A summer of discontent


It is proving to be a tale of two summers for the country's retailers.

In the Christmas and New Year periods the likes of footwear, sellers of apparel and outdoor goods have struggled with weather that at times has been more conducive to sitting inside by a fire.

Retailers such as those in food and appliances, however, have had a good time. And jeweller Michael Hill International has just reported a bumper Christmas.

But Michael Hill's news was an exception to the recent trend among sharemarket-listed companies.

Hallenstein Glasson was last week the latest retailer to report difficult trading conditions, saying its after-tax profits for the half-year to February 1 should be between $9.8 million and $10 million, down about 10 per cent on the same period a year ago. These figures reflected a "challenging summer season due to unfavourable weather conditions for apparel".

Industrial and retail investment company Hellaby Holdings had 13 per cent pared off the value of its shares earlier in the week after it reported a "difficult" start to the year and cited disappointing sales at its Hannahs and No1 Shoes stores.

And earlier this month The Warehouse reported its best Christmas for three years, but trading was still below expectations. Demand remained patchy, "with key seasonal categories such as apparel continuing to be very difficult", chief executive Ian Morrice said.

Briscoe Group, which operates the Briscoes Homeware and Rebel Sport chains, is still confident of achieving earnings for the year to the end of January ahead of last year's $25.2 million figure.

But managing director Rod Duke said the weather had made for a challenging summer season. Retailers, he said, looked for the weather to improve from about Labour Day in October onward and if that didn't happen, it caused problems.

"We hate to play the weather card but, when you've got things like snow in the South Island, it is pretty hard to be selling outdoor shirts and shorts at Rebel.

"I'm confident our summer offering was the best we've ever had, but if the elements work against you, you can't get the volumes up. You are fighting against something way too powerful."

Though the weather was now warmer, it would be hard for the apparel and footwear retailers to make up ground, he said. "The further you go into the season you never recover what you lost."

But elsewhere, other retailers have been doing better, Forsyth Barr analyst Guy Hallwright said. "Some people have had a very good Christmas. Consumers have been spending."

Credit card figures compiled by the Reserve Bank back that up. New Zealanders thumped an extra $200 million on to their credit card balances during December.

At the end of the month Kiwis collectively owed $4.83 billion on cards up 6.5 per cent on the amount owed at the same time a year ago.

Statistics New Zealand's retail figures for December will not be released till mid-February, but the recently issued November figures show food retailers having had a good build-up toward Christmas.

November's supermarket sales were up some 8.9 per cent on the same month a year earlier, other food retailing sales rising 13.2 per cent and takeaway food outlets sales jumping 18.5 per cent. Appliance retailers' sales rose 10 per cent.

Before Christmas, the New Zealand Retailers Association predicted overall sales growth of about 5.5 per cent in the Christmas period, compared with the previous year.

Chief executive John Alberson still expects actual growth to be close to that, but much sector-to-sector variation was likely. "I think overall trading has been reasonably good, with the exception of clothing those guys have found it quite tough."

Source : David Hargreaves