Business Context

NovaRetail, a mid-market omnichannel retailer, closed Q2 with SG&A expense of $128.4M versus a budget of $119.0M, an unfavorable variance of $9.4M (+7.9%). The CFO has asked analytics to explain the variance before the board review and identify whether the overrun is structural, timing-related, or driven by business growth.

Metric Scenario

Revenue for the quarter was $640M versus plan of $650M, so SG&A as a % of revenue increased to 20.1% versus a budgeted 18.3%. The largest reported departmental variances are: Marketing +$3.1M, Store Payroll +$2.4M, Corporate G&A +$1.8M, Customer Support +$1.2M, partially offset by Technology -$0.9M. Leadership also notes that headcount ended at 4,860 versus a plan of 4,720, and average hourly wage in stores rose 4.5% YoY. Marketing spend increased after a weak April comp, but conversion improved only from 3.8% to 3.9%.

Requirements

1. Define the primary SG&A variance metric you would present to leadership and how you would normalize it for business scale.
2. Decompose the Q2 variance into major drivers such as volume, rate, mix, timing, and one-time items.
3. Identify which variances are likely controllable versus non-controllable.
4. Recommend the 3 most important follow-up analyses or actions for the CFO.
5. Name the supporting metrics you would show alongside SG&A to avoid misleading conclusions.

Data Available

• gl_actuals: monthly actual expenses by cost center, department, account, and channel
• gl_budget: monthly budget and forecast by the same dimensions
• headcount_roster: employee-level headcount, start/end dates, department, location, compensation
• payroll_hours: weekly hours, overtime, wage rate, store/location
• marketing_campaigns: spend, impressions, clicks, conversions, channel, campaign objective
• sales_daily: daily revenue, orders, transactions, store and e-commerce channel