What is Seasonality?
Seasonality is a fluctuation in sales or profits during the course of a fiscal year.
How Does Seasonality Work?
For example, the restaurant industry is somewhat seasonal. Sales for many companies are stronger in summer and fall (the second and third quarter) and are lower in the winter and early spring (the fourth and first quarter). Much of this is attributable to New year's resolutions to diet, spend less or cook more; the April 15 annual tax deadline also makes consumers more money-conscious. Accordingly, the sales of restaurant companies go up and down throughout the year but in a somewhat predictable pattern.
Why Does Seasonality Matter?
Seasonality is a major reason that an investor or analyst can't just make an annual sales projection and then expect the company to meet 1/12 of that sales or profit projection every month. Some months will be higher, some months will be lower. Knowing how much higher or lower those sales should be month to month will make for more accurate seasonal projections.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
