Lockdown Reality Bites Traditional Retail

Unlike a year ago when it was clear retailing was doing very well in the rebound from the first wave of the pandemic (and had been doing very well online during the shutdown), this time around it’s a very mixed bag.

Yes, the likes of Temple & Webster (an e-tailer) earlier this week reported a solid start to the 2021-22 financial year in the three months to September, and Kogan (another e-tailer) yesterday also reported a reasonable performance including tidying up a serious overstock position (see separate story). Elsewhere, however, it’s been tough.

And that trading toughness has had more to do with the long lockdowns in Sydney, Melbourne, and also the ACT, and other closures in Brisbane and across the Tasman.

Wednesday’s annual meetings of both Super Retail Group and Adairs revealed a slump in trading due to the long shutdowns in Sydney and Melbourne.

And liquor and hotels group, Endeavour (the spin-off from Woolies) revealed its first quarter had been weak for the same reason and Kogan seems to have repaired its overstocked position.

Regardless of the toughness of the September quarter, investors marked up the shares of the quartet. Super Retail shares rose 1.7% to $13.32, Adairs shares bounced 2.3% to $4.01, Endeavour shares rose 1.2% to $6.79 and Kogan shares were up 6.7% at $11.66.

Super Retail, which runs chains such as SuperCheap Auto and Rebel Sport, told shareholders its group sales fell 12% for the first 16 weeks of the 2022 financial year thanks to the lockdowns.

Discounting the impact of the lockdowns, sales still fell in the quarter compared to the same quarter in 2020.

“If you exclude the major impacted markets of NSW and Victoria, Group like-for-like sales in the first 16 weeks of FY22 were 6 per cent lower than FY21 and 27 per cent higher than FY20,” Super’s CEO Anthony Heraghty said in yesterday’s statement.

“Online sales have increased by 96 per cent and represent 30 per cent of Group sales, year to date. Click & Collect grew by 163 per cent, outpacing home delivery, and represented 59 per cent of online sales during this period,” He added.

Similarly, homewares and fabric retailer Adairs reported an 8.5% drop in sales for the first 16 weeks, driven by a 27.3% fall at the company’s store network.

But its online operation saw a 15% rise and the business’ e-commerce homewares and furniture division, Mocka, saw a leap of 25.8%.

Adairs predicts it has lost between $12 and $15 million in earnings from the lockdowns, but noted the stores that have since reopened in NSW are reporting strong sales, which will hopefully be repeated when Victoria re-opens fully.

Both retailers highlighted significant issues with international shipping and supply chain delays, with Super Retail and Adairs highlighting the crunch could hit margins in the future.

“While store closures in our key markets have made the start of FY22 operationally challenging, the key drivers of our growth remain and are all positively balanced,” Adairs chief executive Mark Ronan said.

And Super Retail’s CEO said the company was delighted with the business’ online growth and resilience during the lockdowns.

“In FY22 year to date, we have maintained steady trading momentum in non-COVID impacted regions and we are confident that we will see a rebound in sales as lockdowns end and stores re-open,” Mr Heraghty said.


Endeavour Group, meanwhile, saw sales slide 0.2% in its stores in the quarter and by more than 9% in its hotels which were hit harder by the lockdowns.

Store sales totalled $2.654 billion for the quarter, down $4 million while hotel sales fell to $282 million from $313 million a year ago.

Total sales across the business fell 1.2% to $2.9 billion for the 14 weeks to October 3,

Endeavour Group CEO, Steve Donohue, said “COVID – 19 continued to impact our trading environment during Q1 F22.

“While Retail trading momentum was sustained across the start of the financial year, our Hotels business was significantly disrupted by the lockdowns in the key states of Victoria and New South Wales. Nationally, approximately 40% of our hotels were closed across the quarter and various trading restrictions were in place across the country. “

“Total online sales were $305 million for the first quarter, an increase of 34.4% on the prior corresponding period and online penetration was 11.5%, which is a new high. A portion of this growth is attributable to the shift to at-home consumption following on-premise closures. Online penetration also grew outside of New South Wales and Victoria.”

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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