Summary
- According to the preliminary figures published by the Australian Bureau of Statistics (ABS), retail turnover dropped by 4.2% in August 2020 compared to the previous month.
- However, The turnover rose by 6.9% in August 2020 as compared to August 2019.
- Supermarkets and food retailers witnessed less drop as compared to other non-essential items.
- ASX listed fashion shares remained under the microscope due to the sharp drop in sales amid the COVID-19 pandemic.
According to the preliminary data published by the ABS (Australian Bureau of Statistics), the retail turnover plummeted by 4.2% (seasonally adjusted) in August 2020, compared to the previous month. However, year on year (YoY), the turnover rose by 6.9%.
Almost all states of Australia witnessed a drop, with the highest decline reported in Victoria, impacted by the pandemic-linked restrictions. The ABS revealed that excluding Victoria, retail turnover across the rest of Australia fell by 1.5% from July 2020 to August 2020.
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Let us skim through the August 2020 performance of some of the industries within the retail sector. We will also look at some related ASX-listed retail players and their recent performance:
Supermarkets and Food Retail Stocks
The ABS highlighted that food retailing recorded a slight drop in August 2020. Amid the COVID-19-induced restrictions, the grocery and food stores remained operational but primarily to provide services online. The pandemic has had limited impact on retailers with online sales partially negating in-store sales. Let us look at a couple of players belonging to this segment.
Coles Group Limited (ASX:COL)
Melbourne-headquartered Coles Group Limited operates multiple retail chains. The Company is primarily engaged in the selling of groceries and food via its supermarket chain, Coles. COL is also involved in liquor and petrol selling through its Coles Liquor outlets and Coles Express, respectively.
On 18 August 2020, Coles Group unveiled its FY2020 results (52 weeks ended 28 June 2020) highlighting an increased sales revenue.
- The Company disclosed that full-year sales revenue rose to A$37.4 billion, up by 6.9% with growth across all segments.
- Coles’ liquor comparable sales grew by 20.2% in the fourth quarter.
- Group EBIT growth attained for the first time in the last four years, rising by 4.7%.
- During the period, the Group reported strong earnings per share growth of 7.1%.
- For FY20, the Group delivered a total shareholder return of 31.7%.
- Coles Group declared a fully-franked final dividend of 27.5 cents per share.
On 23 September 2020, COL share price stood at A$17.620, up by 2.145%. With a market capitalisation of approximately A$23.01 billion, Coles has 1.33 billion outstanding shares trading on the ASX.
Domino’s Pizza Enterprises Ltd (ASX:DMP)
ASX-listed pizza chain operator, Domino’s Pizza Enterprises Ltd, is the largest franchisee of Domino’s outside of the US. On 19 August 2020, Domino’s updated the market with its results for the financial year 2020 (year ended 28 June 2020). Quick highlights are-
- During the period, network sales rose by 12.8% to A$3.27 billion.
- The Company reported online sales of approximately A$2.36 billion rose by 21.4%.
- During FY20 the EBITDA recorded at A$303.0 million up by 7.3%.
- Sales increased in Japan, Europe and ANZ.
On 23 September 2020, the share price of DMP stood at A$82.420, up by 3.517%. The market capitalisation of Domino’s stood at almost A$6.89 billion.
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Clothing and personal accessory retailing
ASX-listed fashion shares were under the microscope as fashion retail spend declined in August 2020. The ongoing pandemic has caused a sharp decline in sales of non-essential items, particularly in fashion.
Lovisa Holdings Limited (ASX:LOV)
Lovisa Holdings Limited was established to fill the void for fashion-forward and jewellery that is affordable. The Company is now trading from 435 stores in 15 nations. On 21 September 2020, Lovisa Holdings updated its annual report for the financial year ended 28 June 2020, the highlights are-
- During the period, the revenue of Lovisa was reported at A$242.2 million down by 3.2%.
- The Company stated that the first half of FY20 witnessed solid growth with total sales rising by 22.2%.
- The Company opened 66 new stores throughout the year and had 435 by the end of the year.
- EBIT during FY20 fell by 41.6% to A$30.6 million.
- Lovisa Holdings declared a deferred interim dividend of 15.0 cents per share.
On 23 September 2020, LOV share price stood at A$7.340, up by 0.963%. The market capitalisation of Lovisa Holdings was noted at A$781.23 million.
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Accent Group Limited (ASX:AX1)
Accent Group Limited is engaged in the retail & distribution of footwear and apparel businesses. The Group has more than 420 stores across ten distinct retail banners and exclusive distribution rights across New Zealand and Australia.
- The Group disclosed that the wholesale sales were down by 6.7% for the year, impacted by a drop in demand in April and May.
- Accent Group Launched first TVC during the fourth quarter of FY20.
- The Company declared fully franked dividend of 9.25 cents per share for FY20, up by 12.1% on the previous year.
Moreover, the Group is set to open its first physical store in Melbourne in the second quarter of FY2021, with an additional five stores to follow in the second half.
On 23 September 2020, AX1 share price stood at A$1.610, up by 5.921%. Accent Group’s market capitalisation stood at 823.64 million with nearly 541.87 million shares.
