Have you been watching the major retailing stocks make big gains over the past two months? Since the beginning of 2015, Harvey Norman Holdings Limited (ASX: HVN), Super Retail Group Ltd (ASX: SUL) and JB Hi-Fi Limited (ASX: JBH) have risen 31.2%, 26.7% and 9.17%, respectively.
While miners suffered further iron ore price falls and the Brent crude oil price collapse sent ASX oil and gas stocks down, these three retailers have benefited from lower interest rates and cheaper petrol.
They're off to a great start with gains that most investors would be happy to have for a whole year. Still, the Australian economy is starting to see dark clouds on the horizon from weaker exports and the possibility of higher unemployment.
What have these three stock got going on for investors?
— Harvey Norman saw a major increase in franchising earnings due to a solid 5% gain in segment revenue, but also from a big reduction in tactical support to franchisees. Although Australian store half-year sales revenue was up only about 2%, all of the retailer's overseas markets turned in higher same store sales. Basically, all the businesses are pointing up and the sum total means better profits for Gerry Harvey and his store chain.
— Super Retail Group had two of its three divisions, auto retailing and sports retailing, produce strong half-year results, though the leisure retailing had a 1.6% decline in sales. Originally well known for its Supercheap Auto brand stores, now the sports retailing business of Rebel Sports and Amart sports stand almost equal in sales. The recent acquisition of these two strong brands has paid off well.
Associated costs with the retailer's planned exit of its FCO outdoor equipment business, and the restructuring of the Ray's Outdoors business weighed down on the leisure business results. That can be seen as a temporary situation where costs will clear in the short term. Initial strong trade in the second half for the group may indicate improved second-half results.
— JB Hi-Fi showed the weakest half-year results of the three. Previous full-year earnings were solid in financial year 2014, but half-year earnings suffered from weaker PC tablet sales and a big fall in software sales. In the company's January trading update, both sales and comparable sales grew in the high-single digits. JB Hi-Fi projects the second half will make up for a weak first half and deliver full year net profits in line with financial year 2014.
