Aussie Retail Sales Limp Forward in November

In trend terms, Retail Sales in Australia rose 0.1% in November and are up just 1.9% from one year ago. That is the lowest year over year rise in trend retail sales since the abs began compiling data in April 1982. This time last year retail sales were ticking over at more than an 8% annual growth rate.

Although annual general meetings can be rather boring affairs, it is worth reading the Chairman's address to shareholders every November. If like me, you read a few of the retailers addresses during the recent AGM season, there was not much cheer going around and for good reason.

Australian retailers are going to have a tougher 2009 than they did in 2008. As the great deflationary debt unwind continues Australian consumers, like their US counterparts are going to reign in their spending, whilst credit availability is curtailed and unemployment rises.

However, that hasn't stopped a nice rally in the shares of discretionary retail stocks. Whilst the All Ordinaries index is up 16.5% from the intraday low on November 21st, many major retailers are up significantly more. JB Hifi (JBH) is up almost 50% from it's intraday low whilst Harvey Norman (HVN), which has been doing it tougher than most, is still up 27%.


That's some pretty nice gains if you were lucky enough to pick them up close to their respective bottoms. It's natural to feel like you've missed the boat when see gains like these. Especially when more bullish commentary is starting appear in the media. But is that a reason to buy stocks or is it a reason be cautious?

Retail earnings will no doubt disappoint in 2009 as the Australian economy comes under more strain than most economists are currently forecasting. Thus you may just get another chance to buy these stocks at or close to their prior lows.