Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Broker still bullish on retail ahead of reopening
Well known stockbroker Morgans have released their review on Australia’s retail sales sector which continues to be hit hard with Victoria’s ongoing lockdown and Covid-19 restrictions throughout the country.
August retail sales came in at -0.7 per cent year on year and -1.7 per cent to $29.3bn, which comes as of no surprise. Covid-19 lockdowns continue to strangle retail spending with NSW, Victoria, and the ACT all in lockdown during August. To break it down further – NSW fell -3.5, Victoria back into lockdown on 5 August managed retail sales of -3.0% over the course of the month. Queensland was a little softer at -0.9%, while sales in WA and SA were up 2.8% and 6.6% respectively.
Despite the gloomy sales figures, there is light at the end of the tunnel. After a national-wide push, vaccination rates have spiked. And as the country heads closer towards the all important 80 per cent vaccinated, the outlook is improving as it brings an end to the pandemic forced lockdowns. On the flipside, online sales penetration was up 240 bps compared to July, to a record 15.0% of total retail sales. Online sales have now doubled over the course of a year and a half.
What to look out for
Morgans is optimistic on certain categories of retail saying “pent-up demand is building for clothing and footwear.” When lockdown restrictions are over, there is a very good chance consumer spending will as summer approaches. Last year there was a rise of 21.0 per cent yoy and 13.2 per cent mom in clothing sales during November last year when the economy re-opened.
Morgans recommends investors look out for UNI and AX1.
The best performing sales categories were the ‘essentials’. Morgans says pharmaceuticals, cosmetics and toiletries were up 10.3 per cent. Food and liquor sales were up 2.7 per cent. The worst performing sales categories were clothing and furniture. This sector is dominated by retail department stores heavily affected by a lack of foot traffic. Clothing was down -18.2% yoy, and furniture was down -12.6% in August following an -8.9% decline in July.
In conclusion, Morgan says, “COVID will have made consumers have a greater long-term appreciation of their home environment, but short-term trends would imply they may be taking a breath on doing it up. Retailers we cover with exposure to homewares and furniture include ADH, BLX and MYD.”
