Selling, General & Administrative Expenses (SG&A)

RECENT NEWS
SeekingAlpha  Sep 10  Comment 
By Josh Arnold: Earlier this week I took a look at SeaWorld's (NYSE:SEAS) revenue and margin trends for the past few years. I concluded that SEAS is well positioned to see top and bottom line growth as it has been able to effectively raise prices...
SeekingAlpha  Sep 5  Comment 
By Celan Bryant: Let's get right down to it. Revenues are up at Mobile Mini (NASDAQ:MINI) -- that's the good news. See below for an overview of Q2 highlights. (click to enlarge) Source: Mobile Mini, Q2 Quarterly Presentation Revenue As...
SeekingAlpha  Sep 2  Comment 
By Chronic Bull: Sanofi (NYSE:SNY) had a decent second quarter. The company's sales remained stable at $10.65 billion, compared with $10.56 billion quarter-over-quarter. However, the company improved its operational efficiency and lowered its SG&A...
SeekingAlpha  Jul 14  Comment 
By Corey Sommers: There aren't a lot of levers left for J.C. Penney (NYSE:JCP) to pull in the short term that might meaningfully move the company's stock price higher. SG&A has been cut about as much as it can and is holding steady at around $1B...
Benzinga  Jun 19  Comment 
In a report published Thursday, D.A. Davidson & Co. analyst Andrew Burns reiterated a Neutral rating and $82.00 price target on Nike (NYSE: NKE). In the report, D.A. Davidson & Co. noted, “Our F4Q revenue and EPS estimates are $7.350 billion...
Forbes  Jun 4  Comment 
The company expects the sale or wind-down of its cellular baseband business to result in a $700 million reduction in annualized GAAP research and development (R&D) and selling, general and administrative (SG&A) expenses, including $100 million in...
Forbes  May 28  Comment 
Apart from revamping its fashion content, Abercrombie is planning to bring its prices down to a more competitive level. To ensure that this move doesn’t put pressure on its margins, the retailer is taking certain steps to lower its SG&A expenses...
Benzinga  May 19  Comment 
In a report published Monday, Morgan Stanley analyst Kimberly C. Greenberger reiterated an Underweight rating and $36.00 price target on Coach (NYSE: COH). In the report, Morgan Stanley noted, “COH's 10-Q confirmed what we feared: North...
FiercePharma  Apr 30  Comment 
When Big Pharma starts talking about big buyouts, the sales and marketing departments start chattering about their jobs. Last week's Novartis-plus-GlaxoSmithKline cancer deal is one prime example. Another, bigger one: Pfizer's proposed...
SeekingAlpha  Mar 26  Comment 
ByElephant Analytics: After taking a look through J.C. Penney's (JCP) 10-K filing, it appears that the surprising Q4 SG&A drop is likely mainly due to timing and accrual reversals. The full-year SG&A number is an accurate reflection of J.C....




 
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Selling, General & Administrative Expenses is the sum of all selling expenses and all general and administrative expenses

Selling, General & Administrative Expenses (alternately SG&A) is an income statement item that refers to a company's operating expenses outside of cost of sales.

Items commonly included in SG&A are not directly attributable to production. Examples of SG&A include employee salaries, commission bonuses, pension costs, marketing costs, insurance, rent and utilities, and maintenance.

While cost of sales are easily controlled, SG&A expenses are more difficult to manipulate. A company can keep its cost of sales down by limiting raw material purchase and adjusting its manufacture/service-production during a given accounting period. SG&A expenses are oftentimes fixed recurring expenses, and thus not as easily adjustable (i.e. payroll expense).

Investors look to SG&A as a measure of how efficiently a company is using its money. A company maintaining an SG&A that is a high percentage of revenue relative to other companies in its sub-industry would may indicate an inability to adapt to market downturns, as SG&A expenses are not easily changed in a short period of time (money being tied up in things like salary and office rent).

Unless a company is very research and development focused, SG&A expenses tend to be one of the largest of a company's operating expenses.

Example

  • Company XYZ, a widget maker, reports net income of $2 million dollars with a $800 thousand cost of goods sold for a gross profit of $1.2 million. The company spends $200 thousand on research and development and $600 thousand on SG&A expenses. SG&A, then, is 30% of XYZ's total revenues (600 thousand / 2 million) and
  • Company ABC, also in the widget industry, the same year reports net income of $5 million dollars with a $1.5 million cost of goods sold for a gross profit of $3.5 million. The company spends $500 thousand on research and development and $2 million on SG&A expenses. SG&A, then, is 40% of ABC's total revenues (2 million / 5 million).
  • Despite XYZ's relatively higher cost of goods sold (40% of revenue vs 30%), all other things being equal an investor would likely view XYZ better suited to deal with a market downturn or other unforeseen negative stressor on the market, as it's relatively lower SG&A expenses equate to an easier reduction of total expenses should it be necessary, as it is harder for company to reduce SG&A expenses than others.
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