'Priced for absolute disaster': Month of reckoning ahead for retail stocks

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Major JB Hi-Fi shareholders are warning investors the electronics retailer's surprise performance is unlikely to be replicated in broader retail stocks.

Investors may have been looking at JB Hi-Fi's results as a sign things might not be as bad as they seem for Australia'sbut Mark Christensen, portfolio manager at Pengana Capital, said August would be a month of reckoning for Australia's listed retailers.

There are some stocks in the market that are definitely priced for perfection, and they really need to live up to or beat expectations."I'd expect to see some material disappointments and some small, isolated pockets of surprise. Maybe we'll see one or two others," he said. Andrew Zenonos, portfolio manager at top-20 shareholder Russell Investments, said he expected a "lot of volatility" in the market, and JB Hi-Fi's outperformance would lead to investors rebasing their estimates.

National Australia Bank continued to highlight weakness in the retail sector in its monthly business survey released on Tuesday. It hadin June, and continued that outlook for July despite an increase in business confidence. "It will be solid, not spectacular, but in the context of consumer sentiment and what investors are fearing, that would be a good result."

 

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