Who’d be running a department store at the moment?
Australia’s retail sales numbers were a disappointment this morning, posting a 0.1% rise against the market expectation of a 0.4% lift.
But the spending in department stores was down 7.9%, seasonally adjusted. The chart on the right shows an increasingly ugly-looking trend.
There are headwinds everywhere for department stores. Consumers are still keeping money under the mattress despite record low interest rates. Australia’s unusually warm winter – Sydney recorded its hottest in 150 years – kept shoppers out in the open and away from the stores more than usual.
And then there’s the rise of online sales gnawing away at the big department stores’ share of consumer spend.
Last week David Jones reported a year-on-year decline in sales for the fourth quarter of 1.9%, but they spent a lot of energy during the season ensuring they kept stock levels down to protect their margins. They’ve also taken the dramatic step of delegating their electronics sales operations to Dick Smith.
Retail sales will be a big indicator to monitor in the coming months as investors look for signs post-election that there’s some consumer confidence returning and that the RBA’s rate cuts are starting to flow through to cash in the registers.
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