Retail: Australian retail sales +25% in April

About the author:

Josephine (Jo) Little
Author name:
By Josephine (Jo) Little
Job title:
Former 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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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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