NZ's Warehouse Group likely to face slow sales trends in 2021 as stimulus reduces - Citi

Warehouse

08/10/2020 20:00

** New Zealand's largest listed retailer The Warehouse Group
 WHS.NZ  on Thursday preannounced FY20 group sales and NPAT
ahead of IBES consensus, which Citi says is a positive
    ** Citi says WHS' sales trends are likely to be very good
near-term but warns that it could slow in 2021 as government
stimulus reduces
    ** "There is still a fair amount of risk around consumer
spending trends in the key January 2021 quarter, when there
won't be any wage subsidy," Citi says 
    ** Citi says WHS' margin improvement in H2 2020 was due to
government support and wage subsidy, and that margins would have
been negative if not for the subsidy
    ** Further, Citi also notes some risk on WHS' dividend,
which the retailer expects to resume early next year, as the
wage subsidy cessation in Oct. is likely to impact consumer
demand in the key Jan. 2021 quarter
    ** Citi retains "neutral" rating on WHS stock and PT of
NZ$2.20
    ** Two of three analysts rate the stock "hold", while one
rates it "buy"; median PT is NZ$2.20 – Refinitiv data
    ** Stock has fallen 21.7% this year, as of last close

 (Reporting by Nikhil Subba in Bengaluru
)
 ((Nikhil.Subba.thomsonreuters.com@reuters.net))