Higher Consumer Spending Boosts ASX-listed Retail Stocks

  • May 05, 2020 AEST
  • Team Kalkine
Higher Consumer Spending Boosts ASX-listed Retail Stocks

The S&P/ASX 200 Index has bounced back by double-digit growth since the free fall in March 2020 due to the COVID-19 impact, with 23 March being the nadir for the index.  While some stocks have shown a sharp recovery, retail stocks are not too far behind either. According to major media sources and analysts, consumer spending is expected to boom in coming times as restrictions start to ease. Moreover, researchers believe that there have been indications of increased consumer spending in places where restrictions have cooled down.

The optimism around higher consumer spending in retail space led to significant gains in the retail stocks on 05 May 2020. With social distancing measures imposed, customers were only allowed to shop for essential items, and people have been over-buying things. But now that the restrictions have started to lose grip and regions have begun to open, there is an optimism in the market that consumer spending shall increase.

ALSO READ: Online Business Models come to the rescue of ASX Retailers amid COVID-19

Ever since the lockdown was imposed and social distancing measures were in place due to the COVID-19, there have been events of panic buying. The customers have been overspending to overstock essential items due to the uncertainty about the availability of the items.

Staying indoors for over a month has not been easy for the people, especially for the outgoing ones. People have been waiting to return to normal life, which still seems a little uncertain since the disease spread remains partially controlled.

Some retailers have benefitted from the online shopping behaviour of the customers that saw a dramatic boost during recent times. Consumers have been staying indoors and shopping for their needs through online modes while abiding by the social distancing and lockdown norms.

However, since restrictions are being rolled back in some Australian states and stores can open with proper safety measures, the market looks more hopeful for the retailers.

Listen to the Podcast: Property market takes a hit while retail surges

Here are some ASX-listed retail stocks to look at:

Kathmandu Holdings Sales 2.5 To 3 Times Higher

International outdoor and action sports company, Kathmandu Holdings Limited (ASX:KMD) witnessed 2.5 to 3 times higher sales than last year during April with the highest growth rates in Australia.

Over recent days, most of the Kathmandu and Rip Curl stores in New South Wales, as well as Queensland, have reopened on a trial basis, with vigorous safety protocols in place and the majority of other Kathmandu and Rip Curl stores in Australia are expected to reopen by the end of the ongoing week.

KMD looks forward to navigating through the current challenging times and emerge as a more robust business in coming times. Although, overall consumer demand is expected to remain softer in the medium term and global travel diminished due to the persistent economic and social impacts of COVID-19.

On 05 May 2020, the KMD stock closed the day’s trade at $0.785, up by 10.563 per cent compared to its previous close. The Company has a market cap of $503.39 million.

Myer’s Strong Online Business Performance

Another retailer, Myer Holdings Limited (ASX:MYR) witnessed a robust performance in its online business since the physical stores were closed on 29 March 2020. Online fulfilment is currently happening at 26 locations around the distribution centre network.

The growing online business has led to a positive impact on other aspects of the business, like 20 per cent of team members have been asked to return to work to support online fulfilment.

The added advantages make the growth in online business more encouraging for Myer, and the Company has well-advanced plans for reopening its physical stores. Currently, the temporary closure of all physical stores is expected to last till 11 May 2020, and the Company looks forward to hosting customers in its stores as and when the restrictions are lifted while maintaining utmost safety.

On 05 May 2020, the MYR stock closed the day’s trade at $0.195, up by 2.632 per cent compared to its previous close. The Company has a market cap of $156.04 million.

PMV Optimistic for Coming Times

During the last month, another retailer Premier Investment Limited (ASX:PMV) had to close all retail stores in Australia temporarily, and the same shall continue till at least 11 May 2020, in line with the government’s decision.

However, during the period of lockdown, all seven of Premier’s brands were said to be trading strongly online in Australia and the Company continue its online trade in Australia during its temporary store closure.

PMV is closely monitoring the situation and is optimistic about conquering the COVID-19 pandemic and bouncing back and thriving at the earliest opportunity.

On 05 May 2020, the PMV stock closed the day’s trade at $15.370, up by 4.203 per cent compared to its previous close. The Company’s market cap stood at $2.34 billion.

Adair Sales Up by 151 per cent

Retailer of home furnishings in Australia, Adairs Limited (ASX:ADH) mentioned that its online sales had exceeded expectations since the closure of the stores and online sales were up 221 per cent for this period. Moreover, Mocka Australia sales were up 151 per cent on last year through this period while Mocka New Zealand recommenced operations on 28 April and strong sales were noted in New Zealand as well.

ADH has implemented decisive actions to manage working capital and reduce costs across its business and has received strong support from our key product suppliers. Moreover, the Company boasts a robust balance sheet and is significantly liquid with no need for additional capital.

On 05 May 2020, the ADH stock closed the day’s trade at $1.530, up by 4.082 per cent compared to its previous close. The Company has a market cap of $248.54 billion.

In coming times, it shall be interesting to see how things pan out for other retailers like Harvey Norman Holdings Limited (ASX:HVN), Super Retail Group Limited (ASX:SUL) as well as City Chic Collective Limited (ASX:CCX). These stocks have shown positive performance during the day on ASX with slight increases intraday shown as follows:

  • HVN grew by 1.091 per cent and closed at $2.780
  • SUL increasing by 2.483 per cent and settled at $ 6.190
  • CCX grew by 2.315 per cent and closed at $ 2.210

 


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