WHEN the 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 full-year sales results last week that give a taste of the benefits of the $2.8 billion government handout. But the latest Bureau of Statistics retail figures for June show sales rose more than expected due to the compensation package to families for the carbon tax.
Woolworths was keen to leave politics out of its result and attribute the rise to other factors, but it is hard to get past the fact that the fourth-quarter sales were up strongly, particularly in hotels, liquor and at 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 quarters.
The spending lift is also being felt online, with NAB's online retail sales index showing a recovery in June as the index rose to 189 points, up marginally from a previous 187.
In dollar terms, online spending grew about 19 per cent year-on-year in June, which was a significant strengthening compared with the previous two months - up 14 per cent in April and 15 per cent in May. Despite this recovery, growth in online retail sales remains lower than a year earlier, when it was up 32 per cent.
It means 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 - in the next month or so - what then? Retail stocks have been battered in the past 18 months as consumer spending has declined in many areas and switched to online.
The fascination of the profit season will be not only the outlook statements for retail companies but also the whole economy. Many companies may avoid an outlook statement but investors should make it clear that is not good enough.