New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Santa's Stocking<br>What's in Store for Christmas?</h2>
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<p>Whilst 2020 has been a turbulent year for the&nbsp;sector, many retailers are approaching the Christmas sales period with a sense of optimism as consumer momentum continues. Over the last two months, the majority of the listed New&nbsp;Zealand&nbsp;retailers have provided positive trading updates&nbsp;signalling sales ahead of expectations. In addition, gross margin expansion has been a key feature, likely as a result of lower discounting activity given both the buoyant backdrop and tight inventory positions. Although 2020 retail sales have recovered, we remain cognisant of a possible economic overhang into 2021. Within the sector&nbsp;Kathmandu (KMD) is our preferred pick for the year ahead, given its leverage&nbsp;to favourable purchasing trends (outdoor recreation) which is backed by recognisable brands, with a possible&nbsp;recovery trade from further easing of restrictions internationally through its Rip Curl business.</p>
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<h3>Retail trends and themes into Christmas</h3>
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<li><strong>A reallocation of spend</strong> —&nbsp;Consumers appetite to spend appears healthy heading into Christmas with 1) household deposits remaining elevated having jumped during&nbsp;lockdown, and 2) the lack of any travel bubble, which will drive continued reallocation of&nbsp;usual international travel spend.</li>
<li><strong>Consumer momentum continues</strong>&nbsp;—&nbsp;Sales momentum remains robust in recent weeks, and purchasing intent surveys are signalling&nbsp;spend on Christmas presents +10% ahead of the prior year period.</li>
<li><strong>Homeware&nbsp;and&nbsp;electronics&nbsp;outperforming</strong> —&nbsp;Nesting has been the theme of 2020 consumer spend, as&nbsp;lockdowns&nbsp;drove investment in the home environment. We expect this trend to continue into Christmas, supported by a buoyant housing market.</li>
<li><strong>Online acceleration</strong> — The acceleration of online penetration has been significant in 2020. Online sales to October are up +17% year to date, and represent 9.5% of total retail spend (8.1% in the prior comparable period). Since the introduction of GST collection on international websites in late 2019, domestic operators have taken meaningful share.</li>
<li><strong>Inventory concerns</strong> —&nbsp;Supply chain congestion has led to limited inventory on shelves. Whilst the New&nbsp;Zealand&nbsp;listed retailers have reiterated inventory positions are sufficient for the Christmas period, there is scope that shortages worsen into 2021.</li>
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<h3>Black Friday insights</h3>
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<p>Black Friday has eclipsed Boxing Day as the biggest sales period of the year in New Zealand, experiencing +27% growth (online and offline) on the prior year as consumers took advantage of pre-Christmas sales. The top performing categories online in November provide some insight into what New Zealander's are buying in the lead up to Christmas. Homeware, appliances &amp; electronics online sales jumped +61% in November against the prior year period, while Apparel sales lifted +45%.</p>
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<h3>What's on the Christmas shopping list?</h3>
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<p>For last minute Christmas shopping ideas, our in-depth analysis of this season’s top sellers will keep the family happy. With supply chain congestion, purchasing in store is your best bet in order to have gifts under the tree in time. In this report we highlight what's been in demand in the lead up to Christmas, with selfie lights and microfibre pillows making Afterpay's top five gifts purchased, and what's on trend in 2020, with chess boards and Sharsies vouchers making the list.</p>
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<div><strong>Guy Hooper</strong></div>
<div><a href="mailto:guy.hooper@forsythbarr.co.nz" target="_blank" rel="noopener">guy.hooper@forsythbarr.co.nz</a></div>
<div>+64 4 495 5255</div>
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<div><strong>Ashton Olds</strong></div>
<div><a href="mailto:ashton.olds@forsythbarr.co.nz" target="_blank" rel="noopener">ashton.olds@forsythbarr.co.nz</a></div>
<div>+64 9 368 0127</div>
</div>
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Santa's Stocking What's in Store for Christmas?


Whilst 2020 has been a turbulent year for the&nbsp;sector, many retailers are approaching the Christmas sales period with a sense of optimism as consumer momentum continues. Over the last two months, the majority of the listed New&nbsp;Zealand&nbsp;retailers have provided positive trading updates&nbsp;signalling sales ahead of expectations. In addition, gross margin expansion has been a key feature, likely as a result of lower discounting activity given both the buoyant backdrop and tight inventory positions. Although 2020 retail sales have recovered, we remain cognisant of a possible economic overhang into 2021. Within the sector&nbsp;Kathmandu (KMD) is our preferred pick for the year ahead, given its leverage&nbsp;to favourable purchasing trends (outdoor recreation) which is backed by recognisable brands, with a possible&nbsp;recovery trade from further easing of restrictions internationally through its Rip Curl business.


Retail trends and themes into Christmas



A reallocation of spend —&nbsp;Consumers appetite to spend appears healthy heading into Christmas with 1) household deposits remaining elevated having jumped during&nbsp;lockdown, and 2) the lack of any travel bubble, which will drive continued reallocation of&nbsp;usual international travel spend.
Consumer momentum continues&nbsp;—&nbsp;Sales momentum remains robust in recent weeks, and purchasing intent surveys are signalling&nbsp;spend on Christmas presents +10% ahead of the prior year period.
Homeware&nbsp;and&nbsp;electronics&nbsp;outperforming —&nbsp;Nesting has been the theme of 2020 consumer spend, as&nbsp;lockdowns&nbsp;drove investment in the home environment. We expect this trend to continue into Christmas, supported by a buoyant housing market.
Online acceleration — The acceleration of online penetration has been significant in 2020. Online sales to October are up +17% year to date, and represent 9.5% of total retail spend (8.1% in the prior comparable period). Since the introduction of GST collection on international websites in late 2019, domestic operators have taken meaningful share.
Inventory concerns —&nbsp;Supply chain congestion has led to limited inventory on shelves. Whilst the New&nbsp;Zealand&nbsp;listed retailers have reiterated inventory positions are sufficient for the Christmas period, there is scope that shortages worsen into 2021.



Black Friday insights


Black Friday has eclipsed Boxing Day as the biggest sales period of the year in New Zealand, experiencing +27% growth (online and offline) on the prior year as consumers took advantage of pre-Christmas sales. The top performing categories online in November provide some insight into what New Zealander's are buying in the lead up to Christmas. Homeware, appliances &amp; electronics online sales jumped +61% in November against the prior year period, while Apparel sales lifted +45%.


What's on the Christmas shopping list?


For last minute Christmas shopping ideas, our in-depth analysis of this season’s top sellers will keep the family happy. With supply chain congestion, purchasing in store is your best bet in order to have gifts under the tree in time. In this report we highlight what's been in demand in the lead up to Christmas, with selfie lights and microfibre pillows making Afterpay's top five gifts purchased, and what's on trend in 2020, with chess boards and Sharsies vouchers making the list.



Guy Hooper
guy.hooper@forsythbarr.co.nz
+64 4 495 5255





Ashton Olds
ashton.olds@forsythbarr.co.nz
+64 9 368 0127



Santa's Stocking: What's in Store for Christmas?

Kathmandu Holdings

Santa's Stocking: What's in Store for Christmas?