The Christmas season is usually a time of joy for retailers. Customers flood stores to find the perfect gifts, filling cash registers in the process. This year, however, the outlook is uncertain. The Australian retail sector has faced tough conditions throughout 2019 and the prospect of Christmas cheer is far from secure.
Sentiment down
According to the Deloitte Retailer' Christmas Survey, only 62% of retailers expect to see higher sales this Christmas compared to last year versus 80% in 2018. Nearly 40% of retailers are expecting some type of margin decrease over the Christmas period.
Discounting remains prevalent, with 39% of retailers planning pre-Christmas discounts to generate sales up from 31% last year. Sales such as Black Friday and Cyber Monday may dilute the impact of the festive season somewhat as consumers shift the timing of purchases.
Numbers up
Despite difficult trading conditions, a number of ASX listed retailers have outperformed this year.
JB Hi Fi Limited (ASX: JBH) reported total sales growth of 4.7% for its JB Hi Fi Australia division in the first quarter of FY20. The electronics retailer expects to make total sales of $7.25 billion in FY20, up from $7.10 billion in FY19. The JB Hi Fi share price has risen more than 75% over the year from $20.42 in early January to over $36 currently.
Breville Group Ltd (ASX: BRG) shares have hit all time highs of above $19 this year. Currently trading at $17.50, Breville shares are up nearly 70% from $10.35 in early January. The Group reported a 17.5% increase in revenue in FY19, up to $760 million. Dividends of 37 cents per share were paid, up 12.1% on FY18.
Kogan.com Ltd (ASX: KGN) reported gross sales of $552.8 million in FY19, up 12% on FY18. Net profit after tax was up 21.9% on the previous year to $17.2 million. The online retailer has seen its share price double over 2019, currently trading at around $7 up from $3.49 in January.
Foolish takeaway
The Christmas spending season is a crucial period for retailers. Some will no doubt fare better than others this festive season, regardless of the quantum of consumer spending. As we progress through the Christmas season, the question is whether JB Hi Fi, Breville, and Kogan can continue to deliver.
