Barrenjoey consumer analyst Tom Kierath said it was hard to think of when conditions had been tougher for retailers over the past 15 years,with consumers now battling a “cocktail” of higher interest rates,food and fuel costs.
“It’s easy to see why consumer confidence is back to GFC levels. Increasingly,we think[Financial year] 23 will be as difficult as FY19,potentially worse in some categories,” he wrote in a note to clients.
Meanwhile,Macquarie’s equities team placed downgrades on JB Hi-Fi,Harvey Norman and Wesfarmers,predicting “significant pressure on discretionary spending” going forward.
“A rise in inflation increases the cost of staples for consumers,leaving less leftover money to purchase discretionary items. We would expect rising inflation to lower relative demand for discretionary items relative to staple items,” Macquarie’s equities team said.
JB Hi-Fi shares fell 5.7 per cent for the session to $39.31,while Harvey Norman was 5.4 per cent lower to $3.86. Supermarket giant Wesfarmers also weighed down a struggling market,losing 3.8 per cent for the session.
Chief executive of the Australian Retailer’s Association,Paul Zahra,said the entire retail sector had emerged from COVID-19 related lockdowns only to fight even more battles.