The next two weeks will be “a critical period for Australian retailers” according to equities analysts at Macquarie, with those businesses least impacted by supply chain issues likely to come out of the January trading period in the best shape.
“Shopping mall foot traffic is below prior years. As management teams return from the summer break, we expect a higher-than-normal risk of pre-result trading updates to point toward current post-Christmas softness,” the company wrote in a note to investors.
“Companies with shorter days’ inventory have a higher chance of a negative update.”
Yesterday, Wesfarmers warned investors of the “significant” Omicron impact, as staff absences have resulted in reduced trading hours.
“These issues are expected to persist while Covid-19 cases and the number of team members requiring to isolate remain elevated,” they explained.
The Macquarie analysts note that JB Hi-Fi and Harvey Norman “should be relatively better positioned” than Wesfarmers.
“We note that suppliers and retailers are calling out significant disruption to operations at present. Consumers are also avoiding high foot traffic areas, which is likely to lead to softer-than-expected January trading. We see greater pressure on high turnover, short shelf-life products,” they said.
“An easing of isolation rules and a peaking of infections should take pressure off workers in the supply chain. However, we expect at least another two weeks of disruption across retailers.”
JB Hi-Fi CEO Terry Smart said that of the group’s 13,000 staff, more than a thousand are currently not able to work.
“On some days up to 10 per cent of staff are either isolating or unwell,” Smart explains. “We’re probably representative of the broader population.”
