4 NZX retail stocks that can be looked at amid inflationary pressure

Highlights

• NZ reported the highest inflation in 3 decades in the December quarter with CPI rising 5.9% at the end of 2021.
• RBD reported a 19.7% growth in revenue for the year ended 31 December 2021, bringing the total sales to $1.06 billion.
• Michael Hill anticipates an EBIT of $49 million to $53 million.

NZ reported the highest inflation in 3 decades in the December quarter with CPI rising 5.9% at the end of 2021. CPI figures rose 1.4% in the last 3 months of 2021 due to a sharp hike in petrol, construction and rents.

The retail sector is expected to increase prices due to inflationary pressures and dissatisfaction persists in the NZ government’s approach to handle COVID-19, as per Retail NZ’s quarterly report.

The latest results from the report show that about 57% of retailers increased prices in Q4 and about three-quarters of retailers are likely to raise prices by approximately 7.5% in the next 3 months. About 59% of retailers stay very unsatisfied in the period.

On this note, let’s skim through how these 4 NZX retail stocks are doing in 2022.

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The Warehouse Group Limited (NZX:WHS)

The Warehouse Group reported that sales for the 5 months ended 2 January were 5.7% lower than sales for the same period in FY21. However, there was an improvement in Q1 sales numbers when figures were down by 14.6%.

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The Group expects adjusted NPAT to surpass $40 million for HY22 compared to $111 million in HY21. WHS will release FY22 half-year results on 22 March.

WHS ended the day 3.48% in red to close at $3.05.

Restaurant Brands NZ Limited (NZX: RBD) 

For the year ended 31 December 2021, RBD reported a 19.7% growth in revenue, bringing total sales to NZ$1.06 billion. While same store sales were robust throughout the time, additional 8 months of business from the California purchase contributed over NZ$100 million to yearly sales growth.

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On Thursday, the Group reported sales figures of Q4 FY21, reporting total sales of NZ$284 million (+5.5% on pcp).

RBD ended the day unchanged to close at $14.6.

Turners Automotive Group Limited (NZX:TRA)

Turner Automotive, a supplier of automotive retail, financing, insurance, and debt management services, saw significant profits growth in HY22, despite Q2 being disrupted by COVID-19 lockdowns. The Group's NPBT increased by 24%, owing to TRA's geographic and earnings diversity.

In FY22, the Group anticipates NPBT to be in the $40 million to $42 million range.

TRA ended the day 0.24% in red to close at $4.24.

Michael Hill International Limited (NZX: MHJ, ASX:MHJ)

Michael Hill, a jewellery retailer, saw sales increase by 9.8% in the second quarter of 2021, despite 2,381 missed store business days. It also saw a 200 to 300 basis points gain in margins across all countries, as well as a 28% increase in digital sales throughout the period compared to pcp.

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In H1 FY22, the Group anticipates an EBIT of $49 million to $53 million.

MHJ ended the day unchanged to close at $1.39.

Bottom Line

NZ Retailers remain dissatisfied about the government’s handling of the COVID-19 pandemic. Further, the sector continues to face increased costs that may be passed on to customers.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)