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High Aussie dollar a boon for shoppers and retailers

If you’re like me, you’ve had some good fun lately shopping the sales with your Aussie dollars. Camp chairs for $5 at Woolworths? A $200 TV from JB Hi-Fi? Yes, please. Still, consumers aren’t the only ones to benefit from the strong Aussie dollar.

Retailers, travel and the “Australian invasion”

The retailers benefit as well, with their dollars going further in buying relatively cheap goods from China and elsewhere, and then passing on the savings to domestic consumers who snap up the deals. Wesfarmers (ASX: WES), operator of Kmart and Target stores, Woolworths (ASX: WOW), with its Big W stores, JB Hi-Fi (ASX: JBH) and The Reject Shop (ASX: TRS) are all able to benefit from the lower price of imports. This could be good news for sales figures and margins in the near term.

Travel agency Flight Centre (ASX: FLT), which derives roughly half its revenue and profit from the Australian market, should benefit as well as more Australians book trips to take their currency overseas. Today, you can buy £0.68 with A$1 or US$1.05 with A$1, a phenomenon that has led my American family to joke about the “Australian invasion.” (Just in the last few weeks, my parents have reported meeting friendly Australians at the rim of the Grand Canyon and at the base of the Washington Monument.)

The takeaway for investors

With ASX blue chips like Woolworths and Wesfarmers trading for 19.4 times earnings and a hefty 21 times earnings respectively, and Flight Centre at 17 times earnings, the best opportunities for investors may lie elsewhere. The possibility of growth and margin improvement already seems well baked into today’s share prices.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.

 

 

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