Figures paint bleak Christmas picture
Figures released by the Bureau of Statistics on Wednesday revealed national retail sales fell 0.2 per cent in December to a seasonally adjusted $21.42 billion.
For the December quarter sales were limp, gaining only 0.1 per cent to $63.74 billion in seasonally adjusted terms.
Within the retail sector there was a divergence of performance. Clothing, footwear and personal accessories proved resilient, rising 2.1 per cent in December, but department store sales were near flat at 0.8 per cent with sales of household goods also up 0.8 per cent.
The weakest sales, and a surprise to some economists, were in the "other" segment (down 2.8 per cent) which includes cosmetics, newspapers and books, while sales at cafes, restaurants and takeaway food outlets fell 1.1 per cent in December.
Further evidence of a lacklustre Christmas trading period - for many retailers the most important time of the year - will emerge in coming weeks as companies report their profit results.
Retailers such as Wesfarmers, Woolworths, Harvey Norman and department store owners Myer and David Jones will update investors on Christmas and the December half soon, with some already reporting flat sales for the holiday season.
Releasing second-quarter sales last week, Wesfarmers managing director Richard Goyder commented: "I wouldn't say it was a booming Christmas but it was a reasonably good Christmas."
Coles posted same-store, or comparable, food and liquor sales growth of 3.9 per cent for the second quarter (which takes in Christmas) while rival Woolworths said its flagship food and liquor business posted a 2.5 per cent increase in second-quarter same-store sales.
The latest national figures from the Bureau of Statistics paint a bleaker picture. Nominal retail sales fell 0.2 per cent in December, which was weaker than expectations (the market consensus was for a 0.3 per cent gain). Retail sales in December were lower than three months prior and in trend terms, monthly retail sales fell slightly for the first time since 2000.
ANZ head of Australian economics Justin Fabo called the figures a "soft outcome" but said most analysts already knew total retail spending was weak, with data ignoring overseas expenditure on holidays or offshore online purchases.
"Retail accounts for around 30 per cent of household consumption and it's the weakest part and has been for the last year or two," he said. "The trajectory of retail sales [from December] was not very favourable moving into this year despite some of the anecdotes being a bit more positive."
St George Bank economist Janu Chan said it seemed it wasn't a good Christmas for retailers.
However, she said, other parts of the economy within retail services were stronger.
Frequently Asked Questions about this Article…
The ABS said national retail sales fell 0.2% in December to a seasonally adjusted $21.42 billion, marking the third consecutive monthly drop in retail spending.
For the December quarter, seasonally adjusted retail sales rose just 0.1% to $63.74 billion. Analysts flagged the broader trend as important because monthly retail sales fell slightly in trend terms for the first time since 2000, signalling a potentially weaker consumer backdrop as the year starts.
Clothing, footwear and personal accessories were resilient (up 2.1% in December). Department stores and household goods each rose 0.8%. The weakest area was the 'other' segment (down 2.8%) — which includes cosmetics, newspapers and books — while cafes, restaurants and takeaway food outlets fell 1.1%.
The figures suggest a softer Christmas trading period that will be reflected in upcoming profit updates. Some groups have already reported flat holiday sales. Coles and Woolworths reported stronger food-and-liquor comparable sales for the second quarter (Coles +3.9%, Woolworths +2.5%), while Wesfarmers described the season as 'reasonably good' but not booming.
ANZ's head of Australian economics called the numbers a 'soft outcome' because total retail spending was weak and the ABS data excludes overseas holiday spending and offshore online purchases. Analysts also note retail makes up about 30% of household consumption, so weakness here matters for the wider economy.
Yes — supermarket food and liquor divisions reported stronger comparable sales for the second quarter: Coles posted 3.9% same-store growth and Woolworths 2.5%, which contrasts with the weaker headline national retail numbers.
Retail companies such as Wesfarmers, Woolworths, Coles, Harvey Norman, Myer and David Jones will disclose December-half and Christmas trading details in coming weeks. Those profit results will reveal whether the weaker national retail numbers translated into flat or weaker earnings for specific retailers.
The key takeaway is that overall retail spending looked lacklustre heading into the new year, but performance varied by sector. Everyday investors should watch upcoming company trading updates and profit results for clearer signals, and remember the ABS retail figures exclude offshore and holiday spending that can affect consumer behaviour.
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