The Wesfarmers Ltd (ASX: WES) share price closed 2% lower today despite a lift in retail trade figures for August.
Shares in the conglomerate that includes such retail names as Bunnings, K-Mart, and Officeworks finished the session at $43.15 apiece.
The S&P/ASX 200 (ASX: XJO) closed 0.53% lower while the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) was today's third worst performing sector, losing 1.05%.
This is despite the Australian Bureau of Statistics (ABS) reporting a 0.6% increase in seasonally-adjusted retail trade figures today.
Let's cover the highlights from the report.
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What did the report say?
Overall, in-store and online retail sales lifted 0.6% month on month and 19.2% compared to August last year.
However, the ABS attributed most of the rise in retail spending to food-related industries. The Bureau's head of retail statistics Ben Dorber said:
This month's rise was driven by the combined increase in food related industries, with cafes, restaurants and takeaway food services up 1.3 per cent and food retailing up 1.1 per cent. While households continue to spend, non-food industry results were mixed and only contributed a small amount to the total rise in retail turnover.
In further bad news for Wesfarmers' K-Mart and Target businesses, monthly turnover for clothing, footwear, and personal accessory retailing dropped 2.3%.
But on a positive note for its buoyant Bunnings brand, household goods retailing increased by 2.6%.
Some analysts are tipping today's retail figures will spur the Reserve Bank of Australia to lift interest rates another 0.5% next month in its ongoing bid to curb inflation.
More bad news on the horizon
Certainly, consumer spending is widely anticipated to slow which could put further pressure on Wesfarmers shares, as reported by The Australian
A note by Commonwealth Bank of Australia (ASX: CBA) analysts said rate hikes and the end of fuel excise cuts will further contribute to the slowdown in consumer spending.
Analysts said:
We therefore think that retail spending will ease as the full impact of the RBAs rapid rate hikes of 225 basis points eventually feeds through to household balance sheets and the federal government's fuel excise cut ends today, adding further pressure to consumer budgets.
Moody's Analytics associate economist Gabriel Tay also believes rising interest rates could put a damper on sales despite the growth seen in a number of retail segments. He said:
We are only cautiously optimistic about retail sales growth till the end of 2022, as the Reserve Bank of Australia is pursuing the most aggressive monetary tightening cycle in its history to combat inflation.
Wesfarmers share price snapshot
The Wesfarmers share price is down 27% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 13% over the same period.
The company's market capitalisation is around $49 billion.
