Retailers Harvey Norman and JB HI-FI should gain from “strong” Christmas trading with industry feedback suggesting gaming consoles, virtual reality and smartphones were in demand, while warm weather underpinned refrigeration and air conditioning sales, according to Deutsche Bank analysts.
The industry insights also pointed to a competitive holiday season for Woolworths and Coles with the former winning the battle, they said.
Here are the conclusions the bank’s team drew from the data:
JB Hi-Fi: Deutsche Bank expects the electronics retailer to post sales growth of 7.7% in the first half compared with the company’s forecast for flat sales for the full year. Gross margin is expected to climb 5 basis points as competition eased following the demise of rival Dick Smith. The analysts said JB Hi-Fi may increase its full-year sales outlook to $4.3 billion from $4.25 billion.
Harvey Norman: First half net profit is seen climbing to $212 million, up 16% and a 62 basis points increase in operational profit margins as benefits from inventory management and productivity measures begin to flow through.
Wesfarmers: Deutsche expects Coles food and liquor sales to climb 1.7%, with operational margins expected to drop 4 basis points due to competition. The analysts forecast continued growth from Kmart and hardware chain Bunnings.
Woolworths: Woolworths won the Christmas supermarket battle due to better sales promotions and products and that momentum is expected to continue. Food sales climbed 2.1%, but petrol sales – the company is selling that side of the business – are seen down. Deutsche Bank estimates first half profit of $825.3 million for the whole group, a 20% decline attributed to drops in sales of petrol and at Big W.