Markets with Madison: Retail recession - costs and crime crushing profits

There are three C words on the top of retail executives’ minds at the moment - costs, crime and confidence.

The former was crystal clear in The Warehouse Group’s annual result this week, which revealed its profits are tanking because of the added cost of investments, crime prevention measures, wages and interest on debt (that one is up 1,125 per cent).

So, are they calling it a retail recession?

“Yeah, for sure,” Warehouse Group chief executive Nick Grayston told Markets with Madison.

“This recession has been looming for some time.”

On the surface, top line sales looked solid amid a cost of living crisis, but under the hood, inflation is eating away at earnings.

That could all be what’s impacting confidence in listed retailers on the New Zealand share market.

The Warehouse Group’s share price is down ~~ per cent in the past 12 months, with other retailers Michael Hill international down 29 per cent, and KMD Brands down 14.7 per cent.

Last month Michael Hill International said trading was proving “much harder”, and last week KMD aka. Kathmandu warned inflation had started to weigh on sales.

Clothing retailer Hallenstein Glassons Holdings could offer more clues on consumer confidence with its annual result out today.

Watch today’s episode of Markets with Madison episode above to see how retailers are responding.

Get investment insights from the experts on Markets with Madison every Monday and Friday on the NZ Herald.

Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.

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Madison Reidy is the host of New Zealand’s only financial markets show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.