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JB Hi-Fi, Harvey Norman Tipped To Avoid Spending Slowdown

Australian consumers are tipped to slow their retail spending by November, with customers of JB Hi-Fi and Harvey Norman likely to be the exception to the rule.

A new report from analysts at UBS on the retail and consumer sector warns the combination of falling house prices, climbing interest rates, and the full fuel excise returning will soon begin to hamper the elevated levels of retail spending.

“We fear a slowdown in spending from November onwards, with the fuel excise and cumulative impact of the rising cost of living, key factors,” the report reads.

Conversely, high income earners ($120,000+) are expected to accelerate their spending, aided by income and savings, which UBS analyst Shaun Cousins will favour the likes of Treasury Wine Estates and Harvey Norman, who target the affluent shopper.

Younger consumers who shop at JB Hi-Fi, and are generally price-insensitive, are also expected to spend throughout the downturn

KMD Brands, parent company for Kathmandu and Rip Curl is another retailer hoping to buck the trend. The company this morning reported a 40 per cent slide in full-year net profit, to A$32.77,off the back of lockdowns and travel restrictions.

August group sales were up 44.2 per cent on the same time last year, showing that an upcoming summer spent outdoors, with international and interstate travel back on the cards, may help the company reverse last year’s fortunes.

β€œThe Australian consumer is facing significant headwinds from the rising cost of living across energy, food, fuel and interest rates, with house prices falling,” Cousins writes.

“These headwinds have yet to weigh on spending with the strong labour market – low unemployment and rising wages despite falling purchasing power – and elevated recent household savings key supports as the consumer returns to traditional spending patterns and engages in catch-up spend after difficult years with COVID.”

Even if Australian retail avoids this downturn in spending until after Christmas, UBS warn spending will slow from February onwards, “as the rising cost of living headwinds bite.”

 



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