Retail: Australian retail sales +25% in April
About the author:
- Author name:
- By Josephine (Jo) Little
- Job title:
- Senior Analyst
- Date posted:
- 03 June 2021, 10:30 AM
- Sectors Covered:
- Consumer Discretionary (Retail)
- Total Australian retail sales +25% yoy due to cycling of peak-pandemic pcp (-9.1%).
- 2-year annual growth +13.6% (vs Apr-2019) – still very elevated vs a normal 2-year stack.
- All categories reported positive yoy growth in April, except for Hardware. Obviously, those categories most severely impacted by COVID-19 are now exhibiting the strongest growth rates (clothing, footwear, restaurants).
- Online penetration hovering at 9.2% vs 11.1% in pcp (when stores were closed) and 5.8% 2 years ago (Apr-2019).
- Morgans key retail picks: Eagers Automotive (ASX:APE), Lovisa (ASX:LOV) and Universal Store (ASX:UNI).
April retail sales +13.6% vs 2019
Total Australian retail sales (seasonally-adjusted) grew by 25% yoy (+1.1% mom) – extreme levels of growth as we cycle the peak-pandemic pcp (Apr-20 retail sales -9.1%) when most discretionary retailer stores were closed. Compared to April 2019 (2-year growth stack), retail sales are +13.6%.
The May/June data will be far more telling, as more elevated spending patterns start to be cycled for the first time.
Category performance – the winners and the winners
April saw all categories report yoy growth, with the exception of hardware/building/garden supplies.
As we would expect, those impacted most heavily by COVID-19 are now exhibiting the strongest yoy growth rates (eg clothing/footwear/accessories, cafes/takeaway).
However, it’s positive to see electronics, household goods, liquor, food and grocery all reported positive yoy growth despite strong performances in the pcp.
On a 2-year stack basis (vs April 2019), the strongest categories include: Other recreational goods (+37.3%); furniture (+29.8%); liquor (+24.2%); household goods (+24%), electrical/electronics (+22.6%) and hardware (+21.2%).
The weakest (although all nicely positive) include: cafes/restaurants (+6%); department stores (+7.6%) and grocery/food (+9%).
Online sales flat against strong pcp; 9% penetration
Online sales were largely steady yoy, a solid result given the pcp (Apr-20 was +73% due to social distancing requirements and store closures).
Online sales penetration (% of total sales) sat at 9.2% - vs 11.1% in April 2020 and double the 5.8% 2 years prior (Apr-2019).
Morgans key retail stocks
Our preferred retail stocks currently include: Lovisa (global rollout re-commencing boosted by Beeline acquisition, re-opening leverage and improved store economics coming out of COVID-19); Universal Store (strong store economics, material rollout plan and re-opening leverage); and Eagers Automotive (positive consensus earnings momentum, structural cost-out and leverage to demand bouncing strongly off a deep trough).
We also continue to like Adairs and Baby Bunting over the long term.
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