WHEN reporting season kicks off next week, watch out for a nice little boost in the final-quarter sales figures for retail stocks, including Woolworths, Coles, David Jones, Myer and Harvey Norman.
Woolworths and Coles released their full-year sales results last week, which gave a taste of the benefits of the $2.8 billion government handout.
But the latest ABS retail figures for June show that sales rose more than expected due to the compensation package to families for the carbon tax.
While Woolworths was keen to leave politics out and attribute the rise in sales to other factors, it is hard to get past the fact that the fourth-quarter sales were up strongly, particularly in hotels, liquor and Big W.
In terms of hotel sales growth, comparable gaming sales were up 0.8 per cent in the fourth quarter, compared with negative 0.6 per cent in the third quarter and 1.3 per cent and 1.4 per cent in the first and second quarter. The lift in spending is also being felt in online retail, with NAB's online retail sales index showing a recovery in June. The figures show that in June 2012, the index rose to 189 points, up marginally from a previous 187.
In dollar terms, online spending grew by about 19 per cent year-on-year in June 2012. The report shows a significant strengthening compared with the previous two months, which were up 14 per cent and 15 per cent in April and May. Despite this recovery, the growth rate for online retail sales
remains considerably lower than from a year earlier, which was up 32 per cent.
It means that companies, including Harvey Norman, David Jones and Myer, will benefit from the government handouts, which started trickling out in late May.
But once the stimulus package runs out and it will in the next month or so what then for retail? Stocks have been battered in the past 18 months as consumer spending declined in many areas and spending has switched online.
The most fascinating thing about the profit season will be the outlook statements for companies, not just in retail but all sectors of the economy.
If recent history is any guide, more companies will squib from making an outlook statement but investors should start pressuring them that this is not good enough in the spirit of transparency.