Forecasts prove difficult

Retail sales tumble as shoppers stop spending

WESFARMERS has warned shoppers are cutting back on clothing and other items due to the coronavirus impact.

The Aussie conglomerate, which owns Bunnings, Kmart and Officeworks, yesterday said the uncertainty of the coronavirus meant it could not estimate its impact on full-year financial results.

Sales of discretionary products such as clothing had been weaker in recent days, Wesfarmers said.

Target was particularly affected.

Management expect this pattern to continue, which poses a risk to retail sales across the group.

There would be extra costs in responding to the virus, and in selling goods due to the lower Australian dollar.

The grim picture comes despite some panic-buying of essential items at Bunnings and Officeworks.

There had been significant demand for cleaning and hygiene products, home office equipment and technology, and education supplies, Wesfarmers said. Panic-buying of goods has also fuelled expectations of increased sales at listed supermarkets Coles and Woolworths during the period.

A host of listed companies have withdrawn their earnings outlook this week after the Australian Government tightened restrictions on movement to limit the virus’ spread.

A ban on foreigners entering Australia, and limits on how many people may gather in one place, have changed daily life.

The effects have devastated business, including the education, tourism and hospitality sectors. Wesfarmers’ warning on retail trade came after shopping centre owner Vicinity Centres ditched its earnings guidance for shareholders.

Vicinity owns 59 centres across Australia, including Chatswood Chase in Sydney and Altona Gate in Melbourne.

Chief executive Grant Kelley (left) said retail trade had deteriorated since Vicinity published its interim results in February. Vicinity has also suspended its on-market securities buy-back program.

Rival real estate firm Scentre Group said operations had performed in line with expectations during the early part of 2020 but it was still suspending its previously announced outlook.

Michael Hill Jeweller has been forced to close its stores in Canada for two weeks following government advice there.

Like many businesses, the jeweller has postponed non-essential spending, hiring and travel.