Market close: Small gain recoups some of sharemarket's March decline

A healthy summer retail period helped boost the Warehouse Group's share price. Photo / Jason Oxenham

The New Zealand sharemarket had a small gain for the second day running. And stock prices, in most cases, are consolidating despite the lowest consumer confidence since the 2008 Global Financial Crisis.

The S&P/NZX 50 Index increased 26.93 points or 0.22 per cent to 12,204.69 after reaching an intraday low of 12,142.87. The index has now declined nearly 6.4 per cent after falling 9.3 per cent this month.

There were 65 gainers and 71 decliners over the whole market on a steady trading day of 37.48 million share transactions worth $155.88m.
The latest Westpac McDermott Miller Consumer Confidence Index fell 7 points in March to a level of 92.1 because of rising prices and Omicron concerns. The survey found that households' financial position has deteriorated as inflation started to bite.

Greg Smith, head of retail with Devon Funds Management, said it was not surprising that consumer confidence has fallen – given the headwinds started at the back end of last year with rising inflation and getting a kick with the Ukraine war.

"Oil, food prices – in fact, everything – have gone up and people are coming off low mortgage rates. Mortgages are a big household expense. Ironically, investor sentiment is quite positive at the moment, and we've seen a lot of companies' share prices under pressure.

"There's now a contrast between consumer and investor sentiment, and the forward-looking sharemarket has already priced in a lot of the bad news this year," said Smith.

Wall Street was weaker overnight as the Federal Reserve chairman Jerome Powell indicated the central bank could be more aggressive in lifting interest rates. The 10-Year US Treasury Note yield rose from 2.14 per cent to 2.24 per cent, and crude oil was back up to nearly $US113 a barrel.

At home, The Warehouse Group rose 13c or 4.39 per cent to $3.09 after telling the market that Christmas and summer trading was strong with record second quarter sales – up 2.8 per cent compared with the previous corresponding period and up 11.2 per cent from the pre-Covid 2020 period.

The big retailer's share price started the year at $4.07 and reached a low of $2.88 on March 15, falling nearly 30 per cent.

The Warehouse reported an 8.2 per cent fall in net profit to $50.44m on revenue of $1.73 billion, down 4.3 per cent, for the six months ending January 31. It is paying an interim dividend of 10c a share on April 26.

Online sales grew 67.8 per cent, making up 19.4 per cent of total revenue and TheMarket.com is on track to exceed $100m in gross transaction value this year.

Smith said: "Here, we have consumer confidence at a low, yet one of the biggest retailers is rising with investors bidding the share price up. The Warehouse has been buffeted by store closures because of Covid but online sales have picked them up."

Fellow retailer Hallenstein Glasson benefitted from The Warehouse's performance, rising 15c or 2.36 per cent to $6.50. All eyes are now on KMD Brands (formerly Kathmandu Holdings) which is reporting its latest financial result.
EBOS Group climbed 99c or 2.58 per cent to $39.30; Fletcher Building was up 9c to $6.49; Auckland International Airport gained 11.5c to $7.73; and Contact Energy rose 13c to $8. Meridian was down 11.5c or 2.23 per cent to $5.035.
Retirement village operators Ryman Healthcare increased 10c to $9.85, while Summerset Group Holdings fell 17c to $11.61.
Skellerup Holdings rebounded a further 5c to $5.89; Infratil posted 13c to $8.05; Scales Corporation was up 14c or 2.82 per cent to $5.10; EROAD rose 22c or 6.06 per cent to $3.85; Harmoney collected 6c or 4.17 per cent to $1.50; and DGL Group gained 7c or 2.22 per cent to $3.22.

Vital Healthcare Property Trust increased 6c or 1.86 per cent to $3.28; My Food Bag recovered 2c or 2.72 per cent to 92c; and Fonterra Shareholders' Fund was up 6c to $3.54.

Mainfreight continues to be volatile, down $1.39 to $79.01; Port of Tauranga lost 7c to $6.03; a2 Milk declined 8c to $5.77; Synlait decreased 7c or 2.06 per cent to $3.33; and Millennium & Copthorne Hotels New Zealand was down 6c or 2.53 per cent to $2.31.
Sky Network Television was down 2c to $2.67. Sky TV is increasing the price of its Sport package by $3 to $34.99 a month from May after securing the rights of the English Premier League soccer and renewing the National Rugby League deal.

Insurer Tower, down 1c to 70c, told the market the cost of claims from the Tongan volcanic eruption and tsunami is expected to reach $7.6m before tax – well below the reinsurance excess of $11.25m and well within the $20m Tower has allowed for large events this year.