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Year of woe is nearly over for ailing retailers

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

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

In a sign that 2011 can't end soon enough for the industry, department store chain Myer fell 2? to $1.93, while JB Hi-Fi, once the darling of the sector thanks to its focus on electronic games and personal electrical equipment, shed 15? to end the day at $11.20.

Notwithstanding an unlikely recovery today, they and the rest of the big retailers including David Jones, Premier Investments - the group behind Portmans, Just Jeans and Dotti - Harvey Norman and Kathmandu will finish the year at a much lower level than at the start.

David Jones was unchanged yesterday at $2.38 but is still at the bottom of its 2011 trading range, and has halved in value since touching $4.87 in January. Myer has fared almost as badly, dropping 49 per cent since 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 high for the year of $3.22 in January. It fell 0.5? to close at $1.81 yesterday, while JB Hi-Fi is down almost $9 since the shares touched $20.13 at the end of March.

As for Kathmandu, which had managed to buck the downward trend until November before putting out a profit warning, its shares have plunged from $2.02 to $1.31 in just six weeks.

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

The sector's poor performance has meant that four retailers appeared in a league table of stocks striking new lows for 2011.

The All Ordinaries index closed 18.6 points lower at 4123.1 yesterday, while the benchmark S&P/ASX200 fell 17.7 points to 4071.1. The All Ords is down 14.9 per cent so far in 2011.

It was the second successive day of falls since the market resumed trading after the Christmas break, as doubts resurfaced over the European debt crisis and a rush to the US dollar put downward pressure on commodity prices.

Trading volumes remained low yesterday, just 803 million shares changing hands, about a third of the daily average. Leading the fall were the miners after commodities fell overnight on Wednesday.

But some investors remain upbeat about the prospects for Australian equities in 2012.

The Bell Potter senior adviser Stuart Smith said the market remained hugely undervalued at its current level.

"You have the despondency in the market on one hand that is providing an opportunity on the other," Mr Smith said.


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