Investing

Business wrap: Confidence and sales crash

Business confidence and retail sales collapse as lockdown begins; Infrastructure NZ sees 30 percent of jobs lost in 6 months; Kathmandu shares halted

Survival mode: ANZ’s latest business confidence survey made for grim reading. The bank said there was very little that was positive in the survey as businesses switch to survival mode in the wake of the national coronavirus lockdown.

Key stats: Headline business confidence in March plunged 45 points to a net 64 percent of respondents reporting that they expected general business conditions to deteriorate. Firms’ expectations for their own activity fell 39 points to a net 28 percent expecting lower activity over the year ahead; a record low.

Job cuts coming: Employment intentions fell 24 points to a net 23 percent of firms intending to reduce employment. Every sector was deeply in the red, but ANZ said retail (-35) was the bleakest.

Spending dives: There was never any doubt that retail spending was going to plunge in the wake of the month-long national lockdown. The only question was: by how much? Paymark delivered the answer yesterday, revealing a drop of 72 percent in retail spending on the first day of the level four shutdown that has remained there since.

Up, then down: By contrast, spending on the Monday and Tuesday ahead of the shutdown was about 50 percent above the same time a year ago.

Taken away: Not surprisingly, the hardest hit businesses during the first week of isolation were travel companies, entertainment firms and parking services, while accommodation saw a 78 percent drop and takeaways lost 61 per cent.

Deconstructed: Infrastructure NZ (INZ) painted a bleak picture of the construction sector which had already been facing challenging times before the onset of the coronavirus lockdown. It estimated that professions across the New Zealand infrastructure sector could shed up to 30 per cent of staff over the next six months unless immediate measures were taken to protect workers and restart construction.

Halted: Investors were taken by surprise when trade in the shares in outdoor clothing and equipment retailer Kathmandu was halted yesterday ahead of a "material announcement" today. Last week the company said it had been cutting costs aggressively in the wake of the COVID-19 lockdown, which forced it to close all its retail stores.

Something's up: Kathmandu shares were up almost 10 percent at $1.12 just before the trading halt.

Retail therapy: Homebound shoppers after a heater or electric blanket for the coming winter now have a limited number of online shopping options available to them following the Government’s decision to relax some of the rules that apply to retailers during the lockdown.

Briscoes lady in work again: The Warehouse, Briscoes, Smiths City and several other retailers have been given permission to operate a limited range of “essential” goods and appliances for online purchases only, provided the businesses can guarantee contactless delivery.

Split Up: Stock exchange operator NZX will split out its regulatory functions from its commercial operations in a move that will see its regulatory arm having its own board independent of NZX. It’s a decision many market participants and investors have argued in favour of for years pointing out the NZX shouldn’t both run the exchange and regulate it.

Ground broken? Chair James Miller announced the split at the company’s annual meeting yesterday, describing it as “ground-breaking in the 150-year history of New Zealand's capital markets, aligned with global best practice." The regulatory arm will be chaired by high profile director Trevor Janes.

Back in favour: Having seen its share price fall as much as 60 percent last week to a low of 76c, Gentrack shareholders were relieved to see the company reaffirm its forecast guidance for the March period yesterday. Shares in the utilities software developer surged 40 percent on the news to close at $1.40.

Fill your boots: The company also announced it was lifting the trading ban for company directors and executives that is typically in place until a company formally reports.

Love Zoom: Has a technology platform ever had a more perfect environment for global take-up of its product. The Founders of video communications success story Zoom must be pinching themselves following a 50 percent surge in the company’s share price in just the last month.

Even students: Businesses and even schools have rapidly adopted Zoom as their platform of choice to stay in contact during global lockdowns and analysts believe they might even stick around as paying customers after the public-health crisis subsides.

Zoomers quadrupled: Last week the company’s daily active user count was up more than 370 percent from a year earlier. (Disclosure: here at Newsroom we almost live on it these days!)

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