Aussie retailers' labour costs to soar after minimum wage hike - UBS

Harvey Norman Holdings

02/06/2023 05:22

** Australian retailers will feel the pressure on costs
after the country's Fair Work Commission (FWC) hiked national
minimum wage, says UBS
    ** "All retailers in Australia will face an increase in
labour costs greater than historical levels and at a scale that
we believe many will find it difficult to offset" - UBS
    ** FWC hikes minimum wage by 5.75%, taking it to A$23.23 an
hour from July 1, adding the hike will not have "discernible
macro-economic effects"
    ** UBS says risks to retail industry EBIT margins is skewed
to the downside
    ** Brokerage says Woolworths  WOW.AX , Wesfarmers  WES.AX 
and Coles Group  COL.AX  are comparatively better-positioned due
to low labour costs or cost-saving programmes
    ** Premier Investments  PMV.AX , Accent Group  AX1.AX ,
Universal Store Holdings  UNI.AX , Lovisa Holdings  LOV.AX ,
Harvey Norman  HVN.AX , and JB Hi-Fi  JBH.AX  are comparatively
worse-positioned
    ** LOV, PMV, UNI spend between 20% and 30% of their sales on
labour costs
    

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))