{"id":2338,"date":"2023-11-25T07:00:09","date_gmt":"2023-11-25T07:00:09","guid":{"rendered":"https:\/\/economicherald.net\/?p=2338"},"modified":"2023-11-25T07:00:09","modified_gmt":"2023-11-25T07:00:09","slug":"criterion-looking-for-retail-therapy-this-festive-season-remember-cheap-isnt-always-cheerful","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=2338","title":{"rendered":"CRITERION: Looking for retail therapy this festive season? Remember, cheap isn\u2019t always cheerful"},"content":{"rendered":"

The sprawling ASX small-cap discretionary retail sector faces a nervous lead-up to Christmas amid wilting consumer confidence \u2013 including the outcome of the current Black Friday\/Cyber Monday spend-fest.<\/p>\n

This AGM season the retailers conveyed a consistent message of soft sales in the first stanza of the current financial year, albeit with the numbers holding up OK relative to pre-pandemic levels.<\/p>\n

In the meantime, inflation has impacted both the cost of doing business and shoppers\u2019 proclivity to spend.<\/p>\n

As with any downturn, the seminal question is whether share valuations have already taken care of the downside \u2013 and perhaps a little bit more.<\/p>\n

Broker RBC notes the recent August results season was \u201cbetter than feared\u201d for the discretionary retailers, with earnings exceeding expectations.<\/p>\n

\u201cWhilst sector growth and valuation multiples appear challenging in [the current financial year], we believe investors may look through near-term pressures to improved trading conditions in 2024-\u201925 and beyond,\u201d the firm opines.<\/p>\n

Across the sector, share performance has been consistently inconsistent.<\/p>\n

For instance, Super Retail Group (ASX:SUL)<\/a> shares have surged by about one-third over the last year.<\/p>\n

In the first 16 weeks of the current financial year, the group\u2019s like-for-like sales edged up 2 per cent. Evidently shoppers are swapping the great outdoors for chamois and polish: its Super Cheap Auto chain posted a 4 per cent sales increase, but Macpac divisional turnover declined 8 per cent.<\/p>\n

Nick Scali (ASX:NCK)<\/a> shares are 12 per cent stronger than a year ago, despite plunging close to 10 per cent on Thursday after CEO and major holder Anthony Scali peeled off a $50 million chunk of his holdings.<\/p>\n

The veteran furniture purveyor posted a robust 35 per cent surge in net profit for the year to June 30, to $101 million.<\/p>\n

But September sales were 6.7 per cent off the pace, with store traffic down 10-15 per cent. A quirk of this retailer is that January \u2013 not pre-Christmas \u2013 is its key trading month, as many furloughed folk flock to sofa showrooms rather than sand and surf.<\/p>\n

The owner of The Athletes Foot chain, Accent Group (ASX:AX1)<\/a> had a stellar 2022-23 year, duly reflected in a 24 per cent share surge. <\/p>\n

The shoe was on the other foot after the company\u2019s November 17 update, when investors reacted poorly to a seemingly innocuous update of a 2 per cent like-for-like sales decline in the first 19 weeks of the current financial year.<\/p>\n

On the laggard side, the plus-sized apparel group City Chic Collective (ASX:CCX)<\/a> has lost around 70 per cent of its value over the last year.<\/p>\n

At this week\u2019s AGM chairman Michael Kay dubbed the performance as \u201cutterly unacceptable\u201d \u2013 and we can\u2019t argue with that. Management also reported the company has \u201cright sized\u201d inventory wise and achieved higher than budgeted cost savings \u2013 enough good news to prompt a 23 per cent share rebound.<\/p>\n

The owner of Bevilles and its eponymous jewellery chain brand, Michael Hill International (ASX:MHJ)<\/a> managed 2 per cent growth for the first 19 weeks of the year.
\nThis number compares cheap-and-cheerful fast fashion trinket house Lovisa (ASX:LOV)<\/a>, which saw like-for-like sales decline by 6 per cent (albeit with overall growth of 17 per cent with the addition of 14 stores).<\/p>\n

The outperformance of High Street jewellery over fast fashion highlights the danger of generalisations about consumer behaviour in adverse conditions.
\nFor our tuppence worth \u2013 your columnist\u2019s disposable income these days \u2013 we suggest appraising the retailers on a case-by-case basis, rather than the misleading \u2018cost of living crisis\u2019 narrative.<\/p>\n

Look no further than high-end online fashion house Cettire (ASX:CTT)<\/a>, which reported a 92 per cent surge in September quarter sales to $127 million.<\/p>\n

Cettire\u2019s stellar sales showing has torpedoed the quaint notion of us being \u2018all in this together\u2019 in adverse times.<\/p>\n

That said, 90 per cent of Cettire\u2019s sales were derived from offshore \u2013 well beyond Australia\u2019s groaning mortgage belt.<\/p>\n

\u00a0
\nThe views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.<\/em><\/p>\n

<\/span><\/p>\n

The post CRITERION: Looking for retail therapy this festive season? Remember, cheap isn\u2019t always cheerful<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

The sprawling ASX small-cap discretionary retail sector faces a nervous lead-up to Christmas amid wilting consumer confidence \u2013 including the outcome of the current Black [more…]<\/a><\/p>\n","protected":false},"author":0,"featured_media":2339,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2338","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nCRITERION: Looking for retail therapy this festive season? 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