KEY POINTS:
The Christmas sales period could save retailers from a terrible year as household costs fall, but salvation is far from certain.
Hallenstein Glasson and Briscoe Group yesterday posted drops in quarterly sales, as shops continued to feel the effects of a downturn in consumer spending.
The trend prompted
Hallenstein Glasson to warn shareholders that half-year profit would be "considerably below" the previous year's $9.2 million, following a 6.7 per cent dip in first-quarter sales.
Industry bellwether Briscoe meanwhile saw its third-quarter sales plummet 11.16 per cent to $77.8 million.
But it said the 13-week period of this year's third-quarter excluded Labour Day. Adjusting for this, and on a same-store basis, group sales were down 8.13 per cent.
A ray of light was a buoyant October, which augurs well for the Christmas trading period - typically accounting for around a third of the retailer's sales.
Managing director Rod Duke was circumspect.
"Yes, October was way better than probably the five or six prior months, but when you've been knocked around, as this industry has for such a long time, you start to think that one swallow doesn't necessarily mean a lot for summer.
"We're encouraged by it - it might be a sign, but it might not be."
Retail fuel prices and mortgage interest rates, however, were also coming off recent highs, while food price inflation was also slowing.
"All these things, I believe from what I hear around the stores, are quite positive, but the cruel fact is the general public in the suburbs are still hurting."
The period between now and January represented around 30 to 40 per cent of their total annual revenues.
"If summer arrives when it should, if there's more good news than bad news economically, then it won't be too bad. But it's hard predicting the future."
The third-quarter decline was in line with falls experienced in its first and second quarter, and Duke expected profit would be behind last year's second-half net profit result of $11.91 million.
But he expected the result to be closer than the first half's, when profits collapsed by 70 per cent.
Analyst Tim Morris, of Coriolis Research, said retailers were in a "weird period" now after over a year in the doldrums.
"If you look at last year, the economy was slowing, and there was a slowing in retail, but then we had a cracker Christmas, on target almost with previous years. But then all of the money oxygen came out of the retail sector in January, February and March."
Signs of a recovery reversed again when the US economy struck trouble. "I don't think this Christmas is going to be as big as last Christmas in terms of just absolute dollars, let alone any inflation-adjusted dollars.
"I think this Christmas we're going to see people in the middle and upper incomes starting to have some concerns - 'hold on a minute - the value of my house is down, the value of my share portfolio is down. I have some questions about my job therefore maybe I just won't reach quite as deep into the pockets to spend' - all of those things add up," Morris said.
Briscoe Group shares closed up 4c at 84c yesterday. Hallenstein Glasson was down 7c to $2.38.
SALES SLUMP
* Briscoe Group third-quarter sales were down 11.16 per cent - but the 13-week period this year excluded Labour Day trading.
* Adjusting for this, and on a same store basis, sales for the period were 8.13 per cent lower.
* Hallenstein Glasson first-quarter sales were down 6.7 per cent.
* New Zealand sales were down 8 per cent for the three months to October 31, while Australian sales were up 1 per cent.
