How Is NZ’s Consumer Discretionary Sector Performing Amidst Macro Worries - 2 Stocks to Consider

Company Overview:

Michael Hill International Limited (NZX: MHJ) is an Australia-based jeweler retailer. Cooks Coffee Company Limited (NZX: CCC) owns the intellectual property and master franchising rights to Esquires Coffee Houses worldwide (excluding New Zealand and Australia).

Kalkine’s Sector Report covers the Key Financial Metrics, Risks, Outlook, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1. Sector Landscape and Outlook

As per Stats NZ, the total volume of retail sales in NZ rose by 0.5% in the June 2025 quarter as compared to the March 2025 quarter. The retail activity witnessed a modest rise in the June quarter, with growth witnessed in most of the industries. Notably, the electrical and electronic goods, supermarkets and grocery stores, and pharmaceutical retailing encountered the largest increases this quarter.

Notably, the biggest contributors to the increase in retail activity during the June 2025 quarter were electrical and electronic goods retailing (up 4.6%), supermarket and grocery stores (an increase of 1.3%) and pharmaceutical and other store-based retailing (up 1.2%).

Exhibit 1: Seasonally Adjusted Retail Sales Volumes ($ Mn), By Industry, Change from March 2025 quarter to June 2025 Quarter

Data Source: This work is based on/includes Stats NZ’s data which are licensed by Stats NZ for reuse under the Creative Commons Attribution 4.0 International Licence; Chart Created by Kalkine Group

International Trade: Quarter Ended June 2025

As per Stats NZ, the total exports of goods and services for the quarter ended June 2025 amounted to $28.9 Bn, up from $26.3 Bn in the June 2024 quarter. The total imports of goods and services amounted to $27.6 Bn, up from $26.7 Bn in the June 2024 quarter. Therefore, the total two-way trade for the June 2025 quarter amounted to $56.4 Bn. The total services exports increased $381 Mn to $7.5 Bn in the June 2025 quarter as compared to the June 2024 quarter.

Exhibit 2: Goods and Services Exports and Imports (June 2025 Quarter compared with June Quarter)

Data Source: This work is based on/includes Stats NZ’s data which are licensed by Stats NZ for reuse under the Creative Commons Attribution 4.0 International Licence; Chart Created by Kalkine Group

Filled Jobs Witness a Marginal Rise

As per FEU dated August 28, the monthly filled jobs increased 0.2% in July and declined 0.8% YoY. Also, the employment in the goods sector has been falling as the construction sector witnessed the impacts of soft housing market. However, the primary sector employment has been growing, likely due to the continued increased export commodity prices.

Key Risks and Challenges:

RBNZ, in its Monetary Policy Statement (August 2025), stated that NZ’s economic recovery stalled in the second quarter. Notably, the spending by households as well as businesses was constrained by the global economic policy uncertainty, declining employment, increased prices for some essentials, as well as falling house prices.

Exhibit 3. Key Risks in Consumer Discretionary Sector:

Source: Analysis by Kalkine Group

Outlook:

As per RBNZ, there are upside and downside risks to the broader economic outlook. Cautious behaviour by households as well as businesses can further impact the economic growth. On the other hand, the economic recovery might accelerate as the full effects of interest rate reductions flow. If the medium‑term inflation pressures continue to ease as projected, there are chances of further cuts.

As per Situation and Outlook for Primary Industries (June 2025), there are expectations that the sectors would continue to grow and thrive, even though there is global trade uncertainty and broader macroeconomic challenges. While the uncertainty might soften global demand and impact the NZ’s export performance, the food and fibre sector remain more resilient compared to others. This is because of its lower sensitivity to price fluctuations where commodities account for the bulk of the export revenue. Additionally, some of the products remain in high demand in the US, which can protect the sector from direct tariff impacts.

Apart from the sector-specific factors, an analysis on 2 NZX-listed companies is provided. This report covers their insights, outlook, performance and potential as expected to be delivered in the near to medium term.

1) Michael Hill International Limited (Recommendation: Speculative Buy, Potential Upside: Low Double-Digit) (M-Cap: NZD 9 Mn)

Business Description:

Michael Hill International Limited (NZX: MHJ) is an Australia-based jeweler retailer. 

Outlook:

During the interim period, MHJ’s primary focus was towards building the robust foundations for margin recovery to fuel sustainable growth. Its core priorities revolve around reinforcing the retail fundamentals, brand identity as well as awareness of the Bevilles brand, embedding the repositioning of the Michael Hill brand throughout markets, etc.

Technical Overview:

Technical Commentary

On the daily chart, MHJ’s stock price penetrated a significant support established by its previous trough, indicating a negative bias. Moreover, the momentum oscillator (RSI-14 period) is moving southward from its midpoint, adding further evidence to the previous observation. Price is trading between its previous peak and trough, which might serve as resistance and support levles for the stock, respectively. A significant support level for the stock is positioned at NZD 0.350, while critical resistance level is located at NZD 0.47.

Fundamental Valuation

P/E Based Relative Valuation

Stock Recommendation

Considering the facts above, a ‘Speculative Buy’ recommendation on the stock has been provided at the closing market price of NZD 0.400 per share, down by 1.23% as on 11 September 2025

2) Cooks Coffee Company Limited (Recommendation: Hold, Potential Upside: Low Double-Digit) (M-Cap: NZD 2 Mn)

Business Description:

Cooks Coffee Company Limited (NZX: CCC) is a New Zealand-based company, which is primarily engaged in the food and beverage industry.  

Outlook:

CCC stated that strong pipeline of new stores is expected in the UK, while opportunities in additional geographies are being actively explored. Amidst the expected growth of its store network and the strong trading momentum, the company remains confident regarding the future prospects. Total Group sites rose to 95 throughout the UK and Ireland as at 30 June 2025, a rise from 89 at 31 March 2025.

Technical Overview:

CCC Daily Technical Chart, Data Source: REFINITIV

Technical Commentary

On the daily chart, CCC’s stock price is forming a trading range, suggesting that the sideways period in the stock might continue to persist in the near future. Moreover, the momentum oscillator RSI (14-period) is hovering near its midpoint, providing more support to the previous observation. Price is trading between its previous peak and trough, which might function as resistance and support levels for the stock, respectively. A significant support level for the stock is located at NZD 0.240, while critical resistance level is placed at NZD 0.270.

Stock Recommendation

Considering the facts above, a ‘Hold’ recommendation on the stock has been provided at the closing market price of NZD 0.26 per share, up by 1.96% as on 11 September 2025

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 11, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4:  Annual Dividend Yield is on a Trailing Twelve Month (TTM¹) basis and are subject to change based on factors such as company performance, stock price changes, etc.

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.