There’s no sign of any joy for retailers from the latest sales data from the Australian Bureau of Statistics, which showed a rise of just 0.2% in February. That was down from the unchanged 0.3% rise in January, according to the ABS.
A better guide from the trend series (which attempts to smooth out the month-to-month variations of the seasonally adjusted series) shows sales growing at just 0.1% from December through February.
The news isn’t likely to force a rate cut from the Reserve Bank this afternoon, according to economists quoted by Bloomberg after the data’s release.
Coming after the weak building approvals for February, its clear the economy’s sluggish tone is continuing into 2012. But it will confirm to the RBA that consumers are still being cautious, which is what the central bank wants to see as it prepares to think about rate cuts, possibly in May if there’s not a surprise chop this afternoon.
The ABS said the largest contributor to the rise was other retailing, which showed a sharp 1.8% rise in February. Food retailing (0.3%) and department stores (0.7%) also showed growth. But turnover fell in clothing, footwear and personal accessory retailing (-1.4%), cafes, restaurants and takeaway food services (-0.7%) and household goods retailing (-0.5%).
The ABS said Queensland provided the biggest rise for any state, up 1.5%, followed by Western Australia (1%) and South Australia (0.7%). The Northern Territory was unchanged. Turnover fell in New South Wales (-0.6%), Victoria (-0.4%), the Australian Capital Territory (-0.7%) and Tasmania (-0.1%), the ABS said.
The data helps explain why Metcash, the big grocery retailer and hardware and liquor distributor and retailer, announced a big restructuring today of its basic distribution businesses in Sydney and the write-down of an investment in retailing in Queensland. The cost will be nearly 480 jobs and more than $100 million in impairment write-downs and actual financial charges.
The Campbells Cash and Carry operation, which has serviced corner stores, will disappear into a combination distribution business called Metcash Food and Grocery, combining IGA Distribution, Merchandising, Fresh and Campbells. In Queensland, the company said the write-downs of Cornetts and Walters joint ventures came at a cost of $75-90 million.
“The two joint ventures have been hit hard not only by deflation but also by the environmental and economic difficulties specific to the Queensland market,” Metcash CEO Andrew Reitzer said in a statement. “The series of natural disasters experienced over the past 12 months together with the fact that many of the stores are in tourist areas and tourism numbers have fallen dramatically has particularly hurt these businesses. Both companies have taken on many new stores in recent years and the current trading environment has stifled their ability to develop these stores to acceptable levels of profitability.”
That’s yet another company hit by tough trading conditions in Queensland. So far we have had the likes of QR National, the Bank of Queensland and Stockland revealing tough times in their Queensland businesses because of the floods and heavy rains of the past 18 months and the slow trading conditions.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.