Exploring the investment value of retail sales growth: Evidence from the China Retailer Alliance

Zhenkun Zhou, Danni Wu, Zhi Su and Tao Ren

Finance Research Letters, 2024, vol. 63, issue C

Abstract: This study investigates the investment value of retail sales growth using a unique dataset obtained from the China Ants Alliance, a retailer alliance in China. Leveraging this dataset, we construct a weekly retail sales growth rate index (SG) and draw significant conclusions about consumer-oriented firms. The hedge portfolios constructed based on this index earn a 0.206% excess weekly return. The predictability of the returns from the index persists after controlling for various firm characteristics. Sales growth also positively predicts firms’ fundamentals, such as revenue growth and cash flow surprises, highlighting the investment value of retail sales in predicting future cash flows and a firm’s revenue. Overall, we enrich the literature on consumer behavior information and stock pricing. We further expand the exploration of the investment value of nonfinancial information and provide a valuable reference for investors and the capital market.

Keywords: Alternative data; Stock pricing; Retail sales; Consumer behavior; Consumer-oriented company; Cash flow surprises (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003945

DOI: 10.1016/j.frl.2024.105364

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