Spiral for ASX Retailers, Re-Openings and Jump-Starts

  • May 19, 2020 AEST
  • Team Kalkine
Spiral for ASX Retailers, Re-Openings and Jump-Starts

While Morisson Government has introduced three-phase plan for gradually opening the economy, nation’s retail sector has been under the scanner following 8.5% jump in March retail sales driven primarily by food retailing and household goods demand with soared e-retailing.

With restrictions easing out in parts of the country, retailers have begun to reopen their physical stores. However, Covid-19 crisis has reshaped the retail sector. The stores are reopening following strict hygiene rules, limited customers, strict following of social distancing restrictions, and less in-store inventory.

The retail shopping experience will not be the same as earlier as the store layouts are changed immensely to follow social distancing restrictions, and there will be limited opening hours. The staff will wear masks, and it will be a new experience for both the sellers and customers alike.

The chains like Kathmandu, Adairs, and Myer are among the first to begin reopening of the stores. The restrictions are being gradually eased across New South Wales and Queensland, and consequently, retailers are reopening their Brick and Mortar stores.

The government has provided all information on how to safely operate during the Covid-19 pandemic on its website Safe Work Australia.

Kathmandu's Staged Reopening Of Stores Amid A Surge In Online Sales

Kathmandu Holdings Limited (NZX / ASX:KMD) has reported an increase in online sales and digital engagement. The Group continued trading online for Kathmandu and Rip Curl chain in all international jurisdictions in April except Kathmandu New Zealand which was only selling essential items since 3 April.

In April, when shopping online was the only option available for the customers, Kathmandu Group's sales were 2.5 to 3 times more than last year. The Group witnessed the highest growth rates in its largest market, Australia.

Group CEO Xavier Simonet said that the company could meet the unprecedented online demand, thanks to its investments in the supply chain and digital infrastructure over the last three years. It helped the Group to ramp up distribution capacity and online trading capabilities rapidly.

Mr Xavier Simonet also thanked team members across all parts of Kathmandu's business for showing incredible resilience and agility during such challenging times.

While reopening the stores, the Group's primary focus remains on employees and customers' safety. Company's stores are reopened across New South Wales and Queensland on a trial basis following all security protocols. However, the stores in Europe, New Zealand, North America, Japan, Brazil remain closed and will open as per the government's guidelines in each jurisdiction.

The stores will reopen with safety guidelines – customer capacity limits in stores, contactless payment and customer service, a social distancing between customers and staff, while stores will have hand sanitisers, and team members will wear protective face masks.

Kathmandu's financial position seems to be strong due to the successful completion of a fully underwritten NZD 207 million equity raising and other cost reduction initiatives.

KMD traded at $0.915, up 1.1% on 19 May 2020 (1:17 PM AEST).

Home Furnishings Group Adairs To Reopen Stores With Additional Safety Measures

While the stores remained closed, Adairs Limited's (ASX:ADH) online sales have gone up by a whopping 221 per cent during the four-six weeks shutdown period.

Total Australian sales were less than last year, while Mocka Australia sales was up by 151 per cent. Mocka New Zealand was closed till 28 April due to government restrictions and sales in the period from 28 April to 3 May was up by 216 per cent on the same period the previous year.

Adairs' balance sheet and liquidity seems to be strong, and the company is not seeking additional capital backed by its sales levels, liquidity, and government assistance programs.

On 4 May, the company's cash on hand was AUD 41 million, with net debt of AUD 43 million and undrawn debt facilities of AUD 12.5 million. However, the stores' rent for the period it was closed has not been paid by the company, while negotiations with landlords are continuing.

The company plans to progressively reopen stores with safety protocols to ensure the wellbeing of staff and customers. Initially, it plans to open larger format stores (primarily our Homemaker stores). The stores will keep on opening throughout May and June as per the government's guidelines.

Safety protocols will be applied to all stores following social distancing, contactless payments, using hand sanitisers, and allowing limited customers at a time.

Stores' layout and stock density will be reviewed to have more space to facilitate social distancing practices.

CEO and Managing Director, Mark Ronan acknowledged the Adairs and Mocka teams, business partners, and suppliers who worked closely to share the impact of the pandemic. The staged store reopening reflects the 'safety first' approach to the company. Moreover, the company believes itself to be in a strong position to navigate through this transforming environment.

ADH traded at $1.515, up 6.7% on 19 May 2020 (1:17 PM AEST).

Premier's Reopening Of Stores And Recovering Phase

Premier Investments Limited(ASX:PMV) had closed all its retail stores in Australia by the end of March 2020. The decision was in line with the Federal and state government to contain the spread of the pandemic.

The company's global sales were significantly hit by the store closures, with total sales declining by 74 per cent for six weeks to 6 May 2020 as compared to the corresponding period last year. The global retail store network sales dropped by 99 per cent, while online sales increased by the same percentage, that is 99 per cent.

From the beginning of store closures, online sales increased in the country. Notably, Peter Alexander's sales were exceptionally high.

Premier's Chairman Mr Solomon Lew congratulated the Prime Minister, the Federal Treasurer, the Federal Health Minister and the National Cabinet on handling of the crisis. The company believes that the 3 Step Framework for a COVIDSafe Australia will support retail employees safely return to work.

The company is reopening its stores by following all COVIDSafe Australian health and safety measures, that include - social distancing practices, frequent cleaning and disinfecting of communal areas, availability of hand sanitisers for staff and customers, encouraging customers and staffs to download the COVIDSafe app.

PMV traded at $15.570, up 1.7% on 19 May 2020 (1:17 PM AEST).

Bottomline: The pandemic crisis has entirely changed the retail industry; the companies are gradually reopening stores and changing their stores' arrangements to follow the safety guidelines from the Federal government. During the lockdown, the retail industry experienced a surge in their online sales. With strict guidelines for a limited number of people in the retail stores and the social distancing prices, it seems that online sales will continue to be high for the sector to meet the paradigm shift in customer preferences. Still, the opening of stores gives more options to the customers.

 


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