Thu, Jan 01, 2009 - Page 11 News List

Aussie retailers eye record hamper

BLOOMBERG

Australian retailers may enjoy record post-Christmas sales as lower borrowing costs and government stimulus packages spur consumer demand, according to the industry’s peak representative body.

Sales may rise more than 3 percent to A$14.6 billion (US$10 billion) between Boxing Day on Dec. 26 and Jan. 15, compared with the same period a year earlier, Margy Osmond, chief executive of the Australian National Retailers Association, said in an interview yesterday.

The organization represents national chains with more than A$100 million in annual sales such as Woolworths Ltd and David Jones Ltd.

A pickup in spending may be among the first signs that the central bank’s interest-rate cuts and Prime Minister Kevin Rudd’s cash handouts are reviving domestic demand. The government distributed A$8.9 billion at the start of last month and the Reserve Bank of Australia has undertaken its most aggressive round of rate reductions since the last recession in 1991.

“Our members all said they had an enormous Boxing Day and the weekend after was incredibly strong,” Sydney-based Osmond said. “What we have seen in December is a higher proportion of people more comfortable with their mortgage, and that has played out over Christmas.”

The central bank cut the benchmark rate to a six-year low of 4.25 percent on Dec. 2. Three percentage points of cuts since September save borrowers with an average A$250,000 home loan more than A$500 a month.

“The expectation is that it will stay strong until the middle of January for the traditional post-Christmas sale period,” Osmond said.

The government package, which included A$4.8 billion in lump-sum payments to the elderly and A$3.9 billion for families, may boost Australian retail sales as much as 5 percentage points, according to Citigroup Inc.

“We think more than our fair share will come through our doors,” Woolworths CEO Michael Luscombe said in an interview in November.

“There is no doubt the economic stimulus announced by the government will be a positive thing for our customers,” he said.

The Sydney-based Woolworths, Australia’s largest retailer, gets two-thirds of sales from its domestic supermarkets.

Luscombe is also chairman of the retailers association.

Still, the global credit crunch is making consumers more cautious with their spending, leading to increased use of layaways and rising demand for gift cards, Osmond said.

The association, which has been surveying consumers and members since the middle of the year, said small electronics and toys continue to be the most popular items at Christmas, while gift vouchers jumped from seventh to third.

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