A fool’s paradise? More reports of strong sales growth from major retailers and yet investors ignored that and sold off shares yesterday’s big slump.
It was a case of all news is bad news and as investors didn’t take notice of the good news or the bad news – they just sold regardless of what was being reported.
Some shrewd investors and analysts know these are one-off sales and that in future months these gains will be reversed with big falls being reported.
Electronics retailer JB Hi-Fi and discount retailer, The Reject Shop (TRS) said yesterday they have seen a massive boost to sales for the current third quarter of their June 30 financial year as remote working becomes the norm across Australian workplaces and people continue to stock up on essentials.
The good news was not enough to push the retailer’s share price into the green, slumping 10.7% to $24.61 after being down more than 16% in early trading. TRS shares fell 5.2% to $2.54.
Discount retailer, The Reject Shop (TRS) also reported a jump in sales for the third quarter, with the company telling investors its bumper run of sales growth was thanks to panic buying Australians.
TRS said it had seen a massive 36.1% surge in comparable sales over the last week.
This follows on from the company’s similarly large 15.1% rise in comparable sales between February 24 and March 15, as shoppers flock to stores, desperate for toilet paper, hand sanitiser, and other in-demand supplies.
Comparable sales for the whole quarter are up 8.2%, with chief executive Andre Reich saying they were “extraordinary times”.
“In these extraordinary times, The Reject Shop will continue to serve all Australians through providing access to essential grocery and household products at everyday low prices while doing everything we can to keep our customers and our team safe and healthy,” he said.
JB Hi-Fi said comparable sales are up 8.8% since January 1, nearly double the 4.8% rise in comparable sales reported in the December quarter.
The company told the ASX yesterday that sales had been tracking well throughout January, however, the company noted it had seen an “acceleration in recent weeks” as customers prepare for COVID-19, buying “products that enable remote working, learning, and communication”.
Wesfarmers’ Officeworks and JB Hi-Fi rival, Harvey Norman also reported similar boosts in sales last week.
JB Hi-Fi’s whitegoods division The Good Guys also recorded a lift in sales, up 10.4% thanks to a panic buying run on “home appliances for food storage and preparation”.
However, the company’s 14 New Zealand stores did not see the same jump, falling 2% for the quarter.
Despite these bumper results, the continued uncertainty over the virus prompted the retailer to join the ranks of companies pulling full-year guidance.
The company said its balance sheet remained strong, and there was “significant headroom” in its covenants.
They were the most important parts of yesterday’s updates – the withdrawal of guidance was an admission that these huge sales increases will have little impact by June 30 and by the end of 2020.
New Zealand-based retailer, Briscoe Group yesterday canceled its NZ12.5 cents a share dividend on the day it was before it was due to be paid. The shares fell 9.3%to $NZ2.35 on the NZX.
“The decision has not been taken lightly and we will continue to monitor the situation with the view of paying a final dividend as soon as the board considers it appropriate,” chair Dame Rosanne Meo told shareholders.
“The company is now required to cease all retail operations for a minimum of four weeks,” managing director Rod Duke said.
“Due to the level on uncertainty around these compulsory store closures, the Group cannot forecast the extent of the impact from these unprecedented events.”
The company is a big shareholder in Kathmandu which is due to release its results on March 26 but has already withdrawn its 2020 guidance. Kathmandu shares fell more than 30% to 67.5 cents on the ASX.
It wouldn’t surprise if Kathmandu releases a similar statement about its closure in NZ today.
Retail Food Group went into a trading halt yesterday while it asses the news of wide-scale shutdowns of restaurants and cafes in the wake of the announcements from the Federal and state governments on Sunday and yesterday.
The halt will remain in place until March 25 unless the company seeks to have it lifted sooner.
And shares in Australia’s biggest car dealer, AP Eagers shares fell as much as 34% – to $2.50 yesterday – as the crackdown on non-essential business hit home and the halving of the first half payout to shareholders.
The company sells new and used cars and associated side businesses like financing and repairs. It took over AHG, its biggest rival late last year, a purchase that now looks to have been poorly timed.
On Friday it announced the final dividend would be halved to 11.25 cents a share, non-executive directors said they would forgo fees, and the managing director’s pay was cut by nearly 50%.
The shares ended down nearly 20% at $3.06.
