Australia’s retail apocalypse has worsened with department store trade plunging as coronavirus threatens to cause the first recession in three decades.
Myer and its South African-owned rival David Jones have seen their profits dive as Australian consumers have also missed out on decent pay rises.
Now the Australia Bureau of Statistics has revealed the extent of the retail malaise with department store trade shrinking in January by 2.2 per cent, following a 3.5 per cent contraction in December.
Department store turnover has shrunk in seven of the past 12 months.
Australia’s retail apocalypse has worsened with department store trade plunging as coronavirus threatens to cause the first recession in three decades. Pictured is Myer’s Hornsby store in Sydney’s north closing down in January 2020
The results were revealed on Friday, a day after Myer revealed its half-year statutory net profit for the six months to January 25 had plunged by 26.9 per cent compared with the same period a year earlier.
It fell from $38.4million to $28.1million, under old lease accounting calculations.
The department store chain’s chief executive John King told the Australian Securities Exchange the coronavirus was disrupting Chinese supply chains.
‘Myer anticipates the challenging macro environment will continue in the second half, and the ongoing impact of the coronavirus on store traffic remains uncertain,’ he said.
CommSec senior economist Ryan Felsman said weak wages were hampering a recovery in department store trade.
‘Certainly what we have seen is consumer caution,’ he told Daily Mail Australia on Friday.
‘The sector’s challenged at the moment as far as the bushfire, smoke haze crisis that we’ve had, now coronavirus.’
Now the Australia Bureau of Statistics has revealed the extent of the retail malaise with department store trade shrinking in January by 2.2 per cent, following a 3.5 per cent contraction in December. Pictured is Myer’s old Hornsby store
Across all sectors, retail trade in Australia fell by 0.3 per cent in January, following a 0.7 per cent decline in December which was the biggest monthly plunge in nine years.
In New South Wales, retail spending in January was 0.3 per cent weaker compared with a year ago, marking the worst annual growth pace in eight years.
Economists at the big four banks – Commonwealth, Westpac, ANZ and NAB – are expecting the Australian economy to shrink in the March quarter.
Another contraction in the June quarter would see Australia fall into recession for the first time since 1991.
ANZ head of economics David Plank is forecasting a contraction in the March quarter and feared the June quarter could be ‘very negative’ as a result of coronavirus.
‘The real question is really more about how long does it extend for and how bad does it get into the middle of the year? The level of uncertainty is enormous,’ he told Daily Mail Australia.
Prime Minister Scott Morrison and his Treasurer Josh Frydenberg are expected to announce a multi-billion dollar stimulus package early next week, which could include wage subsidies to stop bosses from retrenching staff.
Economists at the big four banks – Commonwealth, Westpac, ANZ and NAB – are expecting the Australian economy to shrink in the March quarter as a result of coronavirus. Pictured is a Woolworths store running out of toilet paper
‘We’ll be looking at a series of measures, I’m not confirming one way or another what those measures are today,’ Mr Morrison told reporters in Canberra on Friday.
The Liberal leader praised Queensland’s Labor government for giving small and medium businesses a six-month payroll tax holiday.
‘I commend the Queensland government for what they’ve done on the deferment of payroll tax. That is a good initiative,’ Mr Morrison said.
Mr Felsman said the federal government needed to implement a stimulus package that encouraged businesses to keep employing staff.
‘We need to support for businesses first and foremost so they don’t lay people off and are more confident to invest and spend,’ he said.
The CommSec economist also called for Canberra to subsidise state governments so they could give businesses payroll tax relief.
‘The Queensland government approach is to be applauded,’ Mr Felsman said.
‘Certainly, co-ordinating with the federal government and announcing tax exemptions around payroll taxes would be very helpful.’