The majority of New Zealand-listed retailers have provided earnings guidance, commentary or sales data ahead of result day, with the devil being in the detail this reporting season.
Forsyth Barr broker Suzanne Kinnaird is expecting a strong retail reporting season, with double-digit profit growth anticipated for four of the six New Zealand-listed retailers.
Kathmandu was expected to be the top performer this season, helped by cycling a weak previous period and a successful execution of strategic changes.
Double-digit profit growth was expected from consistent performers such as Briscoe Group and Restaurant Brands.
"The only exception to the positive retail reporting season will be Hallenstein Glasson [HLG] with a material profit decline."
The retail environment in New Zealand currently supported sales growth, she said.
The sector remained competitive, which could affect those without a competitive advantage, compelling offering or where the product range did not resonate with the consumer.
Of the listed retailers, HLG was expected to be the main underperformer, with its product in Glassons not hitting the mark.
"We expect strong sales momentum from the rest of the listed retailers, despite a late start to winter. We expect a more mixed reporting season for margins, largely reflective of internal execution and pricing power of the various retail models to offset currency conditions as favourable hedging rolls off."
The retail sector in New Zealand was outperforming the sector in Australia, although both were performing well.
Retail was being helped by buoyant tourism, particularly in New Zealand, stimulatory monetary conditions, lower fuel prices, positive consumer sentiment and a strong housing backdrop, Ms Kinnaird said.
Individual retailer performance could differ from industry growth, reflecting competitive dynamics, execution and the strength of the product offering.
Briscoe Group was expected to have gained market share by continuing to outperform peers.
Market share loss was likely for Kathmandu, HLG and The Warehouse Group, continuing a recent theme for the latter two.
Restaurant Brands was feeling the benefits from the recent acquisition of a KFC franchisee in Australia, she said.
Things to look for
The Warehouse Group: Reporting September 16. This will give an opportunity for the examination of the first strategic plans from chief executive Nick Grayson. He has been at the group for nine months, but there has been limited insight on strategic direct. The fresh strategic plan is likely to be shared on result day.
Briscoe Group: Reporting September 19. Divisional detail expected in result, outlook commentary given tougher trading conditions in 2017 and a further step down in its effective NZD/USD exchange rate.
Kathmandu: Reporting September 21. Look for a fall in inventory levels, reflecting a strategic focus, and a corresponding reduction in debt levels. Outlook commentary is expected along with a commentary on the competitive landscape given recent media reports on Macpac’s aggressive expansion plans.
Hallenstein Glasson: Reporting September 23. Menswear likely to outperform womenswear. Looking for commentary on strategy change made at Glassons, outlook commentary and any insight into recent trading.
Restaurant Brands: Reporting October 20. Looking for further insight in Carl’s Jr and store roll-outlet plans, any more detail about expansion plans in Australia and potential timing.
