by Chris Becker
Stressed retailers are falling back on weather excuses for poor performance, but the underlying meme is an “austere” Budget handed down last month:
From WSJ:
Australian clothing retailer Pacific Brands Ltd. PBG.AU -2.61% downgraded its annual profit guidance Tuesday, blaming unusually warm weather and a slump in consumer confidence due to a tough national budget.
Australian consumer confidence was hit by the announcement in May by the conservative Liberal-National government of an austere national budget that includes tax increases and spending cuts. Retailers also suffered from one of Australia’s warmest falls on record, which discouraged people from buying heavier clothes. Pacific Brands sells underwear and workwear.
And another, a former favourite:
Discount retailer The Reject Shop will fall short of its profit forecast because of weaker sales caused by warm weather and the federal budget.
“The unseasonably warm weather across the country led to a deterioration in sales of winter related departments and ranges during May,” The Reject Shop said.
“Further … it is clear that sales for the balance of May were significantly affected by a drop-off in consumer confidence consistent with generally reported retail conditions during this period.”
Color me sceptical but to call this budget “austere” is a bit rich – but then again, markets move on people’s expectations of what they think will happen and their own personal impact instead of the big picture view.
Will the stacked RBA board be calling for more rate cuts? Or are these pair just out of sync with the rest of the consumer sector which is doing just fine, thanks to rate cuts:
Here’s Pacific Brands (PBG):
And The Reject Shop (TRS):
Both of these charts do not include the open this morning, where PBG has gapped down nearly 12% and TRS down nearly 6%