Stores sag as index loses more ground

INVESTOR gloom about the perilous state of the retail sector yesterday sent shares in some of the country's biggest operators to new lows for the year.

By InvestSMART · 30 Dec 2011

By InvestSMART ·
30 Dec 2011

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INVESTOR gloom about the perilous state of the retail sector yesterday sent shares in some of the country's biggest operators to new lows for the year.

Myer slipped 2? to $1.93 while

JB Hi-Fi, once the sector darling due to its focus on electronic games and personal electrical equipment, shed 15? to end at $11.20.

They and the rest of the main players, including David Jones, Premier Investments the group behind Portmans, Just Jeans and Dotti Harvey Norman and Kathmandu, will see out the old year with their stocks much lower than they started.

David Jones, whose share price was steady yesterday at $2.38 but still at the bottom of its 2011 trading range, has halved in value since touching $4.87 in late January. Myer has fared almost as badly, dropping 49 per cent since early February when it was trading at $3.75.

The tough trading conditions arising from lower consumer spending and the growing trend towards online shopping has also hurt mainstream retailers such as Harvey Norman, which is down $1.37 since its 2011 high of $3.22 in January. Yesterday it slipped 0.5? to close at $1.81.

JB Hi-Fi is off almost $9 after touching $20.13 at the end of March.

Shares in Kathmandu, which managed to buck the downward trend until as late as mid-November before it put out a profit warning, have plunged from $2.02 to $1.31 in the past six weeks.

There is also been little respite for Solomon Lew's Premier Investments in the past fortnight as its stock has followed the ASX retail index down, giving up more than 70?. Premier shed another 5? yesterday to close at $4.77, almost $2 below its high for the year in April.

The sector's continuing poor

performance saw four retailers appear in a growing league table of new lows for 2011 by the close of business on the ASX yesterday.

It would have been of little comfort to them to know that another

51 stocks many in the resource sector were in the same table.

Together, they contributed to the S&P/ASX 200 Index losing 17.7 points, or 0.43 per cent, to 4071.1.

It was the second drop in

successive days as anxiety

resurfaced over the scale of debt in the euro zone, leading to a rush into the US dollar in turn, putting downward pressure on commodities and the Australian dollar.

But some investors remain upbeat about the prospects for 2012. Bell Potter senior adviser Stuart Smith said the market was hugely undervalued. "You have the

despondency in the market on one hand that is providing an opportunity on the other," he said.

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Frequently Asked Questions about this Article…

Why did ASX retail stocks fall and what caused the market sell-off?

Investor gloom about the state of the retail sector drove selling, fueled by weaker consumer spending and a shift to online shopping. Broader anxiety about sovereign debt in the euro zone also sparked a rush into the US dollar, which put downward pressure on commodities and the Australian dollar and contributed to the S&P/ASX 200 falling 17.7 points (0.43%) to 4,071.1.

How did Myer shares perform and what should investors note?

Myer slipped to $1.93 (down about 2% on the day reported) and has fared poorly overall, dropping about 49% since early February when it was trading near $3.75. The result highlights the pressure on department-store retailers from weak spending and sector disruption.

What happened to JB Hi‑Fi shares and why does that matter to investors?

JB Hi‑Fi, once a sector favourite for electronics and games, fell to about $11.20 (a roughly 15% decline on the day reported) and is down nearly $9 from its peak of $20.13 at the end of March. The move signals that even previously resilient specialty retailers can be hit hard in a weak retail market.

How has David Jones' share price changed this year?

David Jones was reported steady at $2.38 but has lost about half its value since touching $4.87 in late January, putting it near the bottom of its 2011 trading range and illustrating the severity of the retail downturn.

What impact did a profit warning have on Kathmandu's shares?

Kathmandu, which held up better than some peers until mid‑November, issued a profit warning and its shares plunged from $2.02 to $1.31 over the past six weeks, showing how quickly company‑specific news can accelerate sector declines.

How is Solomon Lew's Premier Investments performing and what are the key figures?

Premier Investments' stock followed the ASX retail index down and dropped further, shedding about 5% to close at $4.77 (reported as almost $2 below its high for the year in April). The company has been under pressure alongside other retail names.

What happened to Harvey Norman shares amid the retail slump?

Harvey Norman was reported as down $1.37 from its 2011 high of $3.22 in January and slipped about 0.5% to close at $1.81 on the day covered, reflecting broader weakness in mainstream retail.

Are there any silver linings or opportunities for investors after the retail sell-off?

Some investors remain upbeat. Bell Potter senior adviser Stuart Smith said the market looked 'hugely undervalued' and that current despondency could present investment opportunities heading into 2012, suggesting some analysts view the sell‑off as a potential buying moment rather than only a warning sign.