Retailer Reporting Sharp Decline In Early June Sales

The Australian is reporting that sales at the department store David Jones were down 10.8% y/y in the week of June 4 to 10 when the RBA raised rates a further 25bp to 4.1%. Some stores are seeing over 20% y/y declines as confidence deteriorates and consumers cut back on discretionary spending in the face of higher rates and cost of living. Online sales fell 4% y/y.

• The retailer has said “We are looking at ways to increase conversion but there is no doubting the trading environment is getting harder as the RBA’s aggressive campaign is certainly biting with consumers.”
• “Many retailers are discounting heavily at the moment and customers have been conditioned to look for bargains at this time of the year.” Discounting to attract customers is likely to impact goods prices in the months ahead but services inflation remains the concern.
• June Westpac consumer confidence continued to be depressed with the June 6 hike particularly weighing on sentiment (see MNI: Consumer Sentiment Depressed, More Nervous On Jobs)