UBS economists have warned investors that the Australian retail sector will remain vulnerable over the coming months, as consumers continue to battle interest rates, inflation, and a looming recession.
“With equity prices, earnings estimates and valuations still to yet to adjust to what could be in store over coming months, we conclude that sectors of the market exposed to the domestic consumer will remain on the back foot over coming months,” says UBS Australia equity strategist, Richard Schellbach.
“The ability to gauge what is ‘trend’ or ‘mid-cycle’ have been compromised by the Covid years where consumer preferences changed, and business models saw structural shifts in cost bases and supply chains,” he says.
Schellbach also added ‘Super Retail Group’ to his list of ‘least preferred’ stock.
