1 00:00:00,080 --> 00:00:03,400 Speaker 1: Let's get to markets now. Michael Luke from Milford is 2 00:00:03,440 --> 00:00:03,680 Speaker 1: with us. 3 00:00:03,720 --> 00:00:05,080 Speaker 2: Hello, good evening. 4 00:00:05,280 --> 00:00:07,360 Speaker 1: So retail companies tell us about them that, I mean, 5 00:00:07,520 --> 00:00:09,600 Speaker 1: we all know they've been struggling with the economy the 6 00:00:09,600 --> 00:00:11,080 Speaker 1: way it is. What have you seen out there? 7 00:00:12,000 --> 00:00:13,840 Speaker 2: Yeah, Look, I think it's fair to say a lot 8 00:00:13,840 --> 00:00:16,680 Speaker 2: of our retailers, including the listed ones like the Warehouse 9 00:00:16,680 --> 00:00:18,599 Speaker 2: and camp Mind, have been hit pretty hard over the 10 00:00:18,640 --> 00:00:22,439 Speaker 2: last few years with the weak economy. Retailers that they've 11 00:00:22,480 --> 00:00:25,680 Speaker 2: got very large kind of fixed cost spaces from operating 12 00:00:25,680 --> 00:00:30,360 Speaker 2: these stores, for example, rent, utilities, staffing, that's all fixed. 13 00:00:30,840 --> 00:00:33,400 Speaker 2: So lower sales through the door can have a very large, 14 00:00:33,479 --> 00:00:37,120 Speaker 2: kind of outsized impact on innings. And that's evidence with 15 00:00:37,159 --> 00:00:39,280 Speaker 2: the Warehouse Group, who did over three billion dollars of 16 00:00:39,320 --> 00:00:43,360 Speaker 2: sales last year but actually lost five million dollars of profit. Now, 17 00:00:43,560 --> 00:00:46,519 Speaker 2: recent trading updates we've seen suggest that the retail environment 18 00:00:46,600 --> 00:00:50,559 Speaker 2: still remains challenging. A couple of weeks ago, the Warehouse 19 00:00:50,560 --> 00:00:53,360 Speaker 2: reported their first quarter of sales revenue was up about 20 00:00:53,400 --> 00:00:56,880 Speaker 2: one percent. Within that volume of units sold was actually 21 00:00:56,920 --> 00:01:00,800 Speaker 2: up nearly three percent, but prices were down with activity. 22 00:01:01,520 --> 00:01:04,280 Speaker 2: We also had Hellenstein's they had their AGM today, which 23 00:01:04,360 --> 00:01:07,800 Speaker 2: highlighted an impressive fourteen percent sales growth for the past 24 00:01:07,800 --> 00:01:11,160 Speaker 2: eighteen weeks, but that was led by Australia and they 25 00:01:11,200 --> 00:01:13,160 Speaker 2: called out that trading in New Zealand and still remains 26 00:01:13,240 --> 00:01:16,959 Speaker 2: very challenging, although it was ahead of last year. Now, 27 00:01:17,120 --> 00:01:20,000 Speaker 2: December is a very large month for retailers given Christmas 28 00:01:20,000 --> 00:01:22,800 Speaker 2: and Boxing Day sales, so I'm sure retailers will be 29 00:01:22,840 --> 00:01:25,240 Speaker 2: certainly hoping for an improvement compared to last year. 30 00:01:25,360 --> 00:01:27,959 Speaker 1: Yeah, they absolutely will be. How will company, you know, 31 00:01:28,000 --> 00:01:30,240 Speaker 1: our kres come on the scene the big opening, everyone's 32 00:01:30,280 --> 00:01:32,560 Speaker 1: talking about it. How do you think that companies like 33 00:01:32,600 --> 00:01:35,880 Speaker 1: the Warehouse are going to fear Yeah, we. 34 00:01:35,840 --> 00:01:38,560 Speaker 2: Think it will definitely add more competitive pressure to those 35 00:01:38,600 --> 00:01:41,760 Speaker 2: retailers selling similar products, which does include companies like the 36 00:01:41,800 --> 00:01:45,319 Speaker 2: Warehouse or Camut in the area. I Care has a 37 00:01:45,319 --> 00:01:48,160 Speaker 2: pretty broad range of products, so they could win some 38 00:01:48,240 --> 00:01:50,880 Speaker 2: sales off for a number of different companies, including areas 39 00:01:50,880 --> 00:01:53,600 Speaker 2: like kit set kitchens where they could win some shares 40 00:01:53,640 --> 00:01:57,000 Speaker 2: off a like of Bunnings, et cetera. That I Care 41 00:01:57,040 --> 00:01:59,360 Speaker 2: store had been long awaited by consumers, and it looks 42 00:01:59,440 --> 00:02:02,040 Speaker 2: like the openings gone pretty well. Like we saw off 43 00:02:02,040 --> 00:02:05,280 Speaker 2: the opening of Costco a few years ago. Now some 44 00:02:05,360 --> 00:02:08,640 Speaker 2: companies have actually benefited though, like Mainfreight who helps off 45 00:02:08,639 --> 00:02:11,680 Speaker 2: the logistics, and the ICHA store will bring a lot 46 00:02:11,720 --> 00:02:14,440 Speaker 2: more people to stores in the area like Sylvia Park, 47 00:02:14,680 --> 00:02:17,160 Speaker 2: so some of those stores will benefit as well. 48 00:02:17,280 --> 00:02:21,480 Speaker 1: Let's look ahead, what twenty twenty six better year for retailers? 49 00:02:21,480 --> 00:02:23,000 Speaker 1: Do we think? Better year for the economy? 50 00:02:23,040 --> 00:02:26,680 Speaker 2: More generally, we think so, well, it's been a pretty 51 00:02:26,680 --> 00:02:29,000 Speaker 2: tough few years. We do think the New Zealand economy 52 00:02:29,040 --> 00:02:32,320 Speaker 2: is likely bottomed and we are expecting a gradual recovery 53 00:02:32,360 --> 00:02:35,120 Speaker 2: next year. Now. We expect that's going to be driven 54 00:02:35,120 --> 00:02:37,400 Speaker 2: by the large reduction and interest rates which is flowing 55 00:02:37,400 --> 00:02:41,000 Speaker 2: through to mortgage holders, businesses and boosted confidence and we 56 00:02:41,080 --> 00:02:43,440 Speaker 2: have seen that in some of the recent data. Now 57 00:02:43,520 --> 00:02:47,720 Speaker 2: in November consumer confidence surveys showed they actually lifted to 58 00:02:47,720 --> 00:02:50,800 Speaker 2: the highest level since June. So confidence is starting to 59 00:02:50,840 --> 00:02:53,359 Speaker 2: improve and we're actually starting to see that a little 60 00:02:53,360 --> 00:02:55,520 Speaker 2: bit in some of the spending data, such as am 61 00:02:55,600 --> 00:02:58,720 Speaker 2: Z car data for November which showed that spending was 62 00:02:58,800 --> 00:03:02,440 Speaker 2: up four percent compared to life. Now, given those fixed 63 00:03:02,440 --> 00:03:05,920 Speaker 2: costs with those retail stores, a small improvement in sales 64 00:03:05,919 --> 00:03:09,799 Speaker 2: will definitely help the bottom line next year. So yeah, 65 00:03:09,840 --> 00:03:12,760 Speaker 2: certainly hoping for a better year next year, and we 66 00:03:12,840 --> 00:03:16,000 Speaker 2: do think that regardless of the broad economic backdrop, there 67 00:03:16,000 --> 00:03:19,120 Speaker 2: will be retailers with a compelling consumer proposition like the 68 00:03:19,160 --> 00:03:21,400 Speaker 2: ias that will continue to do well. 69 00:03:21,800 --> 00:03:24,919 Speaker 1: Michael, appreciate that update. Michael Luke Milford with US tonight. 70 00:03:25,240 --> 00:03:27,440 Speaker 2: For more from Heather Duplessy Allen Drive. 71 00:03:27,639 --> 00:03:29,040 Speaker 1: Listen live to news talks. 72 00:03:29,040 --> 00:03:32,240 Speaker 2: It'd be from four pm weekdays, or follow the podcast 73 00:03:32,320 --> 00:03:33,360 Speaker 2: on iHeartRadio.