Early feedback on Christmas spending suggested 2016 was solid but not spectacular for retailers as a group, according to Forsyth Barr broker Suzanne Kinnaird.
The theme appeared consistent across both New Zealand and Australia, the key markets for New Zealand-listed retailers.
Sales looked to have been skewed towards late December, which might result in weaker gross margins for fashion retailers. Anecdotal feedback suggested November was a challenging month across retail, she said.
Online sales continued to show strong growth and had probably extended later than the previous year as delivery times to New Zealand continued to improve.
Weather patterns were less favourable and the extent of discounting had largely been similar to the previous year.
The product cycle - or key Christmas present ideas - was less eventful than the previous year and there were fewer noticeable items that were "must haves".
Early data releases from Statistics New Zealand, Marketview and Paymark showed solid spending growth in New Zealand on the previous year but with some weakness in growth from November to December in seasonally-adjusted terms.
Spending growth was strongest in accommodation, hospitality and hardware. Growth in apparel spending remained modest, Kinnaird said.
December data in Australia had not been released but anecdotal feedback suggested a solid Christmas, but nothing spectacular. December spending was not released until February 6. The Australian Retailers Association predicted sales growth of 2.3 per cent in the six weeks from November 15 to December 24.
The key relevant categories for the New Zealand-listed retailers with Australian exposure were apparel and hospitality, she said. The Australian Retailers Association was forecasting solid growth in both categories. New South Wales was expected to be the strongest state for growth, supportive of Restaurant Brands' acquisition of KFC stores in the state.
Weather patterns in both Australia and New Zealand had been less favourable for retailers through the Christmas trading and holiday period. At best, the weather could be described as volatile.
The slow start to summer in New Zealand was not helpful for retailers wanting to sell products at the start of summer, when margins were typically better.
December was marginally colder than the previous year and January had provided some encouraging signs for Kiwis of summer temperatures actually arriving, Kinnaird said.
Mixed weather had been a feature across Australia and January was starting to show signs of an Australian summer. As in New Zealand, December was modestly colder. More rainfall was also reported in December than in December 2015.
Listed New Zealand retailers would provide various forms of trading updates from January to March and "confession season" started early this year, when The Warehouse Group downgraded before Christmas. Briscoe Group was the most likely to surprise on the positive side during the reporting season.
Briscoe Group had not provided 2017 financial year guidance but it was expected to be another strong year of double-digit profit growth, Ms Kinnaird said.
Early industry data pointed to another strong quarter of sales growth for both Briscoes and Rebel Sport. There was an upside risk to current forecasts and market consensus. Fourth-quarter sales data would be provided to the market on February 7.
Hallenstein Glasson provided a trading update on December 13, highlighting a strong start to 2017 sales, underpinned by a turnaround in Glassons.
Recent industry data suggested the market backdrop remained positive. Weather patterns had not been supportive, with a late start to summer. Forsyth Barr expected a weak result from menswear to be outweighed by strong sales and earnings growth in womenswear, off a weak base.
"While industry growth is modest, results are more likely to be driven by company specific factors in this instance, through better execution of buying after a material personnel change."
A market update was expected late in January, Kinnaird said
Christmas trading was mixed for Michael Hill International. Second-quarter sales were up 4% for Michael Hill stores and 72 per cent for its new brand Emma & Roe. Canada was the standout division, where strong growth was underpinned by same-store sales and margin expansion. Footprint growth offset negative same-store sales in Australasia. No guidance was provided but commentary suggested stable margins in Australasia as Michael Hill resisted competing on price. The company would report its interim result on February 17.
Kathmandu typically released a trading update in early February, before the first-half result in March, Ms Kinnaird said.
Earnings were weighted to the second half, particularly the winter sale, which was still to come.
Guidance was for a flat first-half result. Industry data in New Zealand pointed to an improved trend in the December quarter with surprisingly strong growth expected to be boosted by categories like bikes and motocross.
"Stripping this out, we expect industry growth rates for the core outdoor adventure retailers were more modest but still ahead of the previous six months."
Volatile weather might also have been helpful for Kathmandu.
Restaurant Brands would report its fourth-quarter sales in March and its final results in April. The company was less seasonal than its listed retail sector peers, Kinnaird said.
Industry growth rates remained supportive in both New Zealand and Australia and recent trading was solid.
There was nothing from industry trends or Christmas trading to suggest solid trading would not continue for Restaurant Brand's final quarter.
The company indicated its acquisition in Hawaii would be delayed by about two months and no first-time contribution until the 2018 financial year.
The Warehouse Group
The Warehouse Group had already signalled a disappointing first half after a weaker-than-expected performance before Christmas, largely in the Red Sheds and financial services. First-half guidance was for adjusted reported profit of $38.5 million to $41m, a fall of 15 per cent to 10 per cent.
Given the improvement in spending growth through the latter part of December, the group suggested a result was likely towards the higher end of guidance. The focus of the result on March 9 would be all about more clarity on the new strategy.
"We expect to see an accelerated cost out focus, partly in response to weak recent trading."