Retail spending soars in January 2022 following a December fall

Highlights

• Retail sales rebounded to rise 1.8% in January 2022.
• The observed results reflect some of the pent-up demand from the Delta variant lockdown seeping into the current period.
• Some prominent ASX-listed retail stocks in food retail and household retail deserve a close attention.

Australians have continued retail spending this year after exhibiting a slight lull towards the end of 2021. The latest data from the Australian Bureau of Statistics (ABS) reveals that retail sales rebounded to rise 1.8% in January 2022, after a slowdown of 4.4% in December 2021. This marks the return towards an upward streak in retail spending as seen during the months before December 2021.

Compared with January 2021, retail sales rose 6.4% to AU$32.49 billion in January 2022. The December 2021 slowdown initially sparked concerns about the Omicron variant taking hold of consumer sentiment. However, January data projects a rebound to higher spending. Meanwhile, experts suggest that the observed results reflect some of the pent-up demand from the Delta variant lockdown seeping into the current period.

Overall, the consumption pattern seems to have been complicated this time around as a slew of favourable and challenging factors have occurred together. For instance, the removal of lockdowns in the last quarter of 2021 led to a rise in retailing across dine-in services. However, as the threat of the Omicron variant lurked in the background, consumers preferred more takeaway options over dine-in services.

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A closer look at the data

Among all retail industries, food retailing has seen a consistent rise since November 2021. Sales in this segment reached a 3-month high of AU$13.25 billion in January 2022. This marked the largest monthly rise of 2.2% since July 2021.

Department stores retailing also saw solid gains in sales, accounting for a monthly rise of 4.9% in January. Meanwhile, household goods retailing rose by 0.6% in January, marking a rise of sales worth AU$36.4 million. Total retail sales of household goods remained at AU$5.83 billion.

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However, retail sales fell by 0.8% in cafes, restaurants, and takeaway food services segment. The clothing, footwear and personal accessory retailing segment also suffered during January 2022, falling by 1%. Retail sales in the segment fell by AU$25.2 million in January alone.

ASX Listed retail stocks in the limelight

The latest retail sales data underlined the strength of certain retailing categories during January 2022. Food retail and household retail segments performed well in terms of retail sales last month. On this note, let us take a look at some prominent ASX-listed retail stocks in the related segments:

Woolworths Group Ltd (ASX:WOW)

Woolworths Group Ltd (ASX:WOW) has had a profitable run during the first half of FY22, with its revenues soaring 8% during the period. However, the Company’s EBIT and NPAT fell by 11% and 6.5%, respectively. Most importantly, Woolworths announced a fully franked interim dividend of 39 cents per share, payable on or around 13 April 2022.

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Wesfarmers Ltd. (ASX:WES)

Wesfarmers Ltd (ASX:WES) saw a rough patch through the first half of FY22 in terms of financial performance. The retailing firm reported a significant fall in net profit and a minimal decline in revenue during the period. Meanwhile, the Company’s EBIT and Basic EPS also recorded a fall during the period.

The weak financial results came after a series of government-mandated store closures amid the lockdown-infused environment. The resolution of supply-chain related issues seems essential to bring back Wesfarmers’ performance on the track.

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Temple & Webster Group Ltd. (ASX:TPW)

A major market player in furniture and homeware retailing, Temple & Webster has continued to grow amid the pandemic. During the first six months of FY22, the Company reported a 46% increase in revenue year-on-year. Additionally, revenue per active consumer also inched higher by 10% during the period.

The Company informed that the second half of FY22 has started strongly with year-on-year revenue growth of 26% between 1 January and 6 February 2022.

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