Reject Shop Leads Retailers Down in Sydney on Weaker Net OutlookDavid Fickling
The Reject Shop Ltd. fell the most on record in Sydney trading, leading declines among retailers, after Australia’s largest listed discount chain forecast a decline in profit for the first fiscal half.
The Reject Shop dropped 32 percent, the most since a 2004 listing, after saying net income in the six months ended December will fall as much as 17 percent to about A$17 million. Electronics retailer Dick Smith Holdings Ltd. fell 4 percent and Specialty Fashion Group Ltd. sank 2.9 percent as of the close in Sydney trading. Myer Holdings Ltd. and David Jones Ltd. slipped 4.2 percent and 4 percent, respectively.
A slump in Australia’s A$292 billion ($256 billion) retail industry signals that a slowing mining investment boom is still damping growth. Australian employment unexpectedly fell during December, capping the worst annual decline since 1992, while a measure of consumer sentiment this month fell to a six-month low.
“A lot of people got really excited last year that consumer spending would really pick up, but if you look at the macro numbers we’re not seeing that,” Evan Lucas, a market strategist at IG Ltd., said by phone from Melbourne. “We’re still saving rather than spending as a country.”
The Reject Shop said gross margins, the difference between wholesale and retail sale prices, fell in the first fiscal half on discounting and a lack of demand for higher-margin goods, according to a regulatory statement from the Melbourne-based company today.
Super Retail Group Ltd., the country’s second-largest discretionary retailer by market value, suffered its biggest intraday fall since a 2004 listing after it said Jan. 17 that the mining slowdown had hurt its leisure division and discounting hadn’t improved sales.