Specialty sales and foot traffic data across shopping centres suggest better sales growth in June, Citi analysts shared in a note to investors.
According to the note, specialty sales were up 2 per cent year-on-year, which is the first positive month in the series since January 2023.
The latest news comes following soft fashion and department store sales in May year-on-year as reported by the Australian Bureau of Statistics (ABS). Department stores sales dropped 1.7 per cent in May compared to last year while clothing fell 0.2 per cent.
Overall, ABS retail sales for May grew by 2.1 per cent year-on-year, an improvement on recent months, with April up just 1.2 per cent and March up 1.3 per cent.
Food and liquor led the way, up 3 per cent and 4.1 per cent respectively. Household goods categories are generally showing an improving trend with furniture up 0.8 per cent and hardware up 1.9 per cent. Electrical fell 2.1 per cent though Citi’s industry feedback suggests there has been no deterioration for this category into June.
“ABS May retail sales were slightly better overall but varied significantly across categories,” Citi analysts wrote. “Supermarkets stabilised and we remain optimistic that household goods categories have bottomed.
“High frequency data suggests June has been better overall, though we believe elevated clearance activity, and the colder weather is boosting sales in clothing and department stores.”
Regarding discounting, Citi analysts said industry feedback suggests earlier clearance discounting drove sales across clothing and footwear, particularly in the lead up to end of financial year (EOFY).
They noted that its sales index for clothing is highly correlated to the ABS clothing category. Its sales index shows that conditions improved in June with sales up by 2 per cent - May was down 4 per cent - with foot traffic up 3 per cent following a 2 per cent dive in May.
“The sales index for Footwear is also highly correlated to the ABS Footwear category. Sales were up 1 per cent, well above May (down 5 per cent). Foot traffic was down 2 per cent YoY (May: down 2 per cent).”
Meanwhile, Citi analysts claim web traffic across retail is mixed, with significant deterioration noted at home retailer Temple & Webster - with online traffic there down 3 per cent year-on-year in June compared to being up 16 per cent in May.
However, marketplaces were generally better than prior months, with Amazon growing traffic by 7 per cent year-on-year.
Kogan’s growth improved somewhat but remains weak at 26 per cent, analysts noted.
“Traffic to Adore Beauty declined by 16 per cent YoY in June (data up to 28 June). We have continued to see revenue numbers grow independently of traffic growth as customers migrate to ABY’s own app.
“Web traffic for Kogan was again disappointing, falling by 26 per cent YoY. MyDeal and Catch remain weak with web traffic down 22 per cent and 29 per cent respectively.
“Amazon web traffic grew by 7 per cent YoY in June. While tracking better than May (up 4 per cent growth), its traffic has decelerated from the double-digit growth seen over the past two years.”