Victoria’s stage 4 lockdown rules come into place tomorrow night, closing thousands of workplaces across the state. Non-essential businesses will be shuttered, with other sectors subject to heavy restrictions. Many retailers will be forced to close physical stores, although online shopping can continue. We take a look at the possible impact of these new lockdowns on ASX shares.
Retailers close stores
Under the new restrictions, all but essential retailers will be forced to close their doors. The share prices of retailers Adairs Ltd (ASX: ADH), Lovisa Holdings Ltd (ASX: LOV) and Accent Group Ltd (ASX: AX1) all fell yesterday following the announcement. These retailers previously closed stores during the first lockdown, but have since reopened. Adairs and Accent Group reported record online sales during the first lockdown period, and will no doubt be hoping for the same this time around.
Investors swooped on online retailers in the wake of the announcement. The Kogan.com Ltd (ASX: KGN) share price jumped 9% yesterday afternoon as investors anticipated a shift to online shopping. Online furniture retailer Temple & Webster Group Ltd (ASX: TPW) also stands to gain with physical furniture stores shuttered for six weeks. JB Hi Fi Limited (ASX: JBH) has announced the metropolitan Melbourne store network will be closed to customers, but will remain operational to fulfil online and commercial orders.
Stage 4 restrictions mean much local manufacturing will close, and that which continues will see restrictions on its operation. Inghams Group Ltd (ASX: ING) has announced the restrictions will impact on its two meat processing facilities in Victoria. A 33% reduction in the workforce at these plants is required with financial implications uncertain at this time. Reliance Worldwide Corporation Ltd (ASX: RWC) has advised restrictions may impact its manufacturing and distribution facilities in Victoria, but said any supply disruptions should be mitigated by inventory levels.
Adbri Ltd (ASX: ABC) has reported its sites can continue to operate, but that it will closely assess requirements for construction materials and will modify production levels in response to demand. Wesfarmers Ltd (ASX: WES) has advised that the lockdowns will result in the closure of Kmart and Target stores. Bunnings stores will remain open for trade customers but will be closed for in-store retail customers. Officeworks can continue to service business customers but will also be closed to in-store retail customers.
Victoria’s stage 4 restrictions are generally bad news for business, but the financial impacts will take time to become clear. The effects on ASX shares will be mixed as was the case with the first lockdowns.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd, Reliance Worldwide Limited, and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group, Kogan.com ltd, Reliance Worldwide Limited, and Temple & Webster Group Ltd. 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.