The Motley Fool

Low consumer spending hits retailers

The Australian Bureau of Statistics yesterday revealed the latest retail statistics for May, which did little to please investors. Despite seeing an increase of 0.1% in retail turnover for the month, compared to April’s 0.1% fall, a poorer than anticipated result saw a massive market sell-off.

The numbers reflect a poor consumer outlook and hint that confidence in the economy could be decreasing, particularly as the mining industry continues its slowdown. As the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) plummeted 1.86% yesterday, retail companies shares declined following the ABS’s release.

Specialty stores Myer (ASX: MYR) and David Jones (ASX: DJS) fell 2.9% and 1.94%, respectively, whilst Harvey Norman (ASX: HVN) also fell 2.86%. Along with the retailers themselves, property owners also felt the heat with shopping centre operator Westfield Group (ASX: WDC) falling 1.6%.

Whilst the data released by the ABS shows that consumers are currently not so willing to open their wallets, the news does not fare well for Westfield. Over the last 12 months, the company has been forced to cut their rent prices in order for specialty stores to be able to sustain payments. If consumers continue to lose their confidence in the market, then less spending will adversely affect Westfield in the long run.

The data showed increases in sales in department stores, food and other retailing as well as clothing, footwear and personal accessory retailing. These increases were largely offset by falls in cafes, restaurants and food services – which all contribute significantly to consumers attending shopping centres.

Meanwhile, The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now