A number of key data points in the past few weeks have shown that most retailers in New Zealand are going to have a more cheerful Christmas this year, compared to 2012.
For most New Zealand retailers, this approaching Christmas period is key in determining their overall performance for the financial year.
Paymark, which processes the majority of all electronic transactions made in New Zealand, announced that retailers experienced a strong 8.1% lift in transactions in October, compared to October 2012. The percentage increase for the same period last year was only 2.7%.
Statistics NZ also released electronic card transaction data that showed similar strength in retail spending.
Recent company sales data has also been positive. Two listed New Zealand retailers, Briscoes Group and The Warehouse Group which collectively operate more than 300 stores in New Zealand, announced quarterly sales updates for the period ending 27 October 2013. Trading for both retailers was strong during this period, with organic sales growth of 6.2% for the former and 9.0% for the latter compared to same period last year.
However, not all retailers are feeling the Christmas spirit just yet. Hallenstein Glasson announced to the market on Friday that it expects Net profit After Tax for the six months ending 1 Feb 2014 to fall 20% compared to last year. It has seen sales decline 7% for the first 14 weeks of this financial year, particularly attributed to its Glasson’s brand.
Apparel has been one of the weakest performing retail sectors in New Zealand. Other retail sectors, such as hardware and restaurants, are experiencing record high levels of growth. This would suggest that customers are purchasing apparel items; they are just not purchasing them from New Zealand retailers. The larger ranges, lower priced items and the strength of the NZD has made buying from international retailers more attractive.
At this time of year, retailers and analysts have little insight into how the critical Christmas trading period will truly eventuate. Nevertheless, the recent economic and company announcements show that the consumer is spending more in the lead up to Christmas this year, as opposed to last year.
Disclosure of Interest: Milford Asset Management holds shares in The Warehouse Group and Briscoes Group on behalf of clients.