Australian retailers to benefit from elevated inflation - Citi

Harvey Norman Holdings

01/08/2022 05:58

** Citi Research expects Australian retailers to report
accelerating life-for-like sales growth into FY23, driven by
mid- to high-single-digit inflation 
    ** Upgrades FY23 estimates for Woolworths  WOW.AX  and Coles
 COL.AX  by 3% and 4%, respectively, and reaffirms "buy" ratings
on both of them
    ** Shares of WOW and COL were up as much as 1.5% and 1%,
respectively
    ** Citi raises WOW PT by 6% to A$42.50 and COL PT by 9% to
A$21.00
    ** "While the supermarkets have outperformed in recent
months and are well-held, we expect earnings upgrades could
drive them further towards our revised target prices," Citi says
    ** Says consumers are collectively in far better shape than
market is giving them credit 
    ** Adds that elevated inflation is likely to persist for at
least next six to 12 months 
    ** Also retains "buy" rating for Super Retail  SUL.AX , JB
Hi-Fi  JBH.AX , Harvey Norman  HVN.AX  and Premier Investments
 PMV.AX  
    ** WOW down 1.3% this year, as of last close; COL up 4.5%
this year, as of last close
    
    

 (Reporting by Harish Sridharan in Bengaluru)
 ((Harish.Sridharan@thomsonreuters.com;))