Our market has slipped deeper into the red during lunch and the weaker-than-expected retail turnover data is not helping sentiment.
What the latest retail number for May from the Australian Bureau of Statistics shows is that the federal budget has done little to support the consumer sector.
Shares in furniture and electrical retailer Harvey Norman Holdings Limited (ASX: HVN) led falls in the sector with a 3% crash to $4.52 as the company is seen to be one of the biggest beneficiaries from Joe Hockey's small business stimulus package that was announced as part of the federal budget on May 12.
Fellow retailer Dick Smith Holdings Ltd (ASX: DSH) is not far behind with a 2.9% drop to $2.04 while JB Hi-Fi Limited (ASX: JBH) fell 1.1% to $19.60 during lunch time trade.
Small business owners didn't rush out to spend with seasonally adjusted retail turnover rising 0.3% for May compared with economists' forecast for a 0.5% rise following a 0.1% fall in April.
It was household goods and food retailing that contributed the most of the May rise at 0.9% and 0.7%, respectively, but shoppers shunned department stores with sales in that category falling 1.4% for the month.
That's not good news for the likes of Myer Holdings Ltd (ASX: MYR) although its share price managed to hold at breakeven today at $1.27. Given that the stock is trading close to record lows, this bad news is already factored into its share price.
Further, the stock could be supported by rumours that Myer is a takeover target as reported by my colleague Andrew Mudie.
However, I think it's a mistake to dump electronic retailers on the back of the data as I am expecting sales to improve in June as businesses are more likely to spend in the last month due to the end of the financial year rush than in May.
This is particularly so for JB Hi-Fi even though some analysts believe the stock is looking expensive after its 24% rise since January.
But the stock is trading on a current year forecast price-earnings multiple of 14x and has a yield that's close to 7% if franking credits are included. I think the stock represents reasonable value given its track record and I would be a buyer on dips.
On the other hand, I am not too keen on Dick Smith as I am not a believer in the small electronic store format as the limited floor space means they have to be extra careful in picking the right products, while Harvey Norman is a good stock at the wrong price for me.
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