The post-election bounce hasn't yet been felt in the retail sector, according to analysts at UBS covering the Australian consumer sector.
The investment bank says it doesn't believe the expected bounced has reached retailers following the return of the Coalition Government to Canberra.
To illustrate the point, analysts Ben Gilbert, Jordan Rogers, Aryan Norozi,Tim Plumbe and Grace Malin used the following chart, footfall, an indicator of the number of people entering stores, in a note to clients:
The advertising industry has been cautiously optimistic of a pickup in business following the federal election as brands return to the market without fear of being overshadowed by political issues.
However, the UBS analysts say there is growing evidence the retail sector -- often a driver of campaigns -- is still subdued.
"Listed retailer updates and our channel checks suggest no change, with housing categories still softer," they write.
"Footfall has seen no noticeable rebound ... business and consumer confidence measures remain soft."
The analysts point to commentary by retailers:
- Wesfarmers: "Have not seen any noticeable change [in trading] post the election." 13 June.
- Target / Kmart: "During 2H, market conditions remained very competitive with increased price investment and higher levels of promo intensity." 13 June.
- Harvey Norman: In the past 10 days sales had picked up slightly after people seemed to stop spending. 28 May.
- Officeworks: “Seeing strong competition in the tech space.” 13 June.
- Bunnings: "Moderated trading conditions are expected to continue." 13 June.
- Officeworks: "Variable trading conditions expected to continue & competitive pressure expected to remain strong." 13 June
- Reject Shop; "Tough trading environment in retail sector … low consumer confidence, flat wages, increase in costs." and "Competitive pricing pressure placed…from both major supermarkets and Department stores." 23 May.
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