What Lies Ahead for NZ’s Consumer Discretionary Sector Amidst Macro-economic Uncertainties - 2 Stocks to Consider

Company Overview:

The Warehouse Group Limited (NZX: WHS) is a New Zealand-based company, which operates as a general merchandise retailer. SkyCity Entertainment Group Limited (NZX: SKC) is a tourism, leisure and entertainment company.

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

I.Sector Landscape and Outlook

As per Stats NZ, the total volume of retail sales in NZ rose by $472 Mn (or 1.9%) in the quarter ended September 2025 as compared to June 2025 quarter. The retail activity witnessed an increase in the September quarter amidst growth in most industries. Notably, this was the largest increase in activity since December 2021. The motor vehicle and electrical and electronic goods retailing witnessed the largest increases this quarter.

With respect to the industry, the electrical and electronic goods retailing rose by 9.8%, supermarket and grocery stores witnessed a decline of 1.4%, food and beverage services rose by 1.6%, etc. Notably, 8 of 15 retail industries witnessed increased sales volumes in the September 2025 quarter as compared to the June 2025 quarter.

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

As per Stats NZ, total exports of goods and services for the quarter ended September 2025 amounted to $25.0 Bn, reflecting a rise from $22.3 Bn in the September 2024 quarter. The total imports for September 2025 quarter stood at $30.7 Bn, an increase from $28.6 Bn in the quarter ended September 2024. Therefore, the total two-way trade for the September 2025 quarter amounted to $55.7 Bn.

Notably, the total services exports increased $653 Mn to $7.3 Bn in the September 2025 quarter as compared to September 2024 quarter, with travel services rising $400 Mn to $3.3 Bn, other business services increasing $130 Mn to $1.0 Bn, and transportation services rising $71 Mn to $922 Mn. Also, charges for the use of intellectual property services rose by $17 Mn to $521 Mn and telecommunication services fell $18 Mn to $481 Mn.

Exhibit 2: Goods and Services (Exports and Imports)

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

Trends in Retail Sales

As per the FEU (Fortnightly Economic Update) dated 4 December, just like the trends in the broader housing market, the rise in retail sales was concentrated in the South Island and rural regions. This mainly reflects the relative strength of primary industries. That being said, the retail spending increased in urban centres during September, with sales values in Auckland and Wellington increasing by 1.3% and 2.3%, respectively.

With respect to the retail sales volumes for September quarter, there was growth in discretionary spending sectors, such as hospitality, hardware, department stores, as well as on furniture, furnishings and housewares.

Key Risks and Challenges:

The recent FEU highlighted that the RBNZ noted weak labour market, low real income growth, as well as falling real household wealth because of falling house prices. These factors continue to restrain the faster recovery in household discretionary spending. Overall, the consumer discretionary sector in NZ is exposed to the risks related to increased inflation, interest rate fluctuations, global slowdown, etc.

Exhibit 3. Key Risks in Consumer Discretionary Sector:

Source: Analysis by Kalkine Group

Outlook:

As per the FEU, over the near term, RBNZ expects stabilising of real wealth and higher incomes, mainly from increased primary sector revenue, would be supporting consumption. Next year, as and when the net immigration increases as well as the labour market witnesses improvement, the household consumption growth is expected to fuel activity further. Notably, the retail spending increased in urban centres during September, with sales values in Auckland and Wellington rising by 1.3% and 2.3%, respectively.

RBNZ highlighted that the Committee noted some early signs of stabilisation in labour demand amidst an increase in job vacancies and total hours worked in the quarter ended September. Notably, this is anticipated to broaden into the wider improvement in labour market conditions over upcoming quarters, which would be helping household confidence and spending.

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) SkyCity Entertainment Group Limited (Recommendation: Hold, Potential Upside: Low Double-Digit) (M-Cap: NZD 904.5 Mn)

Business Description:

SkyCity Entertainment Group Limited (NZX: SKC) is a leading entertainment and gaming business.

Outlook:

SKC announced that it formally took possession of New Zealand International Convention Centre (NZICC) from Fletcher Construction. Notably, NZICC is expected to be the strong catalyst for growth for Auckland, and for the entire NZ economy. The company reiterated its FY 2026 earnings guidance of underlying EBITDA of between $190 Mn - $210 Mn (excluding B3 costs) and FY 2026 reported EBITDA guidance of $170.6 Mn – $190.6 Mn (inclusive of B3 costs).

Technical Overview:

SKC Daily Technical Chart, Data Source: REFINITIV

Technical Commentary

On the daily chart, SKC’s share price is experiencing a short-term rebound within a broader downtrend and is now approaching a key resistance defined by the June 2025 low, which maintains a negative bias. However, a successful breakout above this level could provide additional momentum for a move toward the July 2025 peak. A significant support level for the stock is positioned at NZD 0.78, while critical resistance level is located at NZD 0.88

Fundamental Valuation

Price/CF Based Relative Valuation

Stock Recommendation

Considering the above outlook, a ‘Hold’ recommendation on the stock has been provided at the closing market price of NZD 0.82 per share, up by 0.61% 11^th December 2025.  

2) The Warehouse Group Limited (Recommendation: Speculative Buy, Potential Upside: Low Double-Digit) (M-Cap: NZD 260.1 Mn)

Business Description:

The Warehouse Group Limited (NZX: WHS) is a NZ-based company, which operates as a general merchandise retailer.

Outlook:

WHS gave trading update for the 13 weeks to 2 November 2025 (or Q1 FY 2026). The Warehouse Stationery sales amounted to $52.2 Mn, up by 2.6% as compared to Q1 FY 2025, with like for like same store sales rising 1.4%. Its online sales rose 8.2% on prior period and now account for 7.0% of the total sales in Q1 FY 2026. WHS is implementing a comprehensive cost reset programme, focused towards delivering on the intention to reduce CODB to below 31% of sales. Notably, this happens to be a key step in restoring profitability and placing WHS for sustainable growth. WHS also highlighted that its focus is towards margin recovery, overhead reductions, and unlocking working capital. Also, capital investment is expected to be directed towards the most impactful projects.

Technical Overview:

WHS Daily Technical Chart, Data Source: REFINITIV

Technical Commentary

While undergoing a downtrend characterized by a sequence of lower lows and lower highs, WHS’s stock price broke below its prior trough, indicating a negative bias. Moreover, the momentum oscillator RSI (14-period) is heading southward from its midpoint, adding more evidence to the previous observation. Prices are trading below both trend-following indicators 21-day and 50-day SMAs, which might serve as dynamic resistance levels for the stock; in contrast, the stock’s nearest round levels may act as sentimental supports. A key support level for the stock is positioned at NZD 0.69, while crucial resistance level is located at NZD 0.840.

Fundamental Valuation

Stock Recommendation

Considering the facts mentioned above, a ‘Speculative Buy’ recommendation on the stock has been provided at the closing market price of NZD 0.750 per share, down by 0.66% as on 11 December 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 11 December 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.