Retail stocks hammered by cost-of-living crisis

Stocks of major retailers including Baby Bunting, JB Hi-Fi and Super Retail Group were hammered as the cost-of-living crisis hit home in the form of falling sales.

Baby Bunting shares slumped 23.4 per cent to $1.46 after it posted a 7.4 per cent slide in sales in the year to April. Picture: Alison Paterson

Stocks of major retailers including Baby Bunting, JB Hi-Fi and Super Retail Group were hammered on Thursday after they warned the cost-of-living crisis was translating into falling sales of everything from televisions to nappies.

Baby Bunting shares slumped 23.4 per cent to $1.46 after it posted a 7.4 per cent slide in sales in the year to April as young parents went for cheaper brands at it stores.

Super Retail reported a fall in group sales for the first 16 weeks of 2024 caused by customers becoming more cautious on the back of cost-of-living pressures The market update sent its shares sliding 5.45 per cent to $13.02.

Shares in electronics and whitegoods giant JB Hi-Fi dropped 4.54 per cent to $57.24 after a trading update revealed flat first quarter sales, while online homeware and furniture retailer Temple & Webster tumbled 17.9 per cent to $10.36.

Baby Bunting chief executive Mark Teperson said sales had softened over the last two months, reflecting ongoing cost-of-living pressures being experienced by new parents.

“Baby Bunting remains focused on providing great value to customers,” said Mr Teperson.

“We’re acutely aware that our customers are more sensitive than many other groups to the widespread cost-of-living pressures and are managing their spending carefully.”

He said that while the group had seen an improving trend in sales this was heavily impacted by declining average transaction values driven by consumers “trading down” and ongoing competition in nursery essentials impacting prices.

Super Retail reported a fall in group sales for the first 16 weeks of 2024.

Super Retail Group chief executive Anthony Heraghty said that given the challenges around inflation and interest rates, customers were managing their spending carefully and becoming increasingly focused on value.

“While store foot traffic and transaction volumes continue to grow, ongoing cost-of-living pressure is impacting the number of items per sale,” he said.

QUT retail expert Gary Mortimer said retailers of discretionary items such as footwear and electronics were being impacted more by the cost-of-living crisis than supermarkets.

“You still have to put food on the table,” Dr Mortimer said. “But in other areas consumers are moving to become more self-sustainable, looking to repair or recycle an item. If the dryer breaks down instead of going and spending $1000 on a new one, they are using the clothes line in the backyard.”

He said there was little sign of retailers making big changes to their strategy in response to the cost-of-living crisis.

“We are not seeing a lot of slash and burn pricing yet, perhaps because retailers want to get through to the end of the financial year,” said Dr Mortimer. Soaring petrol prices were expected to impact retail sales going forward.

Super Retail said sales at its camping goods chain BCF reflected softer trading in the key Easter period and the “cycling” of clearance activity in the previous comparative period in 2023. It said sales of Rebel footwear had improved following the introduction of new and expanded ranges including Hoka and On but demand for apparel “remains subdued”.

But sales at Supercheap Auto, the company’s biggest single source of revenue, had benefited from the strength in key auto maintenance categories including lubricants, power, and car detailing.

JB Hi-Fi chief executive Terry Smart. Picture: Arsineh Houspian

JB Hi-Fi chief executive Terry Smart said the electronics giant was pleased sales “remained resilient and in line with expectations” in the March quarter.

He said Australian JB Hi-FI stores reported a flat quarter as total sales fell 0.1 per cent, with comparable sales down 0.3 per cent. The group’s Good Guys chainsaw sales fell 0.8 per cent.

Temple & Webster shares slumped but Citi analyst Adrian Lemme noted that its growth trajectory “remains intact”.

Mr Lemme said while year-on-year sales comparisons “look to be getting tougher”, he thought Temple & Webster could keep taking market share. With $100m of net cash, the company was “well prepared to take on opportunities”, and should keep reinvesting in its business.

Other retailers to take a hit on the ASX on Thursday included Bunnings owner Wesfarmers which slumped 3.5 per cent to $68.01 and 4WD accessories firm ARB Corp which tumbled 4.5 per cent to $37.15.

The latest national retail data shows sales volumes fell by more than expected in the March quarter as rising mortgage costs and declining real incomes ate into spending power.

The Australian Bureau of Statistics reported real retail sales dropped 0.4 per cent in the first quarter, a worse result than market expectations for a fall of 0.2 per cent.

Westpac said the pessimism that has dominated the consumer mood for nearly two years now was showing few signs of lifting, with its Consumer Sentiment Index down 2.4 per cent to 82.4 in April.

The latest index read was well below the neutral level of 100, meaning pessimists outnumber optimists.