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Investors jump back to bricks-and-mortar retailers

Hopes of a vaccine lit the flame of a global sharemarket rally.

The retailers welcomed back by investors included Lovisa, Unibail, Vicinity and Retail Food Group, whose chains of food shops are typically located within shopping centres.
The retailers welcomed back by investors included Lovisa, Unibail, Vicinity and Retail Food Group, whose chains of food shops are typically located within shopping centres.

The prospects of a COVID-19 vaccine ready to roll out as early as next year has reminded investors there is a world of traditional retailers heavily sold down since the pandemic hit, triggering a multi-billion-dollar pivot away from online retailers and tech stocks.

While the losers were pure-play retailers such as Kogan.com and Temple & Webster, which have represented five-baggers for those lucky investors who got in early, it was the old-fashioned bricks-and-mortar retailers that were back in the winner’s circle along with shopping centre owners Unibail-Rodamco-Westfield and Vicinity Centres.

Hopes of a vaccine from the US lit the flame of a global sharemarket rally that left behind technology stocks and other growth companies and saw money pour into previously beaten-down value stocks that had been mostly unloved since the pandemic began earlier this year.

On the local sharemarket, retailers Kogan.com and Temple & Webster were dumped as well as those companies closely associated with the boom in online shopping such as Adairs, Domino’s Pizza, Solomon Lew’s Premier Investments, JB Hi-Fi, Super Retail Group and recently floated online make-up and cosmetics business Adore Beauty.

The retailers welcomed back by investors included Lovisa, Unibail, Vicinity and Retail Food Group, whose chains of food shops are typically located within shopping centres.

Online marketplace Redbubble, which had to date enjoyed a stellar run on the sharemarket as investors cheered its online model in the midst of COVID-19, was one of the worst hit as it slid 20 per cent to $3.95. Kogan.com ended down 17 per cent, market darling Afterpay fell 10.8 per cent and below the $100 mark to $93.18.

Temple & Webster, which had quadrupled since the beginning of the year, dived 20 per cent to $9.93, Domino’s Pizza, another big winner since March and with a growing online delivery platform, fell 11 per cent to $77.76, and make-up and cosmetics online retailer Adore Beauty fell 9.23 per cent to $5.80 — well down now from its recent IPO price of $6.75.

And that money went straight to the traditional retailers and their landlords. Jewellery store Lovisa rocketed almost 25 per cent to $10.25, women’s fashion chain Adairs rose 19 per cent to 84.5c, while landlords Unibail jumped 43.55 per cent to $4.12 and Vicinity 14.5 per cent to $1.66.

“We would rather own a more traditional retailer like a Harvey Norman, ARB or JB Hi-Fi, and I think the market is probably pivoting towards this more than growth,’’ said Tom Millner, portfolio manager at Contact Asset Management. “These (pureplay and online) stocks have run exceptionally hard. It is just a day or two of the market having a break. We all know markets are forward looking, falling 20 per cent in one day is a big change of view from some people.

“I think there is a significant amount of ‘hope’ in this. Look at Sydney Airport’s movements, which highlight how much hope there actually is. There may not be an international flight arriving here for six or 12 months, yet the stock is up 9 or 10 per cent.”

Bradley King, at boutique investment manager Armytage, said the large movements on the market on Tuesday showed larger funds were in these mid-caps and when they sell out or buy in it creates huge ripples and share price swings. “They are using their cash to fund more of a value trade,” he said. “We saw that last night in the US with companies like Zoom, for example, being down quite heavily and some of the value stocks picking up.”

Read related topics:Coronavirus

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Original URL: https://www.theaustralian.com.au/business/companies/investors-jump-back-to-bricksandmortar-retailers/news-story/ec12f1f724d135802894a4bac21c43e5