The Hardest-hit Retail Space Still- Michael Hill, MOZ and AX1 Are Worth A Look

The Hardest-hit Retail Space Still- Michael Hill, MOZ and AX1 Are Worth A Look

The retail industry sells consumer goods or services to consumers via various distribution channels to earn a profit. The retail industry differs from other sectors in one important way that retailers do not create a product; rather, they buy products from manufacturers and sell them to customers. The retail industry operates via physical stores as well as online portals. 

Similar to most other businesses, retail and logistics sector is currently confronting immense changes, and like all changes, this brings both risks along with opportunities.

The Australian Retailers Association (ARA) is monitoring information from government, health agencies as well as from retailers to offer its retail members with updates as the developing coronavirus (COVID-19) situation unfolds.

Most of the Australian retailers are asking for a reduction in rent payment and at the same time threatening to withhold payments from property-owners as fears over the coronavirus impact on the sector hit fever pitch.

However, there are some retail stocks which remain in the green zone even during this COVID-19 pandemic.

Related: Is Investing in Retail Sector Stocks A Win-Win Game for 2020?

Let us zoom lens for three ASX listed retail stocks- MHJ, MOZ, AX1

Michael Hill International Limited will continue its e?commerce business

A dual-listed Brisbane headquartered Company Michael Hill International Limited (ASX:MHJ) is listed in ASX and NZX, was founded in 1979 by Sir Michael Hill in Whangarei, New Zealand. The Company has 304 stores across the globe in Australia, Canada and New Zealand. The wholesale and manufacturing divisions of the Company are established in Brisbane, Australia.

On 23 March 2020, Michael Hill International Limited provided an update on COVID-19 pandemic and disclosed that the Company continues to actively observe and oversee the trading and operational effect of public health methods associated with the management of COVID?19 in  the respective of its trading markets space.   

The Company mentioned that in Australia, the current social distancing guidelines are not steady with the daily conduct of its business. The drop off in trade MHJ has experienced in Australia also indicates a customer base that is of course focused on more immediate issues.

Subsequent to the announcement in New Zealand that the nation would be progressing to an essential services?only footing, the Company stated that its store networks in New Zealand would also be suspended indefinitely with immediate effect. 

Canadian store network of Michael Hill International was discontinued on 20 March, and this will now be for an uncertain period. 

However, the Company mentioned that its e?commerce business would continue, and it is also taking a range of urgent measures to ensure that its costs are reduced to match its expected revenue better.

Also Read: Why Retail Stocks Had Been So Popular Till Now?

Mosaic Brands Limited Share price up by ~34%

An ASX listed company Mosaic Brands Limited (ASX:MOZ) formerly Noni B Limited operates as a women's fashion retailer and offers women's casual, business and other various occasion dresses, including jewellery, hats, gifting, bags and more. The brands of the Company include Autograph, Rockmans, Beme, Noni B, W. Lane, Millers, Rivers, Katies and Crossroads.  Mosaic Brands have almost 1,400 stores across Australia.

COVID-19 Update

On 25 March 2020, the Company revealed a number of operational initiatives in response to the escalating COVID-19 outbreak. In implementing these initiatives, the Group is mindful of the impact of the government’s public health guidelines on its operations.

Given this scenario, the Group has decided to suspend all store operations temporarily with effect from Thursday 26 March and will continue to communicate regularly with the team. Likewise, the Company will offer other forms of support through this challenging time of uncertainty, with access to its Employee Assistance Program (EAP).

The Company also mentioned that it has recently witnessed a considerable decline in store traffic and revenue, a direct result of the government’s recommendations of social distancing and the community’s response to the coronavirus pandemic. However, the Company is working with its business partners and is examining its expense of making business, with a view to lowering costs to meet up anticipated revenue.

Moreover, the Group mentioned that its online operations would continue through this period, and customers will be able to purchase from all the nine brand websites of the Company.

Accent Group Limited- Share price up by ~9%

Accent Group Limited (ASX:AX1) earlier known as RCG Corporation Limited  is the regional leader in the retail and distribution of performance and lifestyle footwear space. The Company has more than 420 stores throughout ten distinct retail banners along with exclusive distribution rights for ten international brands across New Zealand and Australia. The brand of Accent Group includes- Platypus Shoes, Hype DC, Skechers, Merrell, the Athlete’s Foot, Timberland, Sperry Top-Sider and more.

On 19 March 2020, the Company provided its trading update highlighting the COVID-19 has had a significant impact on consumer demand in the market and as such, since the middle of February, like for likes store sales have deteriorated.

Further to this trading update, on 25 March 2020, the Group provides the following update on the impact of coronavirus pandemic on its business-

Accent Group has continued to closely monitor the COVID-19 situation and advice from the health authorities and government. Moreover, the Company mentioned that the health and safety of its employees is a top priority and the Group has made the tough decision to shut down all stores from 5 PM on Friday 27 March 2020 for a duration of four weeks.

This also suggests that all of the Company’s retail employees and the majority of support office employees will be stood down without pay for that period.

Moreover, it is notable that the Group will continue to trade through its 18 websites and wholesale business.

Let us now have a look at the stock performance of these three ASX listed retail sector players on 27 March 2020-

  • Michael Hill International Limited (ASX:MHJ)-The stock of MHJ closed the day’s trade flat at $0.240 (as on 27 March 2020), with the market capitalisation at nearly $93.07 million and almost 387.78 million shares outstanding. MHJ stocks 52 weeks high and low price was noted at $0.740 and $ 0.220, respectively. The P/E ratio of MHJ stock stands at 3.730x, with an annual dividend yield of 20.83%.
  • Mosaic Brands Limited (ASX:MOZ)- MOZ stock settled the day’s trade at $0.350 up by 34.615% (as on 27 March 2020), with the market capitalisation at nearly $25.17 million and almost 96.81 million shares outstanding. MOZ stocks 52 weeks high and low price was noted at $3.060 and $0.195, respectively. The P/E ratio of MOZ stock stands at 2.130x, with an annual dividend yield of 55.77%.
  • Accent Group Limited (ASX:AX1)- The stock of AX1 closed the day’s trade at $ 675 up by 9.756% (as on 27 March 2020), with the market capitalisation at nearly $333.43 million and almost 542.17 million shares outstanding. AX1 stock’s 52 weeks high and low price was noted at $2.200 and $0.555, respectively. The P/E ratio of AX1 stock stands at 6.000x, with an annual dividend yield of 14.63%.

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