The good and the bad news for Aussie retailers

At our recent End of Year investor briefings held around Australia (December '15), we highlighted many issues that investors needed to consider for 2016. In particular, we forecast that many import-based retailers would be adversely affected by the devaluing Australian dollar. Last week, Lovisa Holdings announced a downgrade that specifically highlighted the $A as a problem and confirms symptomatic of problems lie ahead for importing retailers. The biggest affect will be on retailers dealing in low price or discounted lines. Lovisa’s downgrade is a timely warning to investors to particularly review their exposures to retailers who have poor pricing power. We summarise the ramifications of the declining $A that investors need to consider. (VIEW LINK)