Retail gloom has dominated company headlines in the New Year. Dick Smith Holdings’ collapse and Woolworths’ decision to exit its troubled home-improvement chain, Masters, shows the damage when retailers get it wrong.
Economic headlines have been just as bad for retail. Rising concerns about China and the rout in global equities, if they persist, will dent consumer confidence and retail sales growth. They could also stop a nascent recovery in retail, evident in better Christmas sales, in its track.
Income growth that will hit a 50-year low in 2016, on Deloitte forecasts, cooling property markets in Sydney and, to a lesser extent, Melbourne will also weigh on the retail sector this year. Pessimists, clearly, have many arguments to avoid cyclical retail stocks.