NZ retail sales unexpectedly drop 1.1% on fuel, cars

Friday 13th March 2009

New Zealand retail sales unexpected fell in January, led by fuel and automobiles, suggesting a rising jobless rate is denting consumer confidence amid the prolonged recession.

Retail sales fell 1.1%, seasonally adjusted, in January, according to Statistics New Zealand. That followed a revised 0.7% decline in December. Economists had expected no change in January sales, according to a Reuters survey.

Retailers have underperformed the NZX 50 Index in the past 12 months, the NZSE Consumer Index falling 38% to the NZX 50's 29% decline. Reserve Bank Governor Alan Bollard yesterday forecast the jobless rate would reach 5.2% this year and peak at 6.8% in early 2010 as the economic downturn forces companies to cut costs and shed workers. Unemployment is currently 4.6%. New Zealand's economy may reach its trough mid-year and begin a slow recover, according to the latest Monetary Policy Statement.

Retail sales fell 3.7% in January from a year earlier, according to today's report.

Warehouse Group, the biggest retailer on the NZX 50 Index, yesterday posted a 24% drop in first-half profit on costs to exit fresh food. Sales fell 2.9% though the company's gross margin widened.

"So long as the prospect of higher unemployment and low consumer confidence remains, the retail environment will continue to be challenging," said chief executive Ian Morrice. The retailer has trimmed costs to "compete vigorously and improve our market share position whilst maintaining margins."

So-called core retail sales, which exclude auto-related items and fuel, rose 0.3% in January after a 0.7% decline in December.

Retail sales dropped for 13 of the 24 store types tracked by the statistician, according to the report. Department store sales fell 2.7% while supermarket and grocery sales rose 1.7%.

Businesswire.co.nz

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