Growing fears Aussies will stop spending as retail stocks drop
A number of major retailers suffered share price drops this week, reflecting fears that stagnant interest rates will force consumers to stop discretionary spending.
The stock exodus was prompted by JB Hi-Fi posting a modest 0.1% sales drop for the March quarter. Its shares tanked by 5.2% on Thursday, which saw other big box retailers fall, with Harvey Norman dropping 3.8%, Nick Scali down 4.5%, Super Retail Group down 5.5%, Temple & Wester dropping 18%, and Baby Bunting suffering a dramatic 23% drop.
The entire consumer discretionary index on the ASX dropped by 2.5% yesterday, while the Australian Bureau of Statistics noted that retail sales have dropped in five of the last six quarters.
“We believe there is clear evidence emerging of softening trade across discretionary,” Jarden Australia told its investors yesterday, which they say is. “consistent with Westpac data.”
Fear & Greed’s Sean Aylmer noted the disconnect between these spreading trends and the fact the business sections of Qantas planes are full again.
“What’s happening is there’s a two-speed consumer pattern emerging in the economy,” he said on this morning’s podcast.
“Those with mortgages or rental accommodation are feeling it. But the older, and wealthier, seem to be in pretty good shape. Catriona Burns from Wilson Asset Manager called it a ‘mixed consumer’ with older generations fairing much better than younger generation.
“It does make it tricky for the RBA because on the one hand there’s big parts of the population struggling to make ends meets. On the other hands there’s another large segment spending fairly freely.”
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Nathan Jolly is the Deputy Editor of Mumbrella. He joined the team in July, 2023.
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Wasn’t this outcome obvious to everyone with basic logic?
The RBA wanted people to spend less.
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Sounds like the rate rises are working then.
Goodo.
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