Australia: Lift in retail sale numbers - Westpac

Australian retailers reported a better month for sales in Feb with a gain of 0.6% overall and Jan’s 0.1% rise nudged up to 0.2%, notes Matthew Hassan, Research Analyst at Westpac.

Key Quotes

“Markets had been expecting a 0.3% rise. Annual growth in nominal sales lifted to 3%yr, the strongest pace since July last year.”

“The detail was mostly positive as well with the Feb gain led by solid rises in ‘discretionary’ store types. Retail ex basic food was up 0.8%mth on a combined basis with solid gains for department stores (+1.5%), clothing (+1.1%) and household goods (+1.1%mth) – categories that had struggled through Dec-Jan.”

“The business size detail shows a better month for small retailers, sales up 0.5%mth but still down 1.9%yr.”

“By channel, online sales again look to have posted a strong month (we estimate up over 5%mth in seasonally adjusted terms, and up 44%yr). The online share of total retail continues to rise strongly, up 1.5ppts over the last year to 5.5%. The entry of new competitors, most notably Amazon Australia, has undoubtedly accelerated this shift.”

“Overall, the Feb update presents a more positive picture than the soft reads through Dec-Jan, possibly reflecting some relaxation in price competition as much as a firming in demand. That said, retail conditions are still far from ebullient with sales tracking towards a 0.7-0.8% gain for the quarter as a whole, a step down on the solid 1.1%qtr rise in the December quarter and a continuation of the sub-3% annual growth pace. The long run average for retail is closer to 5%yr.”