Lending Association

December quarter retail sales data reveals surprising insights

The December quarter retail sales data from the Australian Bureau of Statistics, released on Tuesday, sheds light on why investors warmly received the results and updates from Myer and Nick Scali, the Sydney-based furniture chain.

Myer’s share price surged by 16% as comparable store sales held up against last year’s record performance, with a 0.1% increase. However, on a topline basis, they were down by 3%.

Nick Scali shares soared by 18% as earnings exceeded expectations, reaching $43 million—slightly above the lowered guidance level of $40 to $42 million. More significantly, the December quarter witnessed stronger-than-expected sales growth, contradicting the negative narrative from December’s monthly sales data.

The headline view of December’s retail sales indicated a decline of 2.7% in value terms for the month, reversing the 1.6% Black Friday rise in November and adding to October’s 0.2% dip. However, the quarterly volume data, released on Tuesday, tells a different story, suggesting the potential for stronger-than-forecast sales and earnings among the 30 retailers reporting in the next few weeks, led by JB Hi-Fi on Monday.

According to the Australian Bureau of Statistics figures, retail volumes experienced growth in the three months to December for the first time in five quarters, with a 0.3% increase. This followed a 0.1% decline in the September quarter, a 1.1% drop in the June quarter of the previous year, a 0.6% fall in the first three months of 2022, and a 0.25% decrease in the final quarter of 2022. The last instance of volume growth was in the September quarter of 2022, with a 0.2% increase.

Throughout 2023, sales volumes saw a 1% decrease, a marked improvement compared to the 1.7% decline recorded by the end of the September quarter. While this may not warrant celebration, it indicates that consumers cautiously began opening their wallets in the final months of the previous year, capitalizing on significant price discounts and making substantial purchases.

Notably, the three-month period encompassed the Black Friday sales event in late November and Amazon’s Prime Day sale in October. Although these events occurred in the final quarter of 2022, they saw a decline in volumes. The retail sales figures for the December quarter confirm that demand experienced a slight but significant uplift in the period, compared to the preceding 15 months.