WHS, BGP: How are these stocks faring as retailer confidence falls?

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WHS, BGP: How are these stocks faring as retailer confidence falls?

 WHS, BGP: How are these stocks faring as retailer confidence falls?
Image source: Pressmaster, Shutterstock.com

Highlights

  • Retailers are struggling amid the Omicron prevalence and Red Alert Level settings, as per a report.
  • WHS registered online sales growth of 67.8% in H1 FY22 on pcp
  • Briscoe Group registered a 20% rise in its profit on pcp to a record $87.9 million for the full year ended 31 January 2022 

The latest report by Retail NZ has revealed that retailers were still dissatisfied with their targets, and they were not expecting to reach their targets for the next quarter amid the Omicron spread.

Nearly 90% of retailers are likely to raise prices by 7.5% on average in the next 3 months and 35% of retailers are unsure of their survival in the next 12 months, as per the report.

Retailers are struggling with cash flows, as per Retail NZ chief executive Greg Harford. He added that the situation had been grim for retail businesses in the past 2 years and Omicron had further worsened the foot traffic and consumer confidence.

Rising business costs and inflation have eroded margins and profits of these businesses.

On this note, let’s take a look at the performance of these 2 retailers.

Source: © 2022 Kalkine Media®

The Warehouse Group Limited (NZX:WHS)

WHS released its progress on a strategy update last month. The update revealed that its market share grew in H1 FY22 despite a 5% drop in retail spending on prior year and the supply chain performed well amid inflation and the COVID-19 pandemic.

DO READ: KMD & RBD: 2 retail stocks to follow as NZ business confidence remains low

WHS registered online sales growth of 67.8% in H1 FY22 on pcp with Click & Collect sales up by 79.1% and orders growth of 80.4% showing its ability to better capture shifts in customer demand compared to peers.

ALSO READ: NZ consumer confidence dips to lowest, will it bounce back soon? 

The Group is making modifications in its stores, pursuing a resilient and flexible operating model and is building capability in its customer care tools to adapt to customer demand.

On 8 April, at the time of writing, WHS was trading at $3.15, up 2.61%.

Briscoe Group Limited (NZX:BGPASX:BGP)

Briscoe Group registered a 20% rise in its profit to a record $87.9 million and online sales accounted for 21.47% of the total group sales (+21% on pcp) for the full year ended 31 January 2022.

ALSO READ: BGP, WHS, MHJ: 3 big retail stocks to watch ahead of Easter

However, BGP saw a drop in footfall across its bricks-and-mortar network and fewer shoppers visit its stores amid the COVID-19 pandemic. The retailer expects the demand to bounce back as the Omicron variant subsides.

On 8 April, at the time of writing, BGP was trading flat at $5.8.

Bottom Line

The retail sector needs Government support to accelerate the review of Alert levels and inform about re-engagement with communities, businesses, etc. Retailers may continue to increase prices and restrict staff hours amid rising costs and a volatile environment.

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

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