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With Christmas around the corner. How are Retail Stocks performing?

IRG

Friday 25th October 2013

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The change in retail sales volume between the 2nd and 3rd quarter of 2013 in New Zealand represents two contrasting stories.

According to Statistics NZ, the New Zealand retail sales grew faster than economists were picking in the second quarter (Apr- June) of the year, led by record gains in the hospitality sector.
The total volume of retail sales rose 1.7 per cent, seasonally adjusted, to $17.94 billion in the three months ended June 30, from a 0.9 per cent pace of growth in the first quarter.

However, New Zealand retail sales volumes unexpectedly fell in the third quarter (Jul-Sep), led by supermarkets and motor vehicles. The volume of retail sales fell 0.4%, seasonally adjusted, in the three months ended September 30, for a 2.1% gain from a year earlier.

Nine of the 15 retail industries had lower sales volumes in the latest quarter. Excluding vehicle-related categories, retail sales volumes were down 0.3%. The value of sales fell 0.8%.
Supermarket and grocery store sales slid 1.5%, accommodation was down 3.2% and motor vehicles and auto parts fell 0.9%. Hardware, building and garden supplies recorded the biggest gain, up 4.2%, which the government statistician says reflects increased sales in Canterbury.
The value of sales in the North Island fell 0.4% in the latest quarter, while South Island sales rose 0.7%.

With festive season around the corner the focus now turns towards the retail industry as companies roll out their strategies and marketing ideas to gain the maximum sale from buyers. NZX listed companies in the retail sector underperformed the ^NZ50 Gross Index. IRG’s research indicates that on an average basis nine of the public listed companies returned 3.4 per cent while the index rose by 8.25 per cent.

Outstanding performers included

•    Pumpkin Patch Limited which increased 35 percent increase,
•    Kathmandu Holding Limited increased 30.36 percent, and
•    Michael Hill International increased 14.06 per cent.

Most disappointing of all was Postie Plus Group whose share price decreased by 35.29 percent over the 3rd quarter of 2013.

Many of these companies will depend on their Christmas sales to boost their bottom line profits and hence it is important for investors who are looking to buy or sell retail stocks to have information on these companies performance and its indicative future outlook.


Briscoe Group (BGR) Current Price: $2.39; Market Cap: $513.7M; PE: 15.93; Div Yield: 4.81%

Performance: The directors of Briscoe Group Limited announce a 12.38% increase in net profit after tax (NPAT) to $14.92 million for the half-year ended 28 July 2013. This compares to last year's $13.28 million half year result. The half-year results are unaudited. The earnings were generated on sales of $217.37 million compared to the $204.73 million generated for the same period last year. On a same store basis the Group's sales for the half year ended 28 July 2013 were 3.67% ahead of the same period last year. The directors have resolved to pay an interim dividend of 4.50 cents per share (cps). This compares to last year's interim dividend of 4.00 cps and represents 65% of the Group's NPAT.

Hallenstein Glasson (HLG) Current Price: $4.95; Market Cap: $295.26M; PE: 15.81; Div Yield: 7.07%

Performance: The directors advise that the audited net profit after tax for the 12 months to 1 August 2013 was $18.669 million, a decrease of -11.18% over the corresponding period last year ($21.020 million). Group sales for the period were $220.117 million, an increase of 2.10% over the corresponding period last year ($215.581 million). Total Group Comprehensive Income for the period was $20.055 million, ($22.259 million). Included in Comprehensive Income is a gain of $1.179 million on revaluation of the Group's property portfolio.

Kirkcaldie & Stains (KRK) Current Price: $2.00; Market cap: $20.43M; PE: -15.63; Div Yield: 0.00%

Performance: The six-month period ended 28 February 2013 continued to provide difficult trading conditions for both the retail and the property operations. The result for the Group showed a pre-tax loss of $741,000 (after tax $531,000) for the six-month period ended 28 February 2013. This compares to a pre-tax profit of $9,000 achieved during the same period last year.

Michael Hill International (MHI) Current Price: $1.48; Market cap: $566.9M; PE: 14.23; Div Yield: 4.39%

Performance: Michael Hill International Limited announced an after tax profit of $40.032m for the twelve months ended 30 June 2013, up 9.6% on the corresponding period last year. Operating revenue of $549.52 M was up 7.4% on same period last year. Final dividend of 4.0 cents per share was up 14.3% taking the total dividend for the year of 6.5 cents up 18.2% from 5.5 cents last year.

Postie Plus Group (PPG) Current Price: $0.115; Market cap: $4.60M; PE: 0.00; Div Yield: 0.00%

Performance: Postie Plus Group Limited confirmed the significant net loss for the 2013 year that it had earlier signaled to the market. Sales revenue was $84.24m, a decrease of 10.5% on the prior year's result of $94.08m. The second half incurred sales of $40.95m, compared with the reported revenue of $43.29m in the first half, highlighting the impact of the distribution difficulties. The operating loss before one off costs was $5.22m. One off cost were $3.09m deferred tax asset written off, write down in inventory of $2.46m and restructuring and relocation costs of $0.88m. The net loss attributable to shareholders after one off costs was $11.65m compared to $0.18m in the prior year.


Pumpkin Patch (PPL) Current Price: $0.96; Market cap: $162.31M; PE: 32.00; Div Yield: 0.00%

Performance: Pumpkin Patch, reported underlying net earnings of $8.5 million for the 12 months ended 31 July 2013, at the upper end of guidance given in June, and that it had returned to profitability. Total revenue from the continuing business operations was $288.7m, down 4.0% on last year. Total Group reported earnings after tax were $5.1m, a turnaround from the $27.5m loss last year. Excluding reorganisation costs and trading losses from discontinued operations underlying net earnings for the year were $8.5m (FY12: $10.1m).

Smiths City Group (SCY) Current Price: $0.63; Market cap: $33.19M; PE: 6.18; Div Yield: 5.56%

Performance: The Directors of Smiths City Group Limited, the Christchurch based retailer, have announced an operating surplus after taxation for the 12 months to 30 April 2013 of $5.4million (last year $4.3million) – an increase of 22.7%. Operating revenues for the 12 months remained static at $222.5million. The Directors have declared an unimputed final year dividend of 2.5cents per share (last year 2.5cents).

The Warehouse Group (WHS) Current Price: $3.72; Market cap: $1,157.65M; PE: 8.00; Div Yield: 5.91%

Performance: The Warehouse (Red Sheds) reported sales for the full year of $1,591.1 million an increase of 4.4% or $67 million compared to last year and up $128 million since FY11. Warehouse Stationery sales were $231.8 million, an increase of 12.2% compared to last year. Noel Leeming's results from continuing operations for the eight months under The Warehouse Group ownership were sales of $390.7 million, Operating profit of $11.0 million and a same store sales growth of 7.0%. During the four months, Torpedo7 Group sales were $24.2 million and EBIT of $0.7M.

Kathmandu Holdings (KMD) Current Price: $3.61; Market cap: $722.78M; PE: 16.36; Div Yield: 2.77%

Performance: Kathmandu Holdings Limited announced earnings before interest and tax (EBIT) of NZ$63.4 million, for the year ended 31 July 2013, an increase of $6.4 million compared with the prior corresponding period. Net profit after tax (NPAT) increased from NZ$34.9 million to NZ$44.2 million for the same period.


Investment Research Group will undertake research on the retail sector.

Watch out this space for further announcement.

Comprehensive Company Analysis from $12.99

Financial Analysis Report from $9.99

Call us on 0800 474 669 or Click Here to request your choice of report on the above mentioned companies.

DISCLAIMER: To the extent that any of the content above constitutes advice, it is general advice that has been prepared without reference to investor’s objectives, financial situation or needs. Before acting on any advice, investors should consider the appropriateness of the advice and IRG recommend that investors should obtain appropriate financial, legal and taxation advice before making any financial investment decision. The report is based on information compiled from public information and private research. IRG have completed the report on a best endeavours basis and do not accept any liability of loss or damage. IRG suggest that clients use this as part of a decision making process and check key data before making any investment decisions.
Employees may have an interest in the securities discussed in this report.

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