Retail sales increased by 1.2% in the three months ended
December, considerably weaker than the 2.5% growth expected
Statistics New Zealand figures showed the quarterly growth
gave an annual lift of 3.7% for retail sales. Excluding auto
sales, annual growth was 3.5%.
ASB economist Daniel Smith said the spending figures were at
odds with a host of other drivers and indicators of consumer
spending. The outlook for spending this year remained
''Looking at the areas of weakness in the fourth quarter only
increases the sense of bafflement. Supermarket sales volumes,
the largest individual part of the survey, fell by 0.5% in
the quarter - the second quarter of declining sales in this
Compared to December 2012, supermarket sales were up just
0.5%, despite an increase of 4.5% in electronic card spending
on consumables and net inwards of migration of 22,500 over
the year. Mr Smith said population growth was a key driver of
spending in the category.
Non-store and commission-based sales volumes, which included
sales at online retailers, had been a key growth area in the
survey in the last couple of years - growth was at 18% over
the year to September. But sales fell by 10% in the fourth
quarter, a perplexing result, he said.
''As the structure of this sector is changing rapidly there
may have been changes within the sample, but no explanation
is given by Statistics NZ.''
The other area of weakness was also quite surprising, Mr
Accommodation sales fell by 2.4% in the quarter, the second
successive quarter of weak sales in the category.
Year-on-year declining growth now stood at -2.4%. During
2013, overseas visitor numbers were strong, including the
fourth quarter, and guest nights were about 1.3% higher in
the quarter than in the previous quarter, according to the
ASB seasonally-adjusted estimates.
Other areas were also weaker than expected, particularly food
and beverage services which fell by 0.9% in the quarter.
There were two areas of outsized strength, he said.
Recreational goods were up 8.6% in the quarter and clothing
was up nearly 10% after being one of the weakest sectors
within the survey over the past couple of years.
In terms of retail prices, the survey pointed to continued
subdued price pressures. The strong dollar had kept the cost
of imported goods down, Mr Smith said.
Forsyth Barr broker Suzanne Kinnaird maintained a
''cautiously positive'' view on the listed retail sector.
Her preferred picks in the retail sector were Kathmandu and
Michael Hill International, both with an outperform rating.
Forsyth Barr had a positive view on the outlook with growth
driven by increased store numbers, a pick-up in consumer
demand and, for Michael Hill, its jewellery care plans.
Ms Kinnaird also had an outperform rating on Pumpkin Patch
and Hallenstein Glasson but had a high risk rating on both
companies to reflect the near-term risks involved.
Briscoe Group was rated neutral, as the company seemed fully
''Our rating on The Warehouse, which has yet to demonstrate
material positive returns from its major store reinvestment
programme, is underperform.''