Retailers are counting on Christmas to boost their sales, with the latest Dun & Bradstreet report showing sales expectations for the December quarter are 26 points above the 10-year average.
Dun & Bradstreet, which conducted its latest Business Expectations Survey in August, asked 1,200 business owners and senior executives about their expectations for the December quarter.
The survey shows sales expectations are up 29 points to an index of 38 – the highest level since the December quarter of 2003, and 26 points above the 10-year average index of 12.
Profits expectations have also increased, up 15 points to an index of 17. This is the highest level in seven quarters and 13 points above the 10-year average.
Meanwhile, employment expectations are up three points to an index of six, which is five points above the 10-year average index.
However, the selling prices index is down five points to an index of nine. This is equal to the lowest level since the survey began in 1988, and 21 points below the 10-year average of 30.
This suggests price reductions are expected to continue over the Christmas period.
Overall, retailers’ expectations for the coming holiday are substantially more upbeat than the same period last year, when the sales and profit expectations indices were at a conservative five points and -1 points respectively.
This compares to a current index of 50 for sales and 11 for profits.
According to Dun & Bradstreet chief executive Gareth Jones, a solid performance in the June quarter has provided a welcome uplift in sentiment for the struggling sector.
“The retail sector is being challenged by conservative consumer behaviour, which is forcing discounting and putting pressure on company margins,” Jones says.
“The second quarter improvement is undoubtedly a welcome respite and it has raised hopes for a solid performance in the lead-up to Christmas.”
“However, it is clear retailers have hinged their hopes on a continuation of discount campaigns, with executives indicating they will lower prices in the December quarter.”
It’s worth noting the number of retail executives concerned about the impact of the Australian dollar fell from 49% to 35% during August.
Conversely, the number of firms expecting no impact from the dollar rose 14% to 41%.
Looking forward, 29% of firms expect wages growth to be the primary influence on operations in the December quarter – up 6% from last month.
Just over a quarter of executives rank interest rates as the primary influence on their business, while 11% of firms believe access to credit will be the most important business influence.