Consumer Discretionary

Australia’s major bank valuations may be about to unwind, while asset quality is improving. Small cap engineers are holding up, small retailers will be affected by discounting and residential building is showing positive signs.

The weather has proven a thorn for David Jones, as will competitor discounting. As sales continue to decline, DJ’s new margin push remains under threat.

Myer’s March quarter sales growth was soft and it’s likely more than just seasonal factors that are making times challenging.

A warm autumn has affected apparel sales and there’s an inventory overhang at Target. To brokers, it spells a step-up in retail industry discounting.

Luxury brand stores and competitive foreign labels are challenging Australia’s retailers, while construction activity falls and coal exports look set to rise in the June quarter.

Michael Gable of Novus Capital finds technical pressure on hard-running discretionary retail stocks, with Myer a clear contender for a pullback.

JB Hi-Fi buoyed the market with a sales upgrade but brokers are mindful of the challenges that lie ahead.

Analysts look at just which Australian stocks are best placed as consumer appetites grow and housing recovers.

Analysts at Moelis are comfortable with the furniture retailer’s plans as the Sofas2Go brand successfully rolls out.

David Jones is intent on re-taking its place as an upmarket retailer but for brokers the path is strewn with obstacles.