Households still reluctant to spend, SNZ figures show

Suzanne Kinnaird
Suzanne Kinnaird
Households remained cautious and continued to restrain their spending on items such as furniture and clothing, ASB economist Christine Leung said yesterday.

Statistics New Zealand's (SNZ) figures showed retail sales using electronic cards fell by a seasonally adjusted 0.2% in February from January, held back from a steeper fall by a 2.5% rise in spending on fuel.

The figures showed the core retail group, which excluded vehicle-related industries, fell 0.6% after a 2.3% rise in January.

Spending using cards on durables fell a seasonally adjusted 2.4%, while spending on apparel dropped 4.9%.

Overall, total sales using electronic cards rose a seasonally adjusted 0.4%, with services up 1.3% and non-retail excluding services up 2%.

The actual value of core retail sales using electronic cards was up 5% in February from a year earlier.

Ms Leung said SNZ was unable to provide an estimate of the effects of the February 22 earthquake given the lack of a regional breakdown.

"Given the earthquake occurred later in February, it is also likely the effects on spending will largely be seen in the March data."

SNZ had decided to discontinue the monthly retail sales.

That meant an accurate picture of the earthquake's impact on the region's spending would be unavailable until the quarterly retail figures were released in mid-May, she said.

Forsyth Barr broker Suzanne Kinnaird said the New Zealand retail environment had improved since the post-2007 slump, but growth remained low and monthly volatility remained high.

The Warehouse Group reports its six-month results today, with Forsyth Barr expecting group earnings before interest, tax, depreciation and amortisation (ebitda) to fall nearly 5% to $98.7 million in the period.

In a post-Christmas trading update, The Warehouse said Christmas trading had been soft.

The same-store sales decline worsened to 3.8% in the two months to January 2.

The ongoing fall in The Warehouse's share of ex-auto retail sales remained a concern for Ms Kinnaird, who did not expect the result today to show any turnaround.

With sales below expectations, inventories would probably be up.

Margins at The Warehouse were expected to be below last year and might come under further pressure through the second half of the year if the New Zealand dollar fell further against the United States currency, she said.

The Warehouse was proactively managing margins and reducing costs.

The improvement in Warehouse Stationery was gathering pace.

With the share price only 6% of valuation, excluding any takeover premium, Forsyth Barr continued to have a hold on the shares, Ms Kinnaird said.

The Warehouse last traded at $3.40.

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