Paymark’s Christmas contradicts Warehouse gloom

Paymark’s Christmas contradicts Warehouse gloom

Jan. 10 (BusinessDesk) – New Zealanders splashed out in a small way for Christmas, according to figures from the credit card and eftpos transactions processor, Paymark.

The 3.9% increase in December sales, compared to Christmas 2009, is at odds with last week’s profit downgrade from Warehouse Group, which reported a 2.9% fall in sales for the crucial pre-Christmas trading period, November and December.

Also by contrast, Paymark showed a bigger bounce, with a 4.2% rise in November transactions over the company’s network, which handles some 75% of national electronic transactions.

The shares fell 2.6% to $3.41 after the announcement and were trading at $3.43 today, down 9.8% on the share price a month ago.

The Auckland-based company cut its forecast first-half profit to a range of between $51 million to $54 million in the six-months ended Jan. 30, compared to the $57 million reported in the same period a year ago.

The news was even worse for Warehouse same store sales, which fell 3.8%. Flat revenues at its stationery outlets partially offset the fall, with same-store sales up 0.7%.

“While the increase in activity towards the back-end of 2010 would have been an encouraging way for retailers to end the year, the situation remains one where the near-term should be approached with caution,” Paymark head of sales and marketing Paul Whiston said in a statement.

Consumer spending took a dive last year as households focused on repaying their debt as interest rates stayed at historically low levels. The lack of appetite among people to spend forced the Reserve Bank to rein in its forecast track for hiking rates, and Governor Alan Bollard isn’t expecting spending to improve until farmers pay off their loans before they start taking advantage of high commodity prices.

Stripping out spending on groceries and petrol, Paymark’s data showed discretionary spending grew at an annual 2.7% pace last month, more than three-times the 0.8% growth earlier in the year. Still, the average value of transactions fell 1.7% last year to $49.34.

The biggest spending gains were a 24% rise in takeaway food, and a 7% rise for general food and liquor, and restaurants and cafes.

People continued to use debt cards more than credit cards, with spending up 5.9% and down 0.8% respectively.

Statistics New Zealand will release its own data for electronic card spending on Thursday.

(BusinessDesk)

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