The Australian bushfires are taking a terrible toll on the Australian population, wildlife and landscape. However, amidst all of the chaos, we are coming together as a country.
While many individual, business and large corporate donations have been received from across the globe, Moody’s Analytics estimates that the impact of the fires on the economy will far surpass the $4.4 billion record set by the 2009 Black Saturday fires.
While the impact of the ongoing bushfire crisis on ASX agriculture shares has been widely reported on, there are also a number of ASX retail shares that have been, or are likely to be, impacted by the fires.
Here’s a closer look at 3 such companies and how they have fared so far.
Mosaic Brands Limited (ASX: MOZ)
Mosaic Brands is an Australian retailer that owns a number of household clothing retail brands such as Millers, Rockmans, Noni B, Rivers, Katies and W Lane. Amid already challenging conditions for retailers, Mosaic was one of the first companies in the ASX retail sector to release a trading update regarding the bushfires.
The update noted that their December/January period, considered to be a key trading period, was considerably impacted by the ongoing bushfire tragedy. It noted that 20% of stores were directly impacted and 32% of the company’s stores are located in regional areas where consumer confidence has been particularly fragile.
Mosaic’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the first half of FY20 was up 13% compared to the same period last year. Given the extraordinary factors impacting this first half, the business reports that it is confident in its ability to demonstrate higher growth in the second half.
The Mosaic Brands share price has plummeted more than 23% across the past 5 days in light of the company’s exposure to the bushfire crisis and as investors digest the retailer’s latest update.
Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW)
With the figure continuing to rise, it is estimated the bushfires have burnt through 10.7 million hectares of land – including prime farmland where seasonal produce crops were growing and livestock were grazing.
This devastation will result in reduced supply of these goods to all retailers, including major supermarkets such as Coles and Woolworths. Usually, reduced supply would result in a retailer increasing prices, however, Coles and Woolworths have both come under intense government pressure to pass on the expected price hikes of fresh produce, milk and red meat to the farmers.
Additionally, the recent closure of the Eyre Highway for 12 days prevented the transport of goods between the eastern and western states, adding to supply issues. If the reduced supply of goods can’t be fully offset by increased prices, these supermarket retailers could see some margin pressure during the period.
Thus far, neither supermarket giant has seen negative share price movement as a result of this anticipated impact. In fact, at the time of writing today both Coles and Woolworths shares are up 0.44% and 1.09%, respectively. Both shares will be worth watching as the ongoing crisis unfolds.
The big picture
Ultimately, the safety and wellbeing of communities, wildlife and the environment is the most important thing. But financial stress can also be a very real cause of anxiety – in the best of times, let alone in times such as this. In my opinion, a portfolio of high quality, well diversified stocks and ETFs is a great way to give you choices and help reduce your financial stress.
Additionally, if you aren’t directly impacted by the fires, you may have the time or the financial freedom to volunteer or to donate. If you can, I would urge you to do both.
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Motley Fool contributor Lloyd Prout has no position in any of the stocks mentioned and expresses his own opinions. 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.