June retail sales gain on autos; department stores weak

Retail sales rose 0.9% in June, seasonally adjusted, after falling 1.1% the previous month, Statistics New Zealand said. Economists expected a 0.2% gain.

Rising petrol prices and more car sales masked weakening in the broader retail sector, with sales at department store falling 8.7% in the latest month, leaving the total ex-auto figure flat. Warehouse Group and rival Briscoe Group are among retailers that have cut profit estimates and discounted goods in the past two months.

Retailers may embark on more discounting in the third quarter, said Shamubeel Eaqub, analyst at Goldman Sachs JBWere. Retailers may have been caught out by the drop in demand, leaving them overstocked.

"It seems plausible to us that a significant inventory liquidation will take place," he said.

The value of stock rose by NZ$246 million, or 4.6% at June 30 from a year earlier, Statistics New Zealand said today. Eleven of 24 store types reported declining sales.

By Jonathan Underhill

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