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Weak Australia retail data hits JB Hi-Fi share price

The JB Hi-Fi Limited (ASX: JBH) share price has dropped over 2% today after the release of the latest retail data from the Australian Bureau of Statistics (ABS).

According to the ABS, seasonally adjusted sales rose by 0.2% after a 0.4% increase in August 2019.

There was a fairly even split across various sectors that saw growth. Food retailing saw growth of 0.2%, ‘other retailing’ grew 0.3%, household goods retailing grew 0.2%, clothing, footwear and personal accessory retailing rose 0.4% and department stores experienced growth of 0.2%. However, cafes, restaurants and takeaway services saw a decline of 0.1%.

Looking at the split of growth in the states and territories is quite interesting. NSW, Victoria, South Australia and Queensland only saw growth of 0.1%. Tasmania and the ACT experienced growth of 0.4% and WA somehow achieved sales growth of 0.5%. Northern Territory sales were flat.

In volume terms, Australian turnover was essentially flat according to the ABS.

These numbers say to me that the Australian economy is still looking quite sluggish even with rising house prices and tax cuts. If population growth was 0%, would these retail numbers show declines?

It’s probably unfair of investors to punish JB Hi-Fi’s shares more than any other company when the electronics retailer has proven to be quite resilient through the last year of uncertainty. Perhaps the share price had gotten a bit too ahead of itself.

Foolish takeaway

I don’t think that there are many retailers out there worth owning in a portfolio for the long-term unless it has a truly excellent brand with good economics.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.

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