Australia's retailers: Citi sees strong HY but flags supply chain costs

Harvey Norman Holdings

01/02/2022 03:07

** Citi expects Aussie retailers to post a strong half-year
from pre-pandemic levels, helped by strong housing market,
buoyant savings and continued weak spending in travel
    ** However, it sees rise in COVID-19 cases to impact supply
chain costs for retailers like Coles  COL.AX , Wesfarmers
 WES.AX 
    ** Adds that homemaker centres and standalone stores
favoured over shopping centres, where consumers are assessing a
higher level of COVID transmission risk
    ** Alternatively, supermarkets are likely to be faring far
better on the topline driven by elevated sales at the end of
December and into January - broker
    ** Overall, the brokerage sees trading updates for the
second half of 2022 to be weak for discretionary retailers on
concerns over the high level of COVID cases, but expects the
market to look through this softness
    ** Share prices of Harvey Norman Holdings  HVN.AX , JB Hi-Fi
 JBH.AX , Super Retail  SUL.AX  have declined despite earnings
upgrade
    ** Woolworths  WOW.AX  down 9.4%, WES down 11.1% and COL
down 9.7% YTD, roughly in line with the staples sub-index
 .AXSJ  dropping 9.6%

 (Reporting by Savyata Mishra in Bengaluru)
 ((Savyata.mishra@thomsonreuters.com))