clients truly understand the landscape they’re operating within. Tell us a little bit about the tool and why it's so important.

Anthony: The tool really just aggregates a lot of publicly available data in a more usable format. What I mean by that is we take the top 20 companies or so, in every major industry, that has analyst coverage and what we've been doing is tracking analyst estimates from a revenue and earnings perspective, from pre-pandemic stages, you know in January or so, and just tracking on how their forecasts change as every month passesas we get deeper into the pandemic. On optimism or pessimism, on earnings and revenues, and when the predicted recovery is.

Natalie: Which retail sectors have had the biggest impact during this pandemicas you see it?

Anthony: Yeah so just taking the three major ones you're looking at–discretionary and luxury, along with consumer staples and also online–so discretionary and luxury, probably not surprising to everybody, has been down from a revenue perspective, about 12% or so since the beginning of the year in January.

Conversely, consumer staples–those have increased by 2% and that really isn't surprising, given the current work from home situation. People are not traveling as much so people are home buying things that they need for their everyday lives.

But then not surprisingly, the biggest winner is online. Online revenues, in aggregate, have been up about 10%. And that doesn’t surprise anybody with everybody having things delivered, with stores having limited capacity and everything like that.

Natalie: Well, I definitely agree with you there. I mean we've seen a significant uptick in eCommerce, especially over the last couple of weeks related to holiday season. Do you think other retail sectors will be impacted, and if so, how long, which I’m sure is top of mind for everyone, how long until we see that fallout take effect?

Anthony: So that’s a great question and maybe that answer isn't a specific category, but I think it's going to be the retailers that are predominantly brick and mortar. We're facing additional lockdowns, with this second wave, limited capacity–which is tough for retailers given this is their busiest quarter of the year, holiday season.

I think the retailers that have to be sold predominantly via brick and mortar, can probably be the most challenging. Then again online, I think is going to continue moving up.

Natalie: Thank you Anthony. We look forward to continuing this discussion in future podcasts.

Announcer: And that concludes this episode of BDO’s “60-second Retail” podcast. Don’t forget to tune in for the next episode! To find more information on our hosts, guests, BDO’s services, or listen to previous episodes of “60-second Retail”, please visit www.bdo.com/60-second-retail.



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