‘We’re just delaying purchases until we have to make them’: Reporting season is well underway

BY MUMBRELLA STAFF

August 15, 2024 10:11

‘We’re just delaying purchases until we have to make them’: Reporting season is well underway

It’s reporting season, and the results so far are showing in which areas Australians are cutting back – and where they’re spending their money.

“So far, they show steady overall performance despite the economic headwinds,” Mumbrella publisher Adam Lang said on the latest Mumbrellacast, speaking of the financial results since so far on the ASX.

“Sectors like mining and banking are strong while there are challenges in retail and technology. BHP and Rio Tinto reported robust profits from continued demand for iron ore. Commonwealth and Westpac showed resilience with strong margins amid the rising interest rates that are present now. Woolworths and Coles showed that they are facing profit margin pressure, and that’s due to increased costs. I think we all know about increased costs of living and shifting consumer spending.”

“So, it’s interesting to see them,” Lang said of the supermarket chains, “because they’ve got such a broad base of stores and online trading that they know how so many consumers are feeling the pressure. And so, to see it come through in their results, I think, is really interesting and probably not a surprise, but good hard data to reinforce what we think is going on.

JB Hi-Fi managed to keep sales flat, but earnings dropped 16%.

“Now, JB Hi-Fi are regarded as, and I think fairly so, an excellent retailer,” Lang said. “And while people contend with higher costs of living, basically, we’re just delaying purchases until we have to make them. That seems to be the impact.

“So, JB Hi-Fi has done well in a tough market. Myer is a classic discretionary retailer, and this data provides real visibility into how Australians are spending during the downturn. And last week, the department store chain flagged that its 2024 sales were expected to be pretty flat for the year, and profit would be down 26%. And that is really courtesy of the challenging consumer and trading environment.”

Nick Scali saw revenue down nearly 8%, and profit falling nearly 19%. “That is a tough result, obviously, but still, some would say it is doing reasonably well,” Lang reasoned.

Interestingly, Temple and Webster revenue jumped 26%, a record in the last financial year.

“They’re a real outlier,” Lang said. “It’s an impressive result. They’ve skillfully crafted an online-only and value-based offer that clearly appeals.

“So, it would seem that, from what they’re saying anecdotally, that consumers are staying at home more, but they still want that home environment to be good pre-COVID to now.

“We’re probably still spending more time at home than we used to. And so, they want that environment to be as nice as possible to live and work.”

Listen to the full episode here.