Retailer shares rally on reopen plan, after coronavirus shutdowns

Shares in Australia’s biggest retailers surged, with Myer leading the pack, after the PM set out new plans to restart the economy.

Streets on Sydney’s CBD deserted as shoppers stay home. Picture: Toby Zerna

Australia’s biggest retailers staged a confidence-building rally on the sharemarket, following months of declines triggered by the coronavirus pandemic, as department store owner Myer lead the pack with a massive 45 per cent leap after the Prime Minister unveiled his plan to reopen the Australian economy.

Following a press conference with Prime Minister Scott Morrison on Friday where he reported the three step plan created by the National Cabinet to bring the economy out of hibernation by July, which will include an easing of home isolation and more non-essential trips to the shops, retail stocks went on a bullish sprint.

Myer led the way closing up 9 cents, or 45 per cent, to 29 cents, and has tripled its share price in the last few weeks, with Harvey Norman up 6.7 per cent to $3.03, Super Retail Group up 6.56 per cent to $6.66, JB Hi-Fi up 3.73 per cent to $35.26 and Wesfarmers – whose retail chains include Bunnings, Officeworks, Kmart and Target – up 2.88 per cent to $37.45.

Mr Morrison said earlier Friday he expected the three step process, contingent on health advice, would be fully operational by July and paving the way for a return to some normality for retailers that for more than a month have been forced to close down their stores or remain open but witness a massive slide in sales.

After months of lockdowns and directives demanding consumers only visit the stores for essential purchases, the share prices of Australian retailers were left battered and bruised at record lows.

Now with the Australian economy being revived and brought out of its enforced hibernation, these retail stocks were fighting back Friday. Women’s fashion chain City Chic Collective was up 4.2 per cent to $2.24, Adairs up 6.2 per cent at $1.62 and billionaire retailer Solomon Lew’s Premier Investments up 1.5 per cent at $15.50.

Shares in the nation’s biggest car dealer, AP Eagers, jumped almost 10 per cent to $5.01.

The supermarkets were left out of Friday’s rally however both had benefit from buying support through March and April as panic buying and consumer stripping products from the shelf, from toilet paper to rice and flour. Woolworths ended the week down 21 cents at $34.70 and Coles finished down 3 cents at $15.20.

The bounce back in retail stocks comes as data begins to emerge of the start of the retail slump caused by the lockdowns and implementation of home isolation in March, with a sales leap generated by panic buying to eventually give way to an economic slump.

Australia saw a record 8.5 per cent surge in retail sales in March but lots of other data is consistent with a big contraction in the economy this quarter, said AMP Capital chief economist Shane Oliver.

“While it’s possible, this probably won’t be enough to stop a contraction in March quarter GDP given a fall in car sales and consumer services but it should keep it moderate at around -0.2 per cent, ahead of a 10 per cent or so plunge in the June quarter,’’ Mr Oliver said.

“The surge in retail sales was driven by panic buying and so will reverse from April to be combined with a slump in discretionary spending to probably result in a record fall in retail sales.”

Meanwhile, Mr Oliver said a range of other data highlights the impact of the shutdown on the economy with car sales down 52 per cent in April, ANZ job ads down 53 per cent, ABS payroll data indicating a 7.5 per cent fall in payrolls since mid April and over 70 per cent of business seeing reduced cash flows.