It certainly hasn’t been a great day to be a shareholder of Australian retailers. At lunch a good number of retail shares have fallen significantly after the release of disappointing retail sales data.
According to the Australian Bureau of Statistics, Australian retail sales fell 0.1% in March. With the market expecting a 0.3% increase, this was a big miss and will no doubt be a big concern for retailers.
One notable decline was electrical and electronic goods retailing. Sales fell 0.4% on a seasonally-adjusted basis, which has unsurprisingly put pressure on the shares of electronic product retailers.
The Harvey Norman Holdings Limited (ASX: HVN) share price has been the worst performer in the industry with a 6% drop to $4.03. Rival JB Hi-Fi Limited (ASX: JBH) isn’t far behind with a 4.5% drop to $23.97. Communication and electronics retailer Vita Group Limited (ASX: VTG) has also seen its share price drop 2% to $2.05.
Elsewhere the Greencross Limited (ASX: GXL) share price has fallen 2.5% to $6.54. Whilst Greencross is best known for its veterinary practices, it also has a strong retail presence through its Petbarn pet stores.
Should you invest in these retailers?
Although retail sales have taken a step backwards, hopefully tonight’s Budget will do something to reignite wage growth and encourage consumer spending.
But even if that does happen, I wouldn’t be in a rush to invest in the majority of these retailers.
I think the probable launch of Amazon in Australia later this year is likely to be a major headwind for retailers moving forward and something investors should be watching out for.
Out of all the shares mentioned above, Greencross would be the only one I would consider buying today. I feel it is less likely to be negatively impacted by an Amazon launch.
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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Amazon. Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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