What Is the Average Return on Equity for a Company in the Retail Sector?

By
Steven Nickolas
Full Bio
Steven Nickolas is a freelance writer and has 10+ years of experience working as a consultant to retail and institutional investors.
Learn about our editorial policies
Updated September 30, 2022
Reviewed by
Charlene Rhinehart
Charlene Rhinehart
Reviewed by Charlene Rhinehart
Full Bio

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Learn about our Financial Review Board
Fact checked by
Yarilet Perez
Yarilet Perez
Fact checked by Yarilet Perez
Full Bio

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Learn about our editorial policies

The retail sector encompasses a number of industry categories including automotive, building supply, distributors, general, grocery and food, and online and special lines retail. These have returns on equity (ROE), of 47.18, 0.97, 19.55, 20.06, 14.88, 44.11, and 35.23, respectively.

The figures are based on data published by New York University's Leonard N. Stern School of Business as of January 2022.

The average ROE for the retail sector is 26%, or (47.18 + 0.97 + 19.55 + 20.06 + 14.88 + 44.11 + 35.23) / 7.

Key Takeaways

  • ROE is calculated by dividing a company's net income by its shareholders' equity.
  • This figure is useful for comparing the relative profitability of companies in the same industry within the retail sector, such as automakers or grocery.
  • In fundamental analysis, ROE is used to calculate the profit a company creates using its shareholders' equity.

Calculating Return on Equity

ROE is used in fundamental analysis to determine the amount of profit a company generates with its shareholders' equity.

It is useful for investors as a way to compare the profitability of one company to another within the same sector or industry.

ROE is calculated by dividing a company's net income by its shareholders' equity. A company's net income is reported on its income statement, while its total shareholders' equity is reported on its balance sheet.

Explaining the Average ROE in the Retail Sector

Companies within each industry included in the retail sector have their own returns on equity, which should be taken into consideration when investing in them individually.

For example, Walmart's ROE as of July 31, 2022, was 15.68%.

Macy's ROE for the same period was 45.93%.  When compared to companies in the same industry and retail sector, such as Walmart, Macy's is profitable, although it generates less income than Walmart.

An investor considering a stock in the retail sector might conclude that Walmart is a better pick than Macy's.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. NYU Leonard N. Stern School of Business. "Return on Equity by Sector (US)."

  2. MacroTrends. "Walmart ROE 2006-2022."

  3. MacroTrends. "Macy's ROE 2006-2022."

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description