Widespread belt-tightening in the wake of the federal budget has claimed another retail scalp.
Super Retail Group, which owns Supercheap Auto and Rebel Sports, is the latest to trim its profit forecasts after suffering weaker-than-expected sales since the May 13 budget.
Managing director Peter Birtles says annual net profit is expected to rise by just five per cent to between $107 million and $109 million.
He said it was disappointing to further moderate profit expectations, but believed it was the result of external factors.
The group’s sales have been lower than expected for the past six weeks, and the company fears the trend will continue for the rest of the financial year.
“This reflects the significant downturn in consumer confidence since the federal budget, particularly across the lower to mid-income families who represent the group’s core customers,” the company said in a statement on Monday.
Super Retail said the warmer-than-usual temperatures during autumn and early winter had also hurt apparel sales for its leisure and sports businesses.
Its auto and sports stores also only managed modest rises of 2.2 per cent and 0.1 per cent, respectively.
Clothing maker Pacific Brands, discount retailer The Reject Shop and women’s apparel chain Noni B have all issued profit downgrades in the past month due to a fall in consumer confidence and warm weather.
CommSec market analyst Tom Piotrowski said there was a lot of concern consumers would rein in spending because of the planned tough budget cuts.
“What we are now seeing is the rubber hitting the road with companies warning of difficult conditions,” he said.
“The Super Retail Group is another example of what the market will continue to do in the weeks ahead.”
However, one prominent forecaster does not expect the budget to prevent another strong year of consumer spending.
Deloitte Access Economics partner David Rumbens estimates households will have about $10 billion less to spend by 2017/18 due to budget measures but describes this as only a modest detraction from retail and other types of consumer spending.
Consumers are currently spending around $23 billion a month at the shops.
“On the view that consumers will respond to actual influences on their ability to spend rather than perceived ones, the budget shouldn’t stop 2014/15 from being a strong year for retail,” Mr Rumbens said.
Super Retail shares closed at 27 cents higher at $8.32.