Are COVID-19 retail winners in decline?
Consumer stocks that benefitted from a combination of Government stimulus and online accessibility have slid in the last month, as border openings and positive vaccine news question their current valuations.
According to FE Analytics, since the end of March, Temple and Webster returned 343.97%, Adairs returned 269.04%, Kogan returned 257.91% and JB Hi-Fi returned 66.2%.
However, in the last month, JB Hi-Fi lost 12.34%, Kogan lost 23.11%, Adairs lost 23.57% and Temple and Webster lost 24.82%.
Performance of select retailers in the last month
Adairs, which was a luxury homewares retailer that maintained a physical presence in malls around the country was in the top holdings of the Pendal MicroCap Opportunities and CFS MIF Future Leaders funds.
Temple and Webster was also a luxury homewares retailer but online only; the only fund to have it in its top holdings was SG Hiscock’s ICE fund.
Kogan, another online retailer but with a broader range of electronics as well as homewares, was in the top holdings of two OC funds: Dynamic Equity and Premium Small Companies.
JB Hi-Fi was in the top holdings of eight funds: : BlackRock iShares Edge MSCI Australia Multifactor ETF, Dimensional Australian Small Company Trust, Legg Mason Martin Currie Equity Income, Legg Mason Martin Currie Ethical Values with Income, Morningstar Australian Shares, Pendal MidCap and Vanguard MSCI Australian Small Companies Index ETF.
In its market commentary from the end of October, the OC fund was optimistic about positive vaccine results coming up, but the resulting economic outcomes would still be quite broad.
“[We]… do not believe that a vaccine will be an immediate panacea to the economic damage caused by the pandemic which is now deeply entrenched and therefore difficult to remedy,” the fund said.
“We reiterate that an approved vaccine is unlikely to be 100% effective, it must be manufactured on a mass scale and distribution of it will likely be, at least initially, limited.
“Even if these challenges can be overcome many people are saying they will not take the vaccine fearing unknown side effects.
“Consequently, even if a vaccine is approved in the coming months, the range of potential economic outcomes is still quite broad.”
Performance of select retailers since 31 March 2020
AUTHOR
Chris Dastoor
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