Retail Stocks

[Waltzing]

yes but what about visits in NZ...

now dont get me wrong... NZ has some great performance stats you might not know about... try opening a bank account in sweden.. or try getting bank customer support on the phone in southern ireland...

performance stats for things you might take for granted are high in NZ...

you just cant jump on a train like in landskrona connect at CH and wake up in london...

train commutes are just not a thing in NZ....

even in AM in holland in the early 1980's the train from AM Amsterdam to Zandvoort sunday afternoon beach lunch and then den hague for evening drinks ..

[Waltzing]

Shock... and how is the market going to react to this in the MORN people...

what stats are they hiding .... or is it a health issue....

https://www.interest.co.nz/banking/132245/adrian-orrs-resignation-comes-reserve-bank-negotiates-funding-agreement-government

is there something rooten in the state of NZ...

[BlackPeter]

Shock... and how is the market going to react to this in the MORN people...

what stats are they hiding .... or is it a health issue....

https://www.interest.co.nz/banking/132245/adrian-orrs-resignation-comes-reserve-bank-negotiates-funding-agreement-government

is there something rooten in the state of NZ...

Can't comment on his health ...

but I guess he didn't had always a good hand in smoothening the inflation, didn't he? And yes, while his banking capital requirements might make them more stable, they are costing consumers as well a lot of money.

Can't really imagine that his resignation will impact on share prices (well, not short term, anyway), but for short and deep panic movements we have currently anyway the bully in the evil house.

[Waltzing]

they bungled the rate hicks... the bungled covid ...

now retail has paid a huge price in the GFC style recession...

even trucking while the stats dont show what a driver on a big rig told me last week on a massive hold up on state highway bottom of kamai...

he said the transport runs from Whakatāne to Taupo for his firm was down from one a day to one a week..

He said he had never seen anything like it...

[Waltzing]

the S&P 500 has got the gitters...jitters..sh*tters.. some will say its just the TF thing... but is it..

could the US economy be stalling as consumers start to panic.. not a big panic yet but just a hang on maybe i might not shop till we drop this week...

https://www.cnbc.com/quotes/.SPX

its stalling...

get your pastels out and check back to oct... notice the jumps and falls...its flat..

but if it looks this bad now wait till the TF's start flying and hit the proverbial Wall...

[Waltzing]

whats is that sound..... its the sound of hitting turbulence....

https://www.cnbc.com/quotes/.DJI


https://www.youtube.com/watch?v=bjSpO2B6G4s


will the retail shopper suddenly look up and realise its all sticker shock and actually change habits?

crashs come from that sort of stuff...

[Waltzing]

Here we go... they are p*ssed in ....  https://www.bbc.com/news/articles/cn0422zzpw8o

"Canadian provinces pulling US alcohol off store shelves in response to Trump trade policy is "worse than tariffs", the boss of Jack Daniel's maker Brown-Forman has said."

Has DUMP over reached? again? all in the name of holidaying on the big russian yatchs made in Italy?

The Scots will be flying over in there kilts and  kicking up a jig ... and selling some fine malt to the cannackies...

oh laddies get a sip of this.. it will warm the cockles ..

[Waltzing]

well China says it wants free trade ! Its economic sector break down may now be what we all study and the state of the Stable Country's consumer.....

Well hey they are fishing in the Tasman.... shot any fish lately?  but it was friendly live fire...

well there imports just dropped 11 %  ... what is retail going to do in China and is the data accurate....

Is NZ still in recession.... our reserve bank is headless and it has 600 people with clip boards running around gathering information...

the head disappeared after a great trip to the US and spending up a storm...

come on NZ is the data in NZ any more reliable and timely as china? Our new stable country live fire friend?

Gosh imagine it yesterdays bad mate todays friend!!!

ATM sales going to be a very interesting temp reading for the China consumer? could be that ATM has the numbers everyone wants to read now....

[Waltzing]

well wetail need those OCR cuts now...

kiwi bank says 100 before xmas.. wow thats 2.5 OCR come santa time...

https://www.nzherald.co.nz/business/economy/official-cash-rate/official-cash-rate-decision-reserve-bank-makes-call-today-amid-tariff-turmoil/XGYY6VHKLBG5RIOWZG4WWH4WBE/

[Waltzing]

WOW....

markets reverse... good for weetail..

that was quick..

well Investors, Campers and others..

Happy days are here again...


https://www.cnbc.com/quotes/.DJI

[Waltzing]

wow 145 tax on china goods....

well that cuts off china trade to the USA... apparently...

now that is going to create some supply chain supply dumping....

or attempted dumping...

China need NZ!! even little NZ...

https://www.cnbc.com/2025/04/10/trumps-triple-digit-tariff-essentially-cuts-off-most-trade-with-china-says-economist.html

[BlackPeter]

wow 145 tax on china goods....

well that cuts off china trade to the USA... apparently...

now that is going to create some supply chain supply dumping....

or attempted dumping...

China need NZ!! even little NZ...

https://www.cnbc.com/2025/04/10/trumps-triple-digit-tariff-essentially-cuts-off-most-trade-with-china-says-economist.html

Interesting, given that China produces most of the cellphones and many computers sold in the US. I think 90% of Apple products (not the healthy stuff, but the Steve jobs Apple) are made in China.

Maybe the US will go back to calculating and planning by hand. Remeber these times when hundreds of women manually calculated logerithm tables?  ... hey, this will create jobs in the US, won't it?

I think what they really need is a president with at least half a brain. Why don't they just ask Elon to fire Dumb (saves money) and ask Xi to moonlight in the oval office? Same bad character and no ethical constraints, but somewhat more reliable and trustworthy.

[Jay]

Heard yesterday, that last time Trump was in, Apple got an exemption from the tariffs??
So what about Nike et all??

[Waltzing]

this young person gets no satisfaction....

https://www.youtube.com/watch?v=WeugL6jV3W4

[Greekwatchdog]

Plenty of chat on retail lately. Here is For Bars uptake on retail in general.

It has been a volatile few years for NZ listed retailers, with Trump's reciprocal tariffs providing the latest shock for the sector. While retailers that import into the US may face new costs, NZ retailers sourcing from China could benefit from excess manufacturing capacity and lower input costs. Although the tariff situation remains fluid — Trump has noticeably softened his rhetoric on reciprocal tariffs in recent weeks — this note seeks to provide context for how NZ listed retailers would respond to further changes in the global trade system. Our analysis of listed retailer supply chains, end markets, and sourcing locations found that (1) a -1% reduction in China sourcing costs could increase sector gross profit dollars between +0.2% to +1.1% (all else equal), and (2) KMD Brands is in a better position to mitigate tariff-related headwinds than initially anticipated. The latter reflects better-than-anticipated flexibility in its supply chain, including the ability to redirect Chinese-sourced product to non-US markets, while fulfilling US demand from other lower-tariff sourcing countries.

What could cheaper product sourcing costs mean for the NZ listed retail sector?
Disclosure of product sourcing is inconsistent across the retail sector, both in terms of granularity and the metrics disclosed. However, our analysis confirmed that China is a major sourcing partner for NZ listed retailers (noting that no data was publicly available for BGP). Specifically, China (1) accounts for c.35% of KMD's spend on branded product, (2) is the sourcing origin for c.63% of WHS's sales in Red and Blue Sheds, and (3) is home to c.70% of HLG's sourcing factories. A full breakdown of our estimates of sourcing country is provided in Appendix 1. Should trade tensions between China and the US remain elevated, we expect excess manufacturing capacity to place downward pressure on sourcing costs. We estimate that a -1% reduction in Chinese sourcing cost could result in a 15 - 40 bps gross margin benefit, or a +0.2% to +1.1% increase in gross profit dollars, all else equal.

More confidence in KMD's ability to offset the tariff impost
We expect KMD will be able to offset two-thirds of the total tariff impact (up from our previous estimate of half), and increase our target price +NZ 5 cps to NZ$0.53 accordingly. KMD has c.19% revenue exposure to the US market through Rip Curl (c.12%) and Oboz (c.7%). China is a significant sourcing country for Rip Curl (accounting for c.45% of supplier factories), while Oboz has a lower dependency (c.23%). Notably, China-sourced goods are primarily apparel, which can more easily be relocated to other textile markets. In contrast, technical products such as Rip Curl's wetsuits (Thailand), and Oboz footwear (Vietnam) are harder to shift. Despite ongoing volatility, we have increased confidence in KMD's ability to mitigate potential tariff-related headwinds given (1) Trump's softened stance towards key trading partners (excluding China) and relatively lower tariffs on other key textile nations (Bangladesh, India, and Vietnam), and (2) greater supply chain flexibility with the ability to redirect China-sourced product to other international markets, while meeting US demand through alternative low-tariff sourcing locations.

China is a major sourcing country for all retailers under coverage
Supplier disclosure is inconsistent across the sector, with BGP providing no publicly available data. Figure 2 summarises our estimates of supplier and manufacturer locations by continent. The reporting metric used also varied by company. KMD Brands reported its percentage spend on branded product in 2024 at the group level, however, disclosure at the individual brand level was less granular, with our estimates based on number of factories in each region (Open Supply Hub) and no adjustment for the expected volume that is supplied from those factories. HLG also provides only the number of factories by location. WHS reported the percentage of product sold in Red and Blue sheds by sourcing location in its Ethical Sourcing Report from 2023. A more detailed breakdown of supplier locations is available in Appendix 1.

Unsurprisingly, Asia is the primary supplier and manufacturing continent for all listed retailers under our coverage. China in particular features heavily, accounting for (1) c.35% of KMD's spend on branded product, (2) c.63% of sourcing for WHS's sales in Red and Blue Sheds, and (3)  c.70% of HLG's sourcing factories.

Lower sourcing costs from China would benefit NZ listed retailers
If trade from China to the USA slows materially, we expect surplus manufacturing capacity in China to place downward pressure on sourcing costs for global retailers. Based on our estimates of Chinese-based sourcing above, we estimate that a 1% decrease in China sourcing costs could increase gross margins across the sector by 15-40bps and increase gross profit dollars by 0.2%-1.1% (assuming all else equal). WHS would be the largest beneficiary, due to its high cost of goods as a percentage of sales and large sourcing exposure from China. Any potential reduction in sourcing costs will be lagged due to the time required to turn inventory. Retailers with slower inventory cycles — KMD, WHS and BGP — are likely to realise benefits more gradually than faster inventory turn retailers (HLG).

KMD is the only retailer under coverage with material US exposure
KMD is the sole listed retailer under our coverage that has material revenue exposure to the US. In FY24, 23% of Rip Curl's sales were into the US (c.12% of total group sales), while c.83% of Oboz's sales (c.7% of group sales) were into the US. Briscoes Group (BGP) and the Warehouse Group (WHS) are 100% domestic retailers, while HLG has both NZ and Australian exposure.

Re-basing our KMD Brands tariff estimates
In our report 'Riding the Tariff Wave' released 9 April 2025, we estimated the unmitigated tariff impact of Trump's reciprocal tariffs on KMD to be approximately NZ$20m post-tax. The tariff landscape remains dynamic, with a 90 day pause on all reciprocal tariffs being recently enacted, alongside a 10% import tariff applied on all countries except China. Once this pause ends, we expect further changes to the global trade and tariff regime. Encouragingly, Trump has shown he is willing to negotiate on tariffs, and KMD's longer inventory lead times into the US provide a buffer period for global economies to negotiate trade and tariff deals with the US.

China is a major sourcing country for Rip Curl and a smaller sourcing country for Oboz. At face value, this raises concerns over sourcing cost pressures on US-bound product, however, flexibility in KMD's supply chain should be able to mitigate tariff-headwinds. Most of the Chinese-sourced goods for Rip Curl and Oboz is apparel— which can be redirected to other textile hubs like Bangladesh, Vietnam, or India. By contrast, more technical products—Rip Curl's wetsuits (Thailand) and Oboz's footwear (Vietnam)—are less mobile.  Furthermore, Chinese production capacity contracted by KMD can be reallocated to supply non-US markets, while product for the US can be sourced from other, lower tariff countries.

Recent policy developments and further analysis of KMD's sourcing options gives us greater confidence that (1) KMD is well positioned to mitigate tariff exposure from Chinese-sourcing, and (2) Rip Curl and Oboz can maintain US market presence, assuming alternative sourcing nations continue to have more favourable tariff treatment. As a result, we revise our offset estimates upward, from c.50% to approximately two-thirds of the unmitigated tariff impact.

Earnings changes
We revise our forecasts in light of our more positive view on KMD's ability to offset tariff impacts. We now expect that KMD will be able to offset two-thirds of our unmitigated tariff impact estimate of c.NZ$20m, or only incur a NZ$7m post-tax impact from increased tariff costs. This assumption broadly equates to a c.10% tariff across all products into the US (NZ$10m increase in COGS based on the c.NZ$100m cost of goods for products into US). We reinstate a KMD FY26 dividend of NZ 1.5 cents per share given improved profitability in that period. Improved profitability also eases pressure on key balance sheet metrics.