Retailers sink on weak sales data: Is there more to come?

Retailers sink on weak May retail data

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published July 5, 2016 4:22 pm AEST

Retail sales data for May was weaker than expected, suggesting that our retailers are struggling – leading to the share prices of a number of retailers heading south.

Data from the Australian Bureau of Statistics (ABS) out today showed that retail sales rose just 0.2% in May, despite a rate cut by the Reserve Bank of Australia (RBA) at the start of the month.

Economists had been expecting a reading of 0.3% – although the data was better than April's gain of just 0.1%.

At the close, several retailers had seen their share prices sink.

Vitamins group Vita Life Sciences Limited (ASX: VSC) was down more than 4% to $1.26
KFC franchisee Collins Foods Ltd (ASX: CKF) saw its share price down 4% to $4.10
Harvey Norman Holdings Limited (ASX: HVN) share price has dropped 3.9% to $4.39
JB Hi-Fi Limited (ASX: JBH) saw its share price fall 3.1% to $23.76
Blackmores Limited (ASX: BKL) saw its share price sink 3.1% to $131.85
Department Store retailer Myer Holdings Ltd (ASX: MYR) share price fell 3% to $1.115
OrotonGroup Limited (ASX: ORL) saw its share price drop 2.8% to $2.10

According to ABS data, amongst the weakest sectors were household goods retailing, and clothing footwear and personal accessory retailing – with the sectors down 1.1% and 1.2% respectively.

Foolish takeaway

Increasing global uncertainty and the Australian Federal election may also have led to weaker consumer spending in retail stores. With Brexit still in the headlines and a period of uncertainty around the outcome of the election may herald further bad news for retailers.

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