ASX retail shares have slumped in 2022. Could there be more pain to come?

Consumer and business confidence data has dropped today. Here's what it details.

A woman sits with her head down and colourful retail shopping bags all around her.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • ASX retail shares are giving a mixed performance on Tuesday after the release of consumer and business data for January and 2022
  • Various banks have found consumer confidence, particularly around retail, fell significantly in January
  • The outlook for the rest of 2022 is varied, with most concluding COVID-19 will continue to hamper confidence

It's been a tough start to 2022 for many ASX retail shares. Data released today shows just how tough it has been for Australian shops, and also provides mixed forecasts for the future.

The S&P/ASX 200 Consumer Staples Index (ASX: XSJ) has been underperforming the market over the course of 2022 so far, slumping 9%.

For context, the S&P/ASX 200 Index (ASX: XJO) has fallen 5% over that time.

Here's what the future looks like for Australian retailers and, as an extension, ASX retail shares.

Data highlights tough January and mixed outlook

Data detailing how tough January was for retailers has dropped today, and it's not a particularly pretty picture.

The Commonwealth Bank of Australia (ASX: CBA) announced that its Household Spending Intentions (HSI) index fell 10% last month, with retail spending intentions leading the fall with a 20.9% dip.

However, that fall followed a rallying over the previous months, landing retail spending intentions 4.4% higher than in January 2021.

Additionally, CBA noted credit card data highlighted an uptick in consumer spending in early February.

That's potentially juxtaposed with Australia and New Zealand Banking Group Ltd (ASX: ANZ) and Roy Morgan. They found consumer confidence fell 1.9% over the first week of February.  

ANZ head of Australian economics David Plank said the drop in consumer confidence was likely due to anticipation of rising interest rates and Western Australia's bushfire events, COVID-19 outbreak, and continued border closure.

The pendulum also swung for Australian's financial positions. Just 23% of Australians said their families are 'better off' financially than this time last year – representing a 4 point drop. That's compared to 32% who said their families are 'worse off' – a 4 point increase.  

Looking to the future, 35% – 2 points fewer – believe their families will be better off this time next year. On the other side, 21%  – 3 points more – expect they'll be worse off.

Finally, the latest monthly business survey conducted by National Australia Bank Ltd. (ASX: NAB) found business conditions had fallen 5 points in January with profitability, trading conditions, and employment all slipping lower.

Retail was once again among the hardest hit, falling 38 points.

In more positive news, business confidence rose 15 points in January after falling in December.

NAB chief economist Alan Oster said Australia's economy is experiencing "a period of elevated inflation while supply chain issues remain unresolved".

"Overall, the January survey shows significant disruption to business activity from the spread of the Omicron variant, albeit impacts on businesses were less severe than in past outbreaks," said Oster. "However, we continue to expect a strong recovery as case numbers come down."

How are ASX retail shares performing today?

Tuesday's session brings a mixed performance from ASX retail shares.

The Nick Scali Limited (ASX: NCK) share price has fallen 7% while that of Best & Less Group Holdings Ltd (ASX: BST) and Accent Group Ltd (ASX: AX1) are down 4.1% and 1.9% respectively.

Meanwhile, the Super Retail Group Ltd (ASX: SUL) share price is 2.8% higher, while stock in Adairs Ltd (ASX: ADH) and JB Hi Fi Limited (ASX: JBH) is up 1.3% and 0.6% respectively.

For context, the ASX 200 is currently up 0.8% while the All Ordinaries Index (ASX: XAO) has gained 0.7%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended ADAIRS FPO and Super Retail Group Limited. The Motley Fool Australia owns and has recommended ADAIRS FPO and Super Retail Group Limited. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Retail Shares

Woman checking out new laptops.
Retail Shares

Harvey Norman shares see red on ASIC case update

This could put the saga to rest.

Read more »

A man looking at his laptop and thinking.
Retail Shares

Why this investing expert is cashing in some gains on Wesfarmers shares

The ASX 200 stock is up more than 27% over the past 12 months.

Read more »

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Retail Shares

Why today is a big day for Wesfarmers shares

Why is everyone talking about Wesfarmers shares today?

Read more »

Woman checking out new iPads.
Retail Shares

JB Hi-Fi share price lifts off on strong start to FY 2025

JB Hi-Fi held its AGM today and released its first quarter trading update.

Read more »

Two woman shopping and pointing at a bargain opportunity.
Retail Shares

Why I think this ASX 200 stock is a top buy right now

I’m bullish about this stock with global potential.

Read more »

Two happy woman looking at a tablet.
Retail Shares

Guess which ASX All Ords stock just reported a 21% revenue jump

The ASX All Ords stock has had a strong start to the new financial year.

Read more »

a fashionable older woman walks side by side with a stylish younger woman in a street setting as they both smile at something they are talking about.
Retail Shares

Why I'd start buying ASX retail shares now rather than waiting for 2025

Is it time to act before it’s too late?

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Retail Shares

I'd invest $10,000 into these excellent ASX shares for the long-term

I love finding ASX growth shares that have a compelling future with good potential earnings growth. I want to invest…

Read more »