How are ASX retailers gearing up for Christmas 2021?

Highlights 

  • The retail turnover dropped by 1.7% in August, whereas consumer sentiment remains high.
  • While global supply chains are forecasted to struggle in the upcoming months, Aussies are gearing up for Christmas.
  • Australian retailers are preparing for Christmas sales after large parts of Australia come out from the lockdown.

The COVID-19 pandemic has brought major headwinds to the Australian retail industry, with many stores closing their operations. Many retail companies have witnessed major revenue losses during the pandemic.

However, after a traumatic and challenging year, the Australian retailers are now gearing up for Christmas sales with new enthusiasm. As confidence rises in line with vaccination rates, Aussies are ready to boost the economy despite parts of Australia being under lockdown.

Ecommerce – the preferred shopping mode

According to Australian Retailers Association (ARA) research, more than 58% of local shoppers are making more online purchases this year.

Analysts are forecasting AU$11 billion spending on Christmas, as around 79% of Australians are expecting to spend more than last year on this Christmas. This suggests a major windfall for the online retailers.

Moreover, the e-commerce retailers are expected to book around AU$16.9 billion revenue throughout the December quarter. On this note, let’s look at how ASX retailers are gearing up for Christmas 2021.

Some top performing ASX Retail stocks

Despite headwinds, some ASX retail shares have performed despite market fluctuations including – Wesfarmers, Kogan.com, and Adairs Limited.

The Wesfarmers (ASX:WES) shares have gained 6% on year to date (YTD) basis and Kogan shares have also gained around 18% in the last one month. This growth trajectory indicates a possible earning in the festive season supported by online sales. 

Online retailers like - Kogan.com Limited (ASX:KGN) and Temple & Webster Group Limited (ASX:TPW) have gained profit because of the shift to online shopping. As per Kogan’s annual report – the company booked AU$203.7 million gross profit for FY21 supported by gross shares of AU$1.179 billion.

Other online retailers like – Adairs Limited (ASX:ADH) have grown its revenue and profit making through omni channel sales. As per ADH’s FY21 annual report, the company has reported a 28.5% increase in its online sales. Before interest and taxes, the Group’s underlying earnings were also increased by 97% to AU$109.1 million for FY21.

Analysts expect a possible windfall for these retail companies with such financial performance in the upcoming festive season.

With such financial performance, analysts expect a possible windfall for these retail companies in the upcoming festive season.

business graph

Representative Image Source: © Jirsak I Megapixl.com

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Few challenges

Courier services like Australia Post, among others, have been plagued with delivery delays during lockdowns. After a very challenging period, retailers need to ensure online Christmas shopping to avoid inconvenience and avoid losing out to competitors.

Global supply chain disruptions have resulted in lengthy wait-time for stock replenishment along with product shortages. The e-commerce retailers must keep an eye on stock levels.

Bottomline

Reopening is likely to be difficult for thousands of retailers to make up the losses incurred during the lockdowns. But, according to the analysts, most online retailers are expected to witness large windfalls as more and more Aussies are going to spend equal or more than last year on Christmas gifts this year.

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