Episode 23: 2021 Retail CFO Outlook: Cash Flow & Capital

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 of the Retail and Consumer Products industry group at BDO USA.  In this episode, we are speaking with Jennifer Valdivia, Assurance Partner and West Region Leader, at BDO USA. We're here to discuss more findings coming out of the BDO CFO outlook, specifically how the pandemic affected cash flow and how retailers are dealing with these effects. Our CFO Outlook Survey collects perspectives of CFO’s on their top challenges, issues, priorities and focus areas for the coming year, and we publish these results on our website.  Welcome Jennifer.

Jennifer: Thanks Natalie.

Natalie: How do you see the pandemic affecting cash flows for retailers?

Jennifer: I mean revenues, your top line figure is really what drives your whole business right? And so again, probably not a huge surprise to people but in the prior year 83% of those respondents, versus 37% of those that were surveyed in the current year, anticipated an increase in revenues over the next 12 months.

Nobody saw the pandemic coming, so you know, retailers were pretty optimistic, they saw the next 12 months really, really optimistically in the prior year. In the current year they are just being a lot more realistic and as a result of that there's less cushion from a revenue perspective and revenue sources.

Retailers have had to look at government programs and other sources of funding, in order to bridge those gaps.

Natalie: We've seen a lot of retailers are applying for assistance, government assistance, amongst other things. What would the reasons be for securing this outside capital?

Jennifer: Sure. So definitely the reasons have changed and I'm going to speak a little bit to the changes first, and then I can summarize last year versus this year's respondents.

So in the prior year, the primary reason for securing outside capital was to capitalize on growth initiatives and that was according to about 60% of the respondents, versus only 32% of respondents in the current year were securing outside capital for growth initiatives.  So pretty, pretty significant swing.

Additionally, 17% of the respondents in the prior year versus 35% in the current year, expected to secure outside capital to drive a turn-around strategy.

So really, to summarize, in the prior year, a grand majority of respondents were securing outside capital for growth initiatives. And this year, there is almost an even split for the reasons on why a company will secure outside capital. So it’s either to, again, push their growth initiatives, drive a turn-around strategy or remain stable. So that gap from the prior year has really closed in and forced retailers to hone in on what their true priorities are.

Really, retailers are conserving cash in light of the continued uncertainty that's come to light during the pandemic.

Natalie: Totally understand and agree with that. Thank you very much Jennifer, and I look forward to speaking with you again very soon.

Jennifer: Thanks so much Natalie.

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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