How will these 4 retail stocks fare amid expected price hikes? BGP, WHS, MHJ, KMD

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How will these 4 retail stocks fare amid expected price hikes? BGP, WHS, MHJ, KMD

 How will these 4 retail stocks fare amid expected price hikes? BGP, WHS, MHJ, KMD
Image source: MONOPOLY919, Shutterstock.com

Highlights

  • According to a recent survey, prices are going to move up in next 3 months.
  • Retail businesses are feeling the pressure of rising costs.
  • These are likely to be passed to customers.

According to a recent survey, retailers are likely to increase prices over next three months.  Retailers expect to increase the prices by more than 7%. The retailers are not able to sustain the rising costs in New Zealand due to supply chain disruptions and fuel costs.

Retailers are feeling the pinch as the cost of sourcing products and importing them have increased. The NZ retailers feel that there were other cost pressures like the government asking for wage hikes, but the cost of fuel was the most significant pressure factor. With inflation at a record level, the retail sector has been impacted to a large extent.

Against this background, let’s examine these 4 retail stocks.

Image Source: © 2022 Kalkine Media

Briscoe Group Limited (NZX:BGP, ASX: BGP)

BGP is a big retail group that has 85 stores across NZ. It operates three brands under its umbrella- homeware, sporting goods, and retail. The Group’s Q3 sales performance was strong despite lockdowns due to the Delta variant. New Zealand sales of the Group were up by 9.52% at NZ$496.9 million. Sales in different brands also grew, like homeware was up by 9.53%, sporting goods grew by 9.5%. Online sales as a part of total sales were up by 22.14%.

The group will continue to focus on its online offerings.

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

On 31 January 2022, the stock was trading down by 1.15% at NZ$6.00, at the time of writing.

Kathmandu Holding Limited (NZX:KMD)

KMD is an NZ-based adventure clothing brand. The Company reported a rise of over 15% over pcp in FY21. Due to gross margin improvement, its EBITDA was up by 36%. Its online sales

grew by almost 31% due to changes in customers’ preferences. The Company has plans to expand so that it can deliver a better experience to its customers. It held its annual meeting virtually in November.

Also Read: Which are 5 NZX dividend stocks under NZ$5?

On 31 January 2022, the stock was trading up by 2.96% at NZ$ 1.39, at the time of writing.

The Warehouse Group Limited (NZX:WHS)

WHS is a big retail group that owns six brands and has a market cap of NZ$1.4 billion. In the first two months of Q2, the sales were up by 2.3% over FY21 and 8.6% over FY2020.

However, the total sales for the five months ended 2 January, decreased by 5.7% or NZ$88.8 million compared to pcp. Even the gross profit margin for the company for the five months was 55bps lower than FY21. Online sales, however, recorded a whopping jump of 105% over the same period in FY21. Click and collect accounted for 50% of the online sales, signifying an increase of 89% over pcp.

Also Read: The Warehouse Group (NZX:WHS) provides sales update for Q1 FY22

On 31 January 2022, the stock was trading down by almost 2% at NZ$2.99, at the time of writing.

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

Michael Hill is a specialised jewelry retailer that reported 2,381 missed store business days. In spite of that, the Group saw a jump in sales by 9.8% in the Q2 of FY2022. It also reported a 200 to 300 basis points increase in margins across New Zealand.

The most significant development for this Group has been an increase of 28% in its digital sales compared to pcp. The group is expecting an EBIT of between NZ$49 million and NZ$53 million in 1HFY22.
Also Read: How are 4 NZX retailers doing amid supply chain issues?

On 31 January 2022, the stock was up by 0.72% at 1.40, at the time of writing.

Bottom Line

NZ retailers are feeling cost pressures due to fuel costs, supply chain disruptions, and the government’s push to increase the wage. So, the retailers will further increase the prices. It is expected that the prices will go up by almost 7%, according to a survey.

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