Retail Sluggish; Woolworths To Suffer

Deflated food prices, interest rate hikes, high fuel prices and the absence of 2009's economic stimulus package will combine to weigh on Australian retail sales in 2010. The gathering clouds have seen market leader Woolworths downwardly revised its sales growth forecast for fiscal 2010, ending June, from 'upper single digits' to 3-6%. BMI identifies a worse than expected secondary Chinese slowdown as an additional risk to the Australian economy and thus the country's retail sector. However, in spite of these short-term challenges, over our five-year forecast horizon, the industry continues to display growth potential.

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