Australian retail sector in a pandemic year: exploring stocks – MOZ, JBH, JIN, SUL

  • November 02, 2020 08:32 PM AEDT
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    Team Kalkine
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Australian retail sector in a pandemic year: exploring stocks – MOZ, JBH, JIN, SUL

Summary

  • Mosaic Brands expects the profitability to return in 2021 as most lockdown restrictions are lifted now and brand loyal customers may visit the stores.  
  • JB Hi-Fi’s improved report card showcases results of the online traction and sales in the JB Hi-Fi stores in Australia.
  • Jumbo experienced a more robust engagement from customers in quarter one ending September 2020. 
  • Super Retail reported that the total Group sales increased by 4.2 percent to A$2.83 billion as compared to the previous corresponding period.

COVID-19 pandemic has paralysed many sectors along with Australia's retail industry. Experts believe that the crisis has also presented opportunities and valuable lessons to the businesses to meet the customer demand in new and innovative ways. 

Though after the initial lockdown period, the government slowly allowed the reopening of the physical retail shops; many businesses decided to practice the best of both worlds. The traditional brick-and-mortar retailers are opting for online or e-commerce models as well. For the small setups, the operational cost and other fundamental costs are burdening the balance sheet as the revenue is low. The big retail chains are suffering too, nonetheless. 

Let us explore four retail businesses and see how their stock is performing on ASX. 

Mosaic Brands

Mosaic Brands Limited (ASX: MOZ) Australia's one of the largest fashion retailer groups is struggling to cope up with the coronavirus downturn. The fashion retailer held its first virtual AGM on Thursday, October 29. It closed 73 stores since August due to the unrealistic rent request and landlord expectations. The retailer emphasised on giving priority to the health and safety of its customers, store workers and overall community over the revenue.

Mosaic Brands also said during the AGM that the retailer is adapting to the new version of the retail sector, which is emerging during the coronavirus crisis. The retailer is preparing itself to position the company for the future, focusing on the sustainable profit policy.

Shifting businesses strategy to online

While strengthening and reshaping its core strategy, Mosaic Brands is set to shift its business online. The fashion retail giant said that there is no doubt that this online shift is permanent. 

The brand is consistent with its comments at the 2020 full-year result announcement; its online sale for the Q1 is up 31 per cent on the same period last year. The items available online on its website are growing and in merely eight weeks, SKUSs swelled from 150,000 to over 250,000. 

Managing Director Scott Evans said that several landlords have come on board with the rental reduction agreement, but the company is still expecting for 250 stores to close by the end of the current financial year. 

Mosaic chairman Richard Facioni informed the shareholders that the COVID-19 situation had provided unprecedented challenges to not just Mosaic Brand but to a large number of brands all over the world. More than five million customers have not visited any retail stores in the last eight months.

MOZ closed at A$0.645 on 2 November 2020, with a market capitalization of A$64.28 million.

Good Read: Theory Behind Success and Failure of ASX-listed Retailers: Mosaic and Kogan

JB Hi-Fi

Consumer goods retailer JB Hi-Fi Limited (ASX:JBH) reported a 27.3 per cent growth for JB Hi-Fi Australia in the Q1’ 21 ended September 30, 2020, over the previous corresponding period (pcp). The company reported comparable sales growth of 27.6 per cent in its AGM in Q1’ 21 over the pcp. The Good Guys noted a total 30.9 per cent hike in the sale, a smaller decline of 0.5 per cent on the same period last year. 

Comparable sales have also increased by 30.9 per cent in Q1’21 over the same period last year. Sales for JB Hi-Fi New Zealand have been reported to have lowered 2.5 per cent but up by 3.8 per cent compared to the pcp. Its comparable sales also showed a decline of 2.5 per cent. 

Business getting slowly back on track

All JB Hi-Fi stores in the Melbourne metro area were expected to reopen on 28 October 2020. The stores are welcoming the customers by considering all the safety guidelines. However, JB Hi-Fi will continue with its online delivery and contactless click and collect shopping options for the customers. 

JB Hi-Fi did not provide sales guidance for FY21 citing the current uncertainty amid coronavirus pandemic. Group CEO Richard Murray commented on the report saying its online business has been fruitful and can meet customers’ demands even during the ongoing crisis. Murray said that the company is positioned well for the crucial Christmas trading period ahead. 

JBH closed at A$47.800 on 2 November 2020, with a market capitalization of A$5.44 billion.

Also Read: Why Are Dividend Growth Stocks A Must Have In Every Portfolio: MSFT, JBH

Jumbo Interactive

Australian lottery reseller Jumbo Interactive Limited (ASX: JIN) in its latest AGM updated the stakeholders that the large jackpots were down 38 per cent on the pcp. The peak jackpot reached A$80 million compared to the record A$150 million jackpot a year ago.

Jumbo CEO Mike Veverka provided the trading update during the virtually held AGM. There is, however, a significant improvement in Jumbo's underlying performance. The like-for-like sales increased by between 26 per cent and 64 per cent for its key lottery business. 

Sales improvised but revenue falls

Veverka said that the increase in sales contributed to the group revenue which declined by only 2 per cent, representing company’s ability to deliver engaging and entertaining experiences to customers. He emphasised on the 80bp sharp hike in group margins of revenue to TTV, i.e. from 19.8% to 20.6%.  The numbers showcase the company's commitment to a steady operating performance for the group. 

JIN closed at A$10.750 on 2 November 2020, with a market capitalization of A$679.44 million.

Also Read: Jumbo Interactive Signs A Binding Term Sheet With Lotterywest

Super Retail

Super Retail Group Limited (ASX: SUL) reported a bullish trading update in its recent AGM. The retail group is ingesting more funds into expanding its online businesses as the company is preparing itself with the rising trend of online sales.

Super Retail reported that the total Group sales increased by 4.2 percent to A$2.83 billion as compared to the previous corresponding period. The company said its online sales increased 132 per cent for the first quarter of the 2021 financial year. Supercheap Auto, Rebel Sport, BCF and Macpac brands saw a steep hike in their year-to-date sales performance. 

To cope up with the sudden growth in online demand, the retail group is planning on expanding capital expenditure of A$100 million to increase online capabilities. 

SUL closed at A$11.010 on 2 November 2020, with a market capitalization of A$2.52 billion.

Have a Look: Super Retail Group Reported Total Group Sales Growth of 4.2% in FY2020

 

 


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