As widely expected Australian retail sales fell in January, while December’s drop was deepened in a revision – all pointing to the worsening dip in consumer spending that is sure to continue for months to come.
The bushfires were the culprit, along with the lack of confidence among households who have been battling shrinking income growth for several years.
They have been saving more of the small gains from lower interest rates – especially for those with mortgages.
Now the coronavirus crisis will hit confidence and sales in February and perhaps for the next few months.
And looking at the performance of major retailers on the ASX last week (except for supermarket groups, Coles and Metcash) there’s not going to be much joy from retailing for some time to come.
The Australian Bureau of Statistics reported on Friday that retail sales had started 2020 with a fall of 0.3% in January.
Markets had been expecting a flat month but not only was January worse than expected but the ABS also revision downwards its previous report on December, saying sales that month fell by 0.7%, deeper than the 0.5% fall originally reported.
That means Christmas was pretty miserable for the nation’s retailers. And to add more pain, the 0.9% rise in November (because of the Black Friday special sales extravaganza) was lifted to 1.0% growth.
The worst-hit area was the ACT which suffered almost a fortnight of bad air quality from a huge fire to the south of the city. Retail sales in the territory fell by 2.3%.
Sales dipped by 0.1% in both NSW and Queensland, by 0.2% in Victoria, by 1.1% in Western Australia, by 0.5% in both Tasmania and the Northern Territory. The only increase was a 0.1% rise in South Australia.
It was the first back-to-back drop in national retail sales since the mid-2017. The ABS data showed there were consecutive monthly falls in sales in NSW, Queensland, WA, the Northern Territory, and the ACT.
Food sales increased in the month but every other sector fell. Department stores sales slumped by 2.2% while sales of clothing and footwear dropped by 1.1%.
Sales through cafes, restaurants and catering services dropped 1.2% because of the poor air thanks to the haze and smoke from the fires.
Woolies shares fell 2% last week in contrast to the very solid 10.5% jump in the value of Coles shares and 6.8% surge for Metcash (which runs the IGA chain of small to medium supermarkets). Woolies shares though are up 5.09% so far this year, Coles shares are up 5.8% and Metcash shares are up 2.7%.
That’s all much better than the ASX 200 which fell 2.8% on Friday and 3.5% last week and is down 7% year to date.
Away from food, shares in JB Hi-Fi, the sector leader, according to the interim result season, fell 6.8% last week to be down 7% for far this year, Myer shares though got whacked on Friday, losing 16.7% on Friday alone to be down 42% so far in 2020 (and 16.7% last week).
Kathmandu shares dropped 10.1% last week (5.1% on Friday) and are down 18% year to date; shares in Mosaic Brands (Noni B) shares are off nearly 52% so far this year and 18% last week.
Super Cheap Group shares have fallen 24% so far this year, including a 5.5% drop last week. Harvey Norman shares lost 5.4% last week and have so far dropped 13.7% in 2020. Wesfarmers shares lost 3.5% last week and 5.3% for 2020. Shares in The Reject Shop have fallen 17% so far this year and 8.3% on Friday alone.
And it has been a similar story for the big shopping centre groups, Scentre (the old Westfield), securities are down 14.8% so far this year after a 6% drop last week. Securities in Vicinity Centres have fallen 13.25% for the year so far but securities in Shopping centres Australasia are up 11.2%.
