Retail sales figures

About the author:

Josephine (Jo) Little
Author name:
By Josephine (Jo) Little
Job title:
Senior Analyst
Date posted:
03 June 2014, 12:54 PM
Sectors Covered:
Consumer Discretionary, Industrials & Developers

The official retail sales figures for April have been released.

Key highlights

  • The trend estimate rose 0.4% in April (vs rise of 0.4% in March and 0.5% in February).
  • The seasonally adjusted estimate rose 0.2% in April (vs 0.1% in March and 0.2% in February).
  • Annual growth (in trend terms) rose 6%.
  • Food, household goods and cafes/restaurants/takeaway all rose in the month, while department stores were flat and clothing/footwear fell (-0.1%).

We're receiving feedback that retail conditions are extremely difficult across most categories. 4Q sales results will be poor in our view which will lead to early clearance activity and gross profit margin erosion. Low consumer confidence, budgetary impacts and the warmer weather all spell difficult conditions for the sector.

Apparel will be particularly difficult while housing-related categories and food will be more insulated.

We are only prepared to pay up for better earnings certainty in stocks like JB Hi-Fi (JBH), Domino's Pizza (DMP) and Beacon Lighting (BLX). 

Expect further downgrades to come in the retail sector. Likely candidates include Pacific Brands, The Reject Shop, Myer, Specialty Fashion, Automotive Holdings, OrotonGroup and Kathmandu. If winter doesn't arrive in Australia in the next two weeks Kathmandu will struggle to meet consensus targets.

More information

Our Research Team compiles detailed analysis and reports on a range of companies in the retail sector. If you would like more information, please contact your nearest Morgans office.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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