Retail Chain Companies' Profitability Prediction

The Bachelor’s thesis is dedicated to the forecasting the profitability of food retail companies. The significance of thesis’ theme is confirmed by the crisis of 2014, when the retail trade turnover and the financial rates of companies in the industry began to decline. In this regard, there is a need to analyze and predict retail chains’ profitability for its future enhancement. In the first chapter of the paper the specifics of retail trade are considered, the concept of profitability is disclosed and the theoretical basis of the DuPont method is analyzed. The second chapter is dedicated to the analysis of the Russian market of the product retail, as well as the financial analysis of the profitability indicators of 8 major market companies. In the third chapter the model of DuPont is constructed, the forecast based on models is made and the profitability indicators obtained after the forecast are presented. The main purpose of the paper is the prediction of the profitability of net operating assets for Russian retailers using the DuPont technique. The results include the following. We analyzed the RNOA indicators for the main companies of Russian food retail. Also, models for the forecast of RNOA were constructed. The most significant models were with the DuPont decomposition. Based on the final models, a forecast for 1 year ahead was made. The forecast showes positive dynamics in the development of profitability of operating assets for all companies, except for the Globus retail chain. The forecast shows that retail chains are emerging from the crisis, adjusting to the new purchasing power, the level of prices and the preferences of population. The research can serve as a guide for investment appraisal of retail chains, as well as a basis for analyzing the financial state of companies. The base can develop recommendations on increase of operational efficiency, increase in commodity circulation and profitability of the companies of a food retail chain.