Citi still sees room for outperformance in Australian retail sector

Harvey Norman Holdings

21/01/2025 18:55

** Citi still sees room for outperformance in Australian retail sector  .AXDJ , expecting a
strong 1H25 for most retailers, with strength expected to continue into 2H25
    ** Brokerage now expects uplift of A$70 bln ($43.93 bln), up from A$55 bln, in household
spending capacity in fiscal 2025
    ** Says uplift driven by income growth continuing to surpass expectations; employee
compensation grew by ~A$80 bln for 12 months to Sept 2024, surpassing Citi estimates of ~A$52
bln
    ** Citi expects smaller increase in spending capacity of A$20 bln in fiscal 2026
    ** Interest rates cuts expected from the middle of the year should further encourage
spending, particularly by mortgage constrained households — Citi
    ** Brokerage prefers JB HI-Fi  JBH.AX , Harvey Norman  HVN.AX , Super Retail  SUL.AX , among
others
    ** Subindex has gained 2% so far this year, underperforming a 3% gain on the benchmark ASX
200 index  .AXJO 

($1 = 1.5936 Australian dollars)

 (Reporting by Nikita Maria Jino in Bengaluru)
 ((Nikita.Jino@thomsonreuters.com))