So there’s still a bunch of economists, naysayers, Liberal and National Party hacks and journalists out there who reckon the Rudd government’s cash splash has had no impact.
In the past six months we’ve seen the stimulus payments made to taxpayers and the rise in unemployment steady a touch; job ads pick up, but more importantly, sharp recoveries in the levels of confidence among consumers and business, with business conditions also edging forward according to survey’s from the NAB and the Australian Industry Group and the service sector.
Those who can’t see how the stimulus payments have helped keep the economy from recession (but not from feeling some impact from the global slump) obviously can’t read, or understand the message coming from second-half and full-year results from the country’s major retail chains, groups such as Woolworths, Wesfarmers, Premier Investments Just Group), JB Hi-Fi and Myer.
After weak first half halves, all have had solid improvements in the second half.
Seeing the second half is normally the weakest for all retailers because its winter and there’s the absence of the Christmas selling season, which falls at the end of the first half, the reported sharp rises in second-half sales and profits haven’t driven by anything but a combination of the stimulus spending and the improvement in confidence.
Lower interest rates have had an impact, but not too much. In fact, consumers continue to restrict their credit purchases.
Reserve Bank figures show that credit-card use in the June half has been low, with consumers paying back more in some months than they did last year. Debit card transactions are up, eftpos transactions are up, but purchases on credit have fallen.
Treasury head Dr Ken Henry yesterday pointed to the strong contribution from the government’s stimulus spending to Australia’s solid economic performance.
He told a company directors lunch that the economy would have contracted during the course of the global economic crisis if stimulus measures had not been put in place.
“If it were not for stimulus measures the Australian economy would have contacted, with GDP (gross domestic product) falling by 1.3 percentage points over the year,” he told the function.
Earlier in the week Solomon Lew’s Premier Group reported a sharp rise in earnings because of a big jump in second-half sales and profits at Just Group. That was after a very poor first half.
JB Hi-Fi had a similar experience, while Woolies’ Big W chain had a sharp second-half improvement.
Today it’s the turn of David Jones to produce figures that clearly show how the upmarket department store group also found rich pickings from the stimulus payments.
David Jones reported a full-year net profit of $156.5 million, up 14.2% on the previous financial year’s profit of $137.1 million. The result was the biggest profit for the group since it listed in 1995. The second-half profit was up 36% to $65.4 million. At one stage DJs had been looking at zero to 5% growth in earnings in this period and for all of 2009.
David Jones’ second-half dividend of 17 cents per share fully franked was against 16 cents per share for the second half of 2008, so shareholders get a cut from the stimulus, as will taxpayers with David Jones paying more tax than it would have expected to pay at the start of the year.
But like so many retailers, such as Premier and Mr Lew, David Jones and CEO Mark McInnes claimed all the credit for the improved result and allocated none to the stimulus spending and cuts in interest rates.
Not a mention in 11 pages of comment from David Jones about the stimulus. You’d be right in thinking it is a company run by retailing geniuses.
How quickly they forget. It was only in January that McInnes was warning that the company was facing negative sales growth and lower earnings. It was all but “the sky is falling, the sky is falling, Henny Penny”.
Something changed to perk up DJ’s sales and profits and it wasn’t “brilliant” management or “sterling” direction from the board.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.