News

13 Jul, 2020
Smiggle owner closes Melbourne stores in second lockdown
Inside Retail

Premier Investments is the first major retail business to confirm the closure of stores in parts of Victoria where stage 3 restrictions went back into effect on Wednesday, July 8.

The private company, which owns and operates Smiggle, Peter Alexander, Just Jeans, Jay Jays, Dotti and Jacqui E, issued a statement yesterday, saying its brands are “clearly not an essential service” and closing stores was the “right thing” to do.

“The Premier [Daniel Andrews] has made clear that the livelihoods of all Victorians relies on everyone doing the right thing,” the company said in its statement. “As loved as our brands are by our customers, they are clearly not an essential service.”

The company has closed stores in 36 shopping centres and seven strip malls in metropolitan Melbourne, one of two areas in Victoria that are back in lockdown, for the foreseeable future.

The distribution centre and support office remain open, and customers can continue to shop online across all brands.

However, all metropolitan Melbourne store staff who are eligible for JobKeeper have been stood down, with access to leave entitlements, and the company does not intend to pay rent for the affected stores for the duration of the lockdown.

Same approach for some

This mirrors the approach Premier Investments took nationwide during the first lockdown in April and early May, alongside hundreds of other retailers, including Myer, Accent Group and Kathmandu.

But few on that long list of retailers that closed three months ago have followed Premier’s lead in closing stores for the second lockdown in Melbourne.

Myer, Accent Group and Kathmandu have not made any public statements about store closures in the affected areas, and did not reply to requests for comment.

Country Road, which closed during the first lockdown, has closed one store at GPT’s Highpoint shopping centre, but appears to be keeping other stores open.

Roughly 50 per cent of stores at Highpoint, which is located in one of the “hot spot” postcodes that went into lockdown a week before metropolitan Melbourne, are understood to be closed, including Sephora, Zara and Apple.

“The level of distress among retailers is real, and while most are allowed to open under the current lockdown rules, none of the fundamentals for bricks-and-mortar work when you haven’t got foot traffic, and you have reluctance of staff in being in store if they think they are at risk,” said Brendan Britten, managing partner at advisory services firm Pitcher Partner.

Why they closed

Innisfree, a South Korean beauty retailer, which operates 10 bricks-and-mortar stores in Australia, including one at Highpoint, made the decision to close its Melbourne stores “to help support the community and as a safety precaution for their customers, staff and the broader community”, according to a company spokesperson. The retailer closed all stores during the first lockdown.

That’s also the case for Melbourne bookstore chain Readings, which has closed stores to the public again, except for a location at Westfield Doncaster, which will remain open with limited trading hours.

“Staff are still not comfortable having a lot of contact with people, and we appreciate that,” Mark Rubbo, Readings’ managing director, told Inside Retail.

In making the decision to shut down, Rubbo said he was “very conscious that things actually seem to be worse than when we locked down last time”.

What stage 3 means

Stage 3 restrictions mean there are only four reasons for people to leave their home: to buy food and other essential items, provide care or receive medical treatment, exercise and work or study if unable to do so remotely.

The restrictions apply to metropolitan Melbourne and Mitchell Shire, an area north of Melbourne, and will remain in place for at least the next six weeks.

Many businesses that had just reopened, including restaurants, cafes, pubs, beauty salons, gyms and cinemas, have either had to close or return to takeaway and delivery only.

 

7 Jul, 2020
Lovisa triples online, exits Spain in Q4
Inside Retail

Jewelry retailer Lovisa saw its online business more than triple during Q4, up 256 per cent compared to the same period of 2019, though trading conditions across many of its bricks-and-mortar stores fell short due to Covid-19 restrictions.

Comparable store sales fell 32.5 per cent on the prior year, and while performance has been strongest in Australia and New Zealand, the overall disruption to trade caused FY20 sales revenue to fall to $237 million from $249 million in FY19. 

And although the business had progressively reopened its stores to the point it now trades across 434 locations, Lovisa will use this opportunity to exit Spain, with stores across the country to remain shuttered.  

“As previously announced, the store rollout in Spain was put on hold some time ago as a result of performance below our expectations,” the business said in a release to the ASX on Friday. 

“Whilst we saw some improvement in performance prior to the Covid-19 shut-down, Lovisa was disappointed in the lack of support from our landlords in Spain. Hence, due to this lack of support the board has regretfully made the decision not to re-open these stores and to exit the Spanish market.”

The exit will cost Lovisa $3.3 million in impairment charges and associated provisions in FY20. 

Lovisa is continuing discussions with landlords in other countries in order to receive rent subsidies or abatements for its current portfolio of stores, as many of the wage subsidy programs it has utilised are no longer available to its team.

That said, the business’ cash position is relatively strong, having almost doubled over the last financial year to $21 million. 

“This combined with undrawn financing facilities of $44 million, leaves the business well placed to invest in future growth opportunities as the global economy emerges from the current situation,” the business said. 

3 Jul, 2020
David Jones’ flagship Elizabeth St and Bourke St stores on the block
The Australian Business Review

Australian department store David Jones is poised to launch the sales process for its $1bn property portfolio, with promotional material being sent out to the market next week.

On offer are the flagship David Jones properties in the heart of Sydney and Melbourne, through investment bank UBS, with further details of the offering to be revealed in a flyer document received by interested buyers in the coming days.

Typically, at the top of the list of likely acquirers are high profile listed shopping centre landlords such as Scentre Group, Vicinity Centres, Dexus Property, Mirvac, AMP Capital or Stockland.

However, given the current challenges such landlords are facing, where tenants are demanding rent reductions due to COVID-19, the thinking is that wealthy investors will step up to the plate, given the properties are considered top quality.

In particular, wealthy individuals like Morry Schwartz could have an interest, drawn to the assets because of the option to transform the properties into exclusive hotels should the retail sector stage a further demise.

Retail property billionaire John Gandel may also have interest, as could the interests of retail billionaire Solomon Lew.

However, institutional investors and pension funds are also not to be discounted as prospective buyers, given that many remain flush with cash despite challenging conditions related to COVID-19.

The sites will no doubt be highly sought after, but the ability for an alternative use will be at the forefront of the minds of many, as David Jones — like department stores globally — battle for survival due to the growing online shopping trend.

David Jones is selling its two most prized assets as it searches for ways to drive down debt while grappling with declining sales.

The department store has already offloaded properties to free up cash, selling its Market Street building in Sydney’s CBD to Westfield owner Scentre Group and Cbus Property for $360m in 2016.

Both UBS and restructuring firm KordaMentha are now assisting the department store owned by Woolworths in South Africa on a range of fronts.

The stores that will be placed on the market are located in Elizabeth Street in Sydney and Bourke Street in Melbourne.

In May, Woolworth South Africa’s Australian operations, which include DJs and the Country Road Group, won a waiver from its lenders on its debt covenants and secured a $75m loan from its parent company, as it remained in negotiations with landlords to secure lower rents.

Sales fell 35 per cent during COVID-19 when shoppers were forced into home isolation, although DJs kept its stores open during the worst of the pandemic and online sales were strong.

29 Jun, 2020
Portmans, Country Road, Cotton On: the data is in for 2020
SOURCE:
Ragtrader
Ragtrader

All of the major Australian fashion sites saw growth for the first five months of this year compared to 2019, according to exclusive data analysis conducted for Ragtrader.com.au.

As eCommerce sales continue to grow during COVID-19, SEMRush has revealed there are clear winners in the Australian market.

Global marketing director Olga Andrienko said the data indicated a trend towards local brand support.

Country Road led at 49.3% growth, followed by Decjuba which saw an increase of 35.9%, Bonds at 32.3%, Portmans at 19.5% and Witchery, which achieved 19.5% growth since the time last year.

In terms of growth from April to May 2020, the best performer was Portmans at 41.4%, followed by Decjuba at 30.2% growth and then The Iconic at 11.9%, Country Road at 9.8% and Bonds at 9.7%.

“None of the Australian brands saw negative growth in any of the periods our online fashion study compared, so this could mean there has been a trend towards Australians being more loyal to their local brands,” Andrienko said.

In May, The Iconic zoomed ahead with over 7 million visits. 

For a full data breakdown, including Australian uptake of global brands, see our July edition.

29 Jun, 2020
The Australian economy is showing tentative signs of growth as shoppers return to stores and cafes
Business Insider Australia

The PM might have promised a tradie-led recovery, but right now it looks like the service sector is doing the heavy lifting.

On Tuesday, the economy bounced back into expansion after a months-long contraction, according to the Commonwealth Bank’s Flash PMI sector.

With a score of 50 denoting stagnation on the prior month, Australia tipped back into positive territory with a 52.6, indicating modest growth as businesses began reopening in May.

The recovery was led by the service industry, which reported growing business activity for the first time in five months. Meanwhile, manufacturing production and exports both continue to fall, albeit at slower rates.

Head of Australian economics Gareth Aird noted that while growth was still soft, he believed Australia had passed a “low point” with some encouraging signs emerging.

“Confidence has improved in both the manufacturing and services sectors and the lift in both input and output prices is welcome as it suggests we are more likely to be in a period of disinflation rather than deflation,” he said in the research issued to Business Insider Australia.

That’s despite companies reporting they were still reducing their workforces for the fifth month running, as they continue to operate below normal capacity.

“The further decline in employment was disappointing, but given the lagging relationship between employment and output, it is not surprising. We should see headcount lift from here,” Aird said.

The view appears to be shared by Australian businesses. Taking a 12-month view, sentiment hit its highest level in nine months – long before the term COVID-19 was even coined.

It comes as Australians begin loosening the old purse strings. Separate CBA analysis shows spending last week was again on the rise. In fact, the country is actually spending more than normal, as Australians find a newfound appreciation for some businesses that were shut during March and April.

Compared to this time last year, the country is spending 13% more on personal care services like beauty, hair and massage parlours.

Meanwhile, the country is still splurging nearly 20% more on food, 24% on groceries, and 9% at cafes and restaurants. To wash it down, there’s been a 19% surge in spending on alcohol – although that’s been unsurprisingly concentrated at bottle shops, while pubs and clubs continue to decline.

While recreation and transport spending has followed it downward, Australians are spending 42% more on household items like furnishings and 7% more on clothes.

Is it enough to rescue the economy? Hardly, with Australia still headed for a sharp recession and unemployment continuing to rise.

But it’s an indicator things are beginning to slowly turn around.

29 Jun, 2020
Updated: US stationery business buys up Kikki K
Inside Retail

Months after falling into voluntary administration, putting the fate of 450 jobs and up to 65 stores on the line, shareholders in stationery business Kikki K have voted to sell the business. 

In a creditors meeting on Zoom on Thursday, June 25, shareholders voted in favour of a deed of company arrangement, administrator J.P. Downey & Co. confirmed to Inside Retail.

The new owner E.C. Designs LLC, which trades as Erin Condren Designs, is based in Austin, Texas, and primarily sells personalised and customised organisation and lifestyle products.

Out of 245 votes cast, 244 voted in favour, with only one voting against – leaving the final figure at 98.85 per cent in favour, and 1.15 per cent against. Creditors are likely to get around 1-2 cents per dollar.

According to J.P. Downey & Co., the decision will save the majority of Kikki K jobs, keep a majority of stores open, and keep landlords with tenants.

“Against the economic woes that we are facing, this is a great result,” the spokesperson said.

It’s expected the Kikki K business will continue to trade in Australia and potentially beyond, though the spokepserson couldn’t confirm if Kikki K’s New Zealand business was part of the DOCA yet.

During the receivership period a number of stores were shuttered due to the economic conditions, the COVID-19 pandemic, and the government-mandated closure in New Zealand. 

New Zealand stores have already been closed and all staff positions terminated according to BDO, Kikki K’s receiver in New Zealand.

A BDO spokesperson told Stuff that the potential buyer of the Australian operations had also expressed interest in the New Zealand business, and provided information regarding local landlords in order to facilitate the sale.

The fate of many retailers that enter voluntary administration can often be hard to judge, though Kikki K was of great interest to potential buyers almost immediately, with emails seen by Inside Retail confirming nine potential partners had approached the business within 24 hours of its initial administration. 

Additionally, store sales went up 94 per cent and according to the brand, and a few days later the week ended 50 per cent above target Australia-wide. Online revenue rose by 470 per cent at one stage.

29 Jun, 2020
Malls mauled as giants join rent rebellion
The Australian Business Review

The coronavirus pandemic is taking a heavy toll on shopping centre landlords as some of the world’s largest companies refuse to pay rent or demand cuts, forcing landlords to lower the value of their retail property holdings.

The Australian can reveal that companies including 7-Eleven and McDonald‘s have joined Hungry Jack’s in seeking changes to rent deals or in stopping payments as the crisis peaked.

Solomon Lew‘s listed Premier Investments and Sussan Group are also negotiating to not pay rent for periods when they were shut down and to pay rent as a proportion of sales turnover when they reopen.

The fraught negotiations over shopping centre leases have dragged in some of the country‘s largest landlords, with senior sources saying there was a stand-off between mall owners and key tenants.

The problems are hurting listed portfolios, with property investor Mirvac flagging a near $300m hit to the value of its retail portfolio, while both its office and logistics portfolio bumped up in value.

Rival company Dexus said its towers and parks had virtually held their values.

In a sign of the growing split between the real estate sectors, the office powerhouse also sold off a $530m tower in the heart of the Sydney CBD for more than it was valued at last year.

It sold the tower to Singaporean company Peakstone, via CBRE.

Its overall valuations showed a dip of about $200m, as prime office towers retain their value.

“Our high-quality property portfolios were in a strong position as we entered into a period of uncertainty driven by the onset of the COVID-19 pandemic, with their high occupancy levels, diversified tenant base, and limited new supply coming online in our key office markets,” Dexus chief executive Darren Steinberg said.

He said the valuations showed the resilience of high-quality portfolios in the uncertain environment. “The office portfolio experienced a circa 1.5 per cent decline on prior book values as a result of the softer assumptions relating to rental growth, downtime and incentives over the next 12 months,” Mr Steinberg said.

The sharpest rental disputes between landlord and tenants are emerging in the stressed retail sector.

In a letter to landlords as virus concerns peaked, 7-Eleven said that should the impact on its sales continue, it would have to “carefully consider” cost-control methods, and it cited temporary lease commitment relief as a measure to ensure the ongoing viability of each of its stores.

The chain, which has more than 700 stores, said that it intended to stay open unless directed to shut by government.

But it said that the unprecedented impact on consumer confidence had already been reflected in the sales performance at a number of stores in its network.

McDonald’s told landlords that restrictions on trade were having a significant and direct ­impact on its business and in particular, its local operators.

In March, as food courts were closing, it laid out its position to shopping centre landlords.

“Despite changes in operating hours or closure of stores our exposure at this time to occupancy costs is unsustainable and is an area of considerable concern.

“Due to this fundamental change in our ability to trade as intended, we seek the immediate cessation of financial obligations under the lease (to be reviewed on a monthly basis),” the letter said.

A McDonald’s spokesman said that since that time the company had provided significant support to its franchisees in freestanding stores around Australia and it was in talks with shopping centre landlords where it traded.

These were occurring on a store-by-store basis and reflected the conditions in which they were operating.

Rival chain Hungry Jack’s sought to push back rents until virus-related restrictions are lifted.

The fast food chain initially proposed to defer gross rental payments for three months, or until the restrictions are lifted and trading patterns show signs of returning to normal.

The Jack Cowin-owned chain later told landlords that rents would be deferred for three months.

In contrast, some local companies are sticking to their leases.

United Petroleum fully paid its rent for April and May. After first writing to landlords saying it did not know how it would be affected, United paid half of the first month‘s rent and then followed up with daily trading updates to landlords.

Even though profits were down, the company decided to fully pay rent rather than seeking relief under the Morrison government‘s leasing code.

One landlord told The Australian that the implementation of the code across different states had made it inconsistent and difficult to apply.

Mirvac on Wednesday revealed it would cut the value of its mall portfolio by 9.9 per cent and similar writedowns have been flagged by Vicinity Centres, co-owner of Melbourne icon Chadstone. Westfield owner Scentre is also likely to be hit.

“COVID-19 has transformed the world in the space of a few short months. No sector has been untouched by the health and economic crises that have developed. These are unprecedented times and Mirvac is taking necessary measures to address these challenges, including appropriate capital management,“ Mirvac chief executive Susan Lloyd-Hurwitz said.

Mirvac‘s sharp devaluations cut about $306m off its portfolio.

Dexus announced that 107 of its 118 assets, comprising 42 offices and 65 industrial complexes, had been externally valued, resulting in a total estimated decrease of about $195m, or 1.2 per cent on prior book values.

29 Jun, 2020
A shoe-led recovery: what Australians are spending on
Financial Review

The easing of lockdown restrictions across the country has led to a spending spike on transport, footwear, electronics and clothing.

The latest Zip Weekly Spending Index shows Australians are starting to get out more, with spending on transportation – which includes petrol, public transport, taxis and rideshares – up by 41 per cent in the week to June 15.

Despite the jump, total transport spending is still about 20 per cent below the amount spent at the start of year on transportation.

Spending on fashion and footwear has also increased, with total spending on clothing now 15 per cent above the start of the year after a week-on-week increase of almost 30 per cent.

Spending on shoes spiked by 32 per cent in the week but is still down more than 20 per cent from the start of the year.

The Zip data, current to the week of June 15, captures a period when the entire country had loosened restrictions around pubs, clubs, cafes and restaurants and the majority of retailers had opened their doors again.

However, activity in many capital cities remains subdued, with the majority of office workers still not permanently back at their desks.

Australians were also eating out more, with spending on restaurants, cafes and drinks up 27 per cent in the week, the third consecutive week of growth in the category. Total spending is still more than 10 per cent down from the start of the year.

The data, supplied exclusively to The Australian Financial Review, is produced on a weekly basis by Zip, the company behind pay-later service Zip and budget-tracking application Pocketbook. It skews towards the company's younger, and female, users.

"Our data continues to show the resilience of some categories – electronics, furniture and homewares, and gardening and hardware – which continue to power along at levels well above pre-COVID," said Zip co-founder Peter Gray.

"Other areas seem to be edging slowly back to normal with transport, and food and drink picking up. Utilities spend is now creeping to positive territory when compared with pre-COVID."

Spending on electronics also spiked, up 45 per cent in the week and 30 per cent higher than the start of the year.

Sales at furniture and homeware retailers also increased, with overall sales up 12 per cent from January, while sales at garden equipment retailers are now 8 per cent higher than the start of the year.

The positive news around furniture store sales could be seen in the performance of listed retailers in the sector.

Furniture retailer Nick Scali reported last week its sales for May and June climbed 54 per cent, an increase that will see full-year revenue and net profit just below that seen in financial 2019.

Homewares retailer Adairs also reported a 27 per cent rise in sales since the start of the calendar year that was propelled by an almost 100 per cent rise in online sales.

The Zip Weekly Spending Index, along with the Australian Bureau of Statistics' new payroll data index, feature in the Financial Review's data page tracking the economic recovery and the virus spread.

These economic indicators, along with the more traditional ABS labour force data, will provide an up-to-date insight into the state of the economy.

The increase in real-time economic data provides information about actual behaviour, as opposed to surveys that ask people how they think they will behave and their view.

29 Jun, 2020
Follow the feet: small malls do better
Financial Review

Smaller neighbourhood and suburban shopping centres have held up significantly better than the major fortress malls and CBD retail destinations during the downturn, an analysis of foot traffic by Macquarie shows.

The upshot of that analysis is that landlords such as Stockland, Aventus and Charter Hall Retail REIT, which have a greater exposure to the smaller malls with relatively more visitation, make for more defensive stocks.

"Convenience is the place to be," the Macquarie analysts wrote.

"Footfall in neighbourhood and sub-regional assets has not deteriorated as much as more destinational assets.

"Footfall has declined the most for CBD assets impacted by tourism, lower current CBD workforce and is yet to see a material improvement. This is a headwind for portfolios with relatively larger exposures to this category."

Shopping centre footfall declined by more than 80 per cent year-on-year during the peak of the lockdown measures, according to data from ShopperTrak.

Footfall has since improved but is still down by around 21 per cent this year. Google Mobility Trend data paints a similar picture, with retail and recreation visitation down 16 per cent on the baseline.

Thousands of retailers have reopened their doors in the major malls as lockdown restrictions have eased, although some retailers such as Naomi Milgrom's Sussan Group have stayed closed longer. 

The fall in foot traffic and the change in consumption patterns including the increase in online shopping has put pressure on long-standing rental arrangements between retail tenants and their landlords.

Earlier this month the country's second largest shopping mall owner Vicinity Centres launched a $1.4 billion capital raising to prop up its pandemic-battered balance sheet, flagging hefty portfolio write-downs after a sharply curtailed rent collection.

GPT also cut the value of its directly held retail property portfolio by nearly 9 per cent as foot traffic fell, rental growth was reduced and vacancies increased.

Footfall in GPT's portfolio was affected the most among the mall landlords, due to its large exposure to Melbourne Central.

Quarterly sales updates show sales at Stockland-held centres have held up better than those run by Vicinity and Westfield-operator Scentre. That is likely to be a result of the smaller size of the Stockland malls, according to Macquarie.

"The data suggests footfall at more convenience-based assets has been more resilient compared to larger assets," the Macquarie analysts wrote.

"We believe they [the data sets] reinforce our view that smaller and more convenience-based assets will have relatively more
resilient cashflows over coming months."

29 Jun, 2020
Metcash to expand hardware arm with $57m Total Tools acquisition
Inside Retail

Metcash is looking to increase its presence in the hardware market after seeing sales in this part of the business return to positive growth in the second half of FY20, thanks to a spike in DIY during COVID-19.

The wholesale distributor said on Monday that it is in the final stage of negotiations to acquire 70 per cent of Total Tools, a national franchise targeting tradespeople, for approximately $57 million.

Under the proposal, Metcash would provide Total Tools with a $35 million debt facility to support its growth plans and the potential future acquisition of interests in a select number of stores. Over time, Metcash would look to have a mix of store ownership, including both independently owned and joint-venture retail stores.

The deal, which is for Total Tools’ franchisor operations and one company-owned store, would give Metcash a clear pathway to acquire the remaining 30 per cent stake in Total Tools within the next three years.

Metcash said the acquisition is in alignment with its strategy to be the leading supplier to independents in all three areas in which it operates – food, liquor and hardware – and supports Total Tools’vision to remain a leading professional tool retail network.

Metcash’s hardware arm, which includes the Mitre 10 and Home Timber & Hardware chains, currently accounts for 14 per cent of group sales revenue. Food, including the IGA supermarket network, accounts for 61 per cent, and liquor for 25 per cent.

Total Tools has been operating for over 30 years and currently has 81 bannered stores nationwide. In the 2019 calendar year, it had sales of approximately $555 million.

The acquisition is subject to negotiation of final binding transaction documentation, which will be undertaken under a period of exclusivity, and approval by the competition watchdog, which recently gave the green light to Bunnings’ acquisition of tradie chain, Adelaide Tools.

$14.9 billion in revenue in FY20

Metcash also announced its FY20 results on Monday, including a 2.9 per cent year-on-year increase in group revenue to $13 billion. After taking charge-through sales into account, revenue totalled $14.9 billion.

Food and liquor sales both saw positive growth in FY20, despite the liquor category being adversely impacted by COVID-19 restrictions in March and April.

Food sales, including charge-through sales, increased 3.5 per cent to $9.1 billion, with supermarket sales increasing 3.8 per cent to $7.5 billion. This figure excludes Drakes sales, which Metcash stopped supplying from October 1, 2019. Convenience sales increased 2 per cent, mainly due to tobacco sales.

Total supermarket sales for the 10 months to February, which excludes the COVID-19-related bump in March and April, were up 0.2 per cent on the prior year. The IGA network saw 5.6 per cent like-for-like sales growth, with one net new store opening in the year.

Liquor sales increased 0.3 per cent to $3.7 billion. For the 10 months to February, liquor sales increased by 2.2 per cent.

Hardware sales decreased by 1.3 per cent year on year to $2.1 billion, due to a slowdown in construction activity which impacted trade sales and the loss of a large HTH customer in the first half of FY19.

Sales were down 2.8 per cent for the 10 months to February, but turned around in March and April thanks to a surge in demand for DIY products, such as paint.

The group reported a statutory loss after tax of $56.8 million, which includes the impact of the AASB16 leasing standard and a $242.4 million impairment to goodwill and other assets declared in the first half.

Underlying EBIT for the group, not including the new leasing standard, the impact of the loss of the Drakes business and lower contribution from lease resolutions, was $324.2 million, a roughly $12 million improvement from FY19.

The wholesale distributor said it is in a strong financial position after a recent equity raising and has seen continue sales growth in the first seven weeks of trading in FY21.

22 Jun, 2020
Retail sales surge 16pc as restrictions ease
Financial Review

Consumers were back out in force in May, sending retail sales surging a record 16.3 per cent during the month as COVID-19-related restrictions eased.

After a 17.7 per cent plunge in April – the biggest seasonally adjusted fall on record – the May bounceback is another sign the economy is recovering from the pandemic downturn.

Citi economist Josh Williamson said the result confirmed views that households would emerge from lockdown ready to spend.

"Importantly, it shows that there was considerable pent-up demand on the part of households to spend following isolation and that households balance sheets have not been structurally scarred from COVID-19," Mr Williamson said.

The seasonally adjusted estimate rose $4 billion in May to $28.83 billion. The rise was so large that even with the record hit in April, the annual seasonally adjusted growth was up 5.3 per cent in May compared to an average annual change of 2.7 per cent.

ASX-listed retailers such as Premier Investments and AP Eagers jumped on the news.

Paul Donaghue, managing director of PNP Golf said unlike previous recessions people have more money in their pockets this time.

"I think there is a bit more money around this time. It's not a credit squeeze like most other recessions I have seen – and I have seen a few."

"This one was a lockdown so people couldn't get out and about. It means they probably have a bit more in their pocket."

The national household savings rate climbed to 5.5 per cent in the March quarter and with fewer trips overseas due to restrictions economists such as Westpac's Andrew Hanlan said consumers now had extra money to spend on retail.

"There is a degree of expenditure switching: away from overseas travel, which has stopped and is outside of the scope of Australian retail sales, towards activities closer to home, including retail spending," Mr Hanlan said.

Golfing retailer Mr Donaghue took a hit to revenue of at least 75 per cent during the shutdown. He refused to take JobKeeper because his workers were earning significantly less than $1500 a fortnight, and has only slowly seen business pick up leaving him still 50 per cent below pre-COVID crisis.

The preliminary retail figures from the Australian Bureau of Statistics showed the monthly turnover in household goods retailing was 30 per cent higher compared with May 2019. The monthly rise in clothing and personal accessories was up more than 100 per cent in May but remains more than 20 per cent down on May 2019. Spending at cafes and takeaway food services rose around 30 per cent but is still 30 per cent below the level of May 2019.

Australian Retailers Association chief executive Paul Zahra said the latest figures might have shown a big bounceback but there were significant risks ahead for retailers.

"I don't think this gives us momentum and I think retailers will still face a massive cliff in September," he said, "and without a proper retail recovery you can't have an economic recovery."

Mr Zahra, the former chief executive of David Jones, said the three things that had delivered the latest bounce were the "lockdown blues" driving a demand for entertainment and shopping, the easing in restrictions allowing for that shopping to happen, and the Morrison government's $70 billion JobKeeper program.

He said JobKeeper needed to be extended beyond September or there could be a serious drop-off in consumption.

The retail trade figures only give a partial read of Australia's overall consumption, which makes up about 60 per cent of GDP. The figures record only a limited number of consumer services and yet services make up 62 per cent of GDP.

22 Jun, 2020
Hairhouse co-founder Joseph Lattouf dies at 53
Inside Retail

Joseph Lattouf, a co-founder of Hairhouse Warehouse, passed away on the 17 of June, 2020, after a one-year battle with cancer. He was 53.

Melbourne brothers Tony and Joseph Lattouf established the hair business in 1992 with a store in Knox City. Joseph brought his hairdressing experience, Tony his retail and business knowhow.

Today the multi-award winning one-stop hair and beauty store business counts more than 130 outlets across the country, and has grown to a portfolio which includes Australian Skin Clinics.

Last year the iconic Aussie brand rebranded to Hairhouse.

Joseph Lattouf once said “Evolution is everything. We’ve got to keep changing, we’ve got to keep things happening.  I’m very proud on behalf of all my partners – you are all my partners.”

Vale Joseph Lattouf

The Hairhouse directors have issued a statement, expressing their “deep sadness”.

“We have lost a visionary and leader, and our community has lost an inspiring human being, a dear friend and mentor. 

“For all of us at Hairhouse, Joseph doesn’t just leave behind a company, but a legacy. Through this business, Joseph (and his brother Tony) redefined the landscape of the Australian hair industry.

“What began in 1992 with one store (and a big dream), has become an iconic hair and beauty business,  and a household name in Australia.  Spanning an unprecedented  30 year period, Joseph’s genuine dedication and passion for Hairhouse remained energetic and inspiring. 

“His entire team will continue to honour his memory by working creatively, connectively, and progressively within the business that he loved so much.

“Joseph’s spirit will forever be the foundation of Hairhouse.”

22 Jun, 2020
Nick Scali brings forward dividend payment on strong sales
Inside Retail

National furniture chain Nick Scali says the easing of government restrictions in recent weeks has led to a significant rebound in customer activity, and it now expects orders for the months of May and June to be up 54 per cent on the prior corresponding period.

Given the nature of its business model, Nick Scali expects these orders to translate to a 30 per cent increase in revenue in the first quarter of FY21 and profit growth for the first half of FY21.

Off the back of this, the board has decided to bring forward the 25c interim dividend payment that it had previously deferred to October 2, 2020, to June 29, 2020.

Like many bricks-and-mortar retailers, Nick Scali was impacted by temporary store closures and weak consumer sentiment during the coronavirus outbreak in March and April.

The retailer temporarily closed all stores in Australia and New Zealand in March, and gradually reopened in Australia during April. Stores in New Zealand only recently reopened at the beginning of June.

Nick Scali says the closures meant it was unable to record approximately $9-11 million of sales in the current financial year, but that the implementation of cost-cutting measures across marketing, employment and property and government support have led to a 15-20 per cent increase in second-half profit in FY20 compared to FY19.

Written sales orders in the H2 period to June 14, 2020, grew by 7 per cent, according to a trading update released on Friday, and written sales orders in the Q4 period to June 14, 2020, grew by 20.4 per cent.

Still, revenue for FY20 overall is expected to be slightly down from FY19, at between $260-263 million, compared to $268 million. And underlying net profit after tax (NPAT) is expected be in the range of $39-40 million for FY20, slightly down from the $42 million recorded in FY19. This figure excludes the impact of the gain on sale of property and the adoption of AASB 16.

Notably, Nick Scali launched a digital sales channel while stores were closed and plans to invest in it further.

The retailer’s management and board thanked staff for their support and attributed the company’s strong performance to their hard work and commitment.

18 Jun, 2020
Super Retail Group raising $203 million to grow omnichannel business
Inside Retail

Super Retail Group is tapping shareholders to improve the customer experience, analytics and supply chain of its omnichannel business and take advantage of new opportunities as a result of the disruption caused by COVID-19.

The company, which owns and operates the Supercheap Auto, Rebel, Macpac and BCF retail chains, is issuing approximately 28.2 million new shares to raise $203 million at a fixed price of $7.19 a share.

The equity raising, which comprises an institutional entitlement offer that opened on Monday, June 15, and a retail entitlement offer, has the support of company founder, Reg Rowe, who has committed through the entities he controls to take up his full entitlement of $59 million.

Super Retail Group CEO Anthony Heraghty said he was pleased with the company’s trading performance during COVID-19, adding that it is well positioned to take advantage of shifts in consumer behaviour observed during the pandemic.

“We are very pleased with the robust trading performance of the Group despite COVID-19 and thank our team members for their dedication to the business during the pandemic,” Heraghty said in a statement released to the ASX on Monday.

“The execution of our strategy has continued during COVID-19, with our four core brands well positioned to take advantage of shifts in consumer behaviour that have been observed through the pandemic.

“The equity raising enables us to continue the execution of our strategy, further strengthen our omni-retail capabilities and continue to organically grow our four core brands.”

Super Retail Group saw a 26.2 per cent drop in sales during the month of April (March 29-April 25) compared to the previous corresponding period, but like-for-like sales rebounded in May (April 26-May 23), growing 26.5 per cent.

Group online sales more than doubled during April and May compared to the previous corresponding period to represent 18.2 per cent of overall sales.

The company attributed to the strong performance to its recent investment in its omni-retail platform and supply chain, which enabled it to meet the significant shift to online and click-and-collect purchasing. It also repurposed costs to areas of high activity to meet demand.

Super Retail Group said it has continued to benefit from the strong consumer environment in June.

Supercheap Auto’s sales for FY20 to May 23 totalled $987 million, a 4.6 per cent increase on the previous corresponding period. Rebel’s sales for the same period were $945 million, up 2.1 per cent on the previous corresponding period.

BCF’s sales were $478 million, down 0.6 per cent on the previous corresponding period, and Macpac’s sales totalled $109 million, down 10 per cent.

Macpac was impacted more than the group’s other core brands by the New Zealand government-imposed closure.

18 Jun, 2020
City Chic to shutter 14 stores on rent negotiations
Inside Retail

Fashion retailer City Chic will shutter 14 stores after failing to negotiate reduced rents with landlords as it seeks to refocus its capital expenses following the impact of COVID-19.

The remaining 92 stores will remain open with reduced rents moving forward, as well as agreed-upon rent reductions for the time spent in hibernation. 

“The decision to close these stores reflects our focus on appropriate store economics,” said City Chic chief executive Phil Ryan. 

“We remain committed to opening new stores and converting stores to large formats where deals can be structured to reflect the current retail environment.”

A City Chic spokesperson confirmed to Inside Retail the Miranda, Tuggerah, Kotara, Liverpool, Sydney, Knox, Southland, Doncaster, Woden, Belconnen, Northlakes, Westlakes and Tea Tree Plaza stores in Australia would be closed, as well as the Rickerton store in New Zealand.

Ryan said the majority of staff were redeployed to nearby stores, though an undisclosed number of staff are now out of work.

These staff join the 823,000 Australians currently unemployed according to the Australian Bureau of Statistics, as the unemployment rate reached 6.4 per cent at the end of April 2020 – compared to 5.2 per cent in January.

The store closures also partly reflect the shifting tide of online shopping, Ryan said, with City Chic focusing on connecting with customers across multiple touchpoints and executing on its digital strategy. 

During the lockdown period City Chic’s online sales grew by 57 per cent due to the business quickly adjusting its product range toward intimates, streetwear and casual wear. 

Sales in these sections of the business grew while sales in its higher-end ranges fell, though increased promotional activity pulled online gross margin down despite an overall increase in activity.

18 Jun, 2020
Key reports point to recovery in consumer spending
Inside Retail

Household spending is starting to show signs of recovery, according to a new report from the Commonwealth Bank of Australia (CBA) that includes data to the end of May 2020.

Retail spending intentions jumped in May, driven by food, general retail (department and discount stores) and household furnishings and equipment. This is consistent with CBA’s weekly card spending data, which showed a 6 per cent increase in the week to June 12 compared to a year ago.

Entertainment spending intentions also improved in May, driven by an improvement in ‘recreation’ spending, although restaurants, cinemas, theatres and other venues are still seeing weak spending.

Home buying spending intentions also jumped in May, likely driven by falling house prices, while travel spending intentions stabilised, as domestic tourism started to seem more likely.

CBA’s monthly Household Spending Intentions (HSI) report is based on near real-time readings of household transaction data and relevant search information from Google Trends to provide a forward-looking analysis of consumer spending intentions.

The report covers seven key areas – home buying, retail, motor vehicle, entertainment, travel, education and health and fitness – which cover around 55 per cent of total consumer spend in Australia.

The HSI report is just the latest analysis to point to a recovery in consumer spending, a key factor for retail growth. ShopperTrak has reported steady growth in shopping centre foot traffic for the past six weeks, and the Westpac-Melbourne Institute Index of Consumer Sentiment returned to pre-COVID levels in May, after a weak April.

While Australia is still officially in a recession, the staged reopening of the economy and the implementation of fiscal support policies, such as JobSeeker and JobKeeper, appear to have given Australians the confidence to loosen their purse strings.

However, this also raises the risk of a relapse if the government’s fiscal support policies end before business fully stabilises.

“While we know that the Australian economy is in recession, the path to recovery is becoming clearer,” Stephen Halmarick, Commonwealth Bank’s chief economist, said in the HSI report.

Here are more recent reports showing signs of a recovery in retail spending.

Independent retailers see turnover increase

According to data from 13,962 independent retailers compiled by point-of-sale system Vend, turnover increased by an average of 45.3 per cent nationwide in May compared to April.

Retailers in all states, except the ACT, saw an increase in the month, with Western Australian retailers seeing the biggest jump of 65.8 per cent. The national average turnover in May was still 12.8 per cent lower than it was in February.

Recovery varies by sector

Zip’s Weekly Spending Index, which is based on granular transaction data from more than 1.8 million Australians, showed the first signs of a retail recovery in May, however, the different restrictions in each sector means this recovery is highly fractured across industries.

While hospitality overall is still struggling, restaurants and cafes are recovering quicker than pubs and bars. Spending in restaurants was down 19 per cent in May 2020 compared to April 2020, and down 39 per cent in cafes. Spending at pubs and bars was down 74 per cent in May 2020 compared to April 2020, nearly equal to the 79 per cent decline seen in April 2020 compared to March 2020.  

Sectors that saw a big increase in spending in May 2020, compared to May 2019, include security and safety system installation (up 133 per cent), surf schools (up 102 per cent), online marketplaces (up 89 per cent) and trade services (up 30 per cent).

Sectors that saw an increase in buy now pay later spending in May 2020, compared to May 2019, include cosmetics (up 103 per cent), jewellery (up 55 per cent), outdoor gear (up 47 per cent) and furniture and homewares (up 19 per cent).

18 Jun, 2020
David Jones, Just Group and Myer named in payment terms probe
SOURCE:
Ragtrader
Ragtrader

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell wants federal legislation requiring small businesses to be paid in 30 days.

It comes amid a fresh wave of big businesses using the COVID-19 crisis as an excuse for poor payment times, she claimed. 

It’s a key recommendation made in ASBFEO’s final report regarding its Supply Chain Financing, which reflects a recent surge in larger businesses pushing out payment times to their small business suppliers.

“Large businesses extending or in some cases, suspending payments to small businesses are on notice that this behaviour is unacceptable,” Carnell said.

“There’s no denying businesses of all shapes and sizes are enduring extraordinary challenges as a result of the Coronavirus crisis, but small businesses are being hit hardest.

“Many small businesses have been forced to close their doors and a lot may not survive the coming months, even with significant support from the government. That’s why it is more important than ever to ensure small businesses are paid on time.

“We know that if small businesses are paid on time, the whole economy benefits. On the flip side, a lack of cash flow is the leading cause of insolvency.

“Legislation requiring SMEs to be paid in 30 days is the only way to drive meaningful cultural change in business payment performance across the economy.

“If Australia were to go down this path, it would not be alone. Just recently, legislation was tabled in the UK that stipulates a uniform 30-day statutory limit for payment of invoices and provides for enforcement of financial penalties for late payments.

The Supply Chain Financing Review calls out several household-name businesses that have engaged in poor payment practices.

“Myer, David Jones, Just Group, Sussan Group, Carlton United Brewery and CIMIC are named in the report as having payment policies that are damaging to their small business suppliers.

“Our Review has revealed the voluntary Supplier Payment Code is not effective. There is no compliance monitoring and it is actually unenforceable. This is consistent with similar systems internationally.

“While we support the Payment Times Reporting Framework as a useful tool, it’s unlikely to result in the systemic change that is needed.

“When used appropriately, supply chain finance is a legitimate and effective product that can be used to free-up cash flow for small and family businesses. In fact, it may be particularly useful to small businesses that need to be paid faster as they navigate their way through the COVID-19 crisis.

“However it is critical that harm inflicted on small businesses as a result of misuse of these products be urgently addressed.”

16 Jun, 2020
Chanel unveils its first ever digital fashion show
Financial Review

ast year, Chanel presented its cruise collection in a lavish display at the Grand Palais in Paris, with a set that transformed the cavernous space into a train platform, with the railways acting as the catwalk’s borders. Claudia Schiffer was there, and Keira Knightley too, applauding the candy-bright jackets many fashion critics thought were a stroke of genius from new creative director (or, in Chanel's vernacular, artistic director of the fashion collections) Virginie Viard. It was, as they say, a scene.

This year, things are very different. In March, Chanel made the decision to cancel its cruise show, which would have taken place in Capri – the perfect setting, one might imagine, for a holiday collection. For a brand that prides itself on its shows, and which has, in the past, set its clothing collections against such backdrops as a rocket ship, a supermarket, an airport, a circus, a man-made beach and a library, cancelling it altogether is a first, and one the brand hopes not to repeat.

“It’s a shame for everyone,” says Chanel’s global president of fashion, Bruno Pavlovsky, speaking to Life & Leisure on Friday afternoon, just days before the house will present its cruise collection as a series of online content titled Balade en Méditerranée (“A trip around the Mediterranean”). Instead of a decadent set on the sun-drenched Italian island, on Monday, the brand instead showed a range of silhouettes and videos on their web platforms.

“We’d worked for the past six months on the collection and the show, we were very excited to go to Capri. One of the things that would have been so amazing about Capri is its natural beauty; the lights, the colour, the unique beauty of the Mediterranean, particularly at this time of year.”

In an ordinary runway show (though there is never anything ordinary about Chanel's), Pavlovsky says, you have “20 minutes to convince.” Will a series of Instagram posts convey the same sense of excitement? “In a way it’s so difficult to translate the feelings you have in a show, but this is quite nice. If you asked me what we’d prefer, we’d prefer a show, no doubt. You cannot compare it to a show.”

Pavlovsky has a long history with Chanel – after a stint at Deloitte in the late 80s, he started at Chanel in 1990 in audit and management, working his way up to his current position in 2004. If new creative director Virginie Viard was widely regarded as Karl Lagerfeld’s right-hand woman, Pavlovsky is the left-hand: the business mind that supports and guides the maison’s design directive.

He is biased, he says, about the collection the world is about to see. “I’m not a good judge of the collections,” he says, laughing gently. “I am always positive about them. This collection is quite special for us; it’s the first time we’ve had a collection without a show.”

Indeed, Chanel will be the first major French brand to present a collection at all – online or not – since the country went into lockdown in March. Adding to the symbolism of the show – a value Chanel hangs its logo-stamped hat on – the show’s erstwhile location, Capri, was partly chosen as a nod to Lagerfeld, who spent time there in 1997 photographing the Villa Malaparte.

But adapting cruise is more than just an emotional decision; the collection is incredibly important to the brand’s bottom line. For those outside fashion circles, the somewhat confusingly named cruise collection is not intended, of course, for customers who cruise – it is summer wear, less formal than couture but just as refined in terms of its reflection of the brand values. 

Gabrielle Chanel is credited with inventing the cruise collection, and Lagerfeld reinstated the idea in 2000, along with a show that travelled each year to a different exotic location (Grand Central Station in New York, the Eden Roc in Cap d'Antibes, the Bosquet des Trois Fontaines in the gardens of the Château de Versailles, The Island in Dubai, even Havana, Cuba, the country’s first fashion show since the communist revolution of 1959). Cruise collections may lack some of the drama and extravagance of a haute couture show, but they contribute handsomely to a house’s finances; there are many more clients who look for a cashmere Breton knit than a rarefied couture ball gown.

Pavlovsky does not go into budget specifics, but does note that cancelling the collection altogether would have been disastrous for the company’s suppliers. “Our first thought is for our own business, but as you can imagine, manufacturers are not in a good situation, the coming months will be quite difficult because a lot of orders have been cancelled. If people are not doing collections they will not get any more orders. For us, it’s symbolic but it’s important that in the past and the future [cruise] will be part of Chanel.”

So what about the clothes? As with most Chanel collections, there is tweed, but here, reinvented for the summer months: a sherbet orange bolero, a shirt knotted at the midriff paired with a drop-waisted maxi skirt, a balconette bra worn under a sheer draped blouse, the kind of thing you might wear to sip champagne on, yes, a Mediterranean cruise. Pavlovsky, who has known Viard since 1990, says she has brought a new sense of femininity to the clothing. “There is something, I think, about a woman designing for other women.”

We’re not designing a new collection because we want to design a new collection ... it makes sense for the business and the brand.

— Bruno Pavlovsky, Chanel

In July, the Paris couture collections will be held digitally, rather than on runways. Pavlovsky is hesitant to put a time on anything returning to normal, but is hopeful that by Paris Fashion Week in September, models will at least be able to walk the runway, albeit to digital audiences.

“But between now and then, so many things could happen. At this stage probably we’re planning a show without an audience that we will livestream. Nothing has been decided, it is far too early. We need to be very agile and able to adapt.”

On this, I press Pavlovsky. There is a mood right now in the fashion industry at large that the rapid cycle of collections and the vast sums spent on shows are out of touch with a world battling climate change and global pandemics.

In May, Belgian designer Dries van Noten spearheaded an open letter, signed by the likes of Tory Burch, Carolina Herrera, Jil Sander and retailers such as Nordstrom, Bergdorf Goodman and David Jones, to change the way fashion is run: an adjustment to the deliveries of collections to stores, a shift in the fashion calendar, changes to the discounting season and more. In April, Saint Laurent announced it would not take part in the catwalk season as normal. Giorgio Armani has announced that his January Armani Privé runway collection will be "seasonless" and what is seen as a harbinger for the rest of the industry, Gucci declared it would go from five to two shows a year.

But what of Chanel?

Pavlovsky is firm when he says, “We have six collections a year today, and we don’t do it just because we want to, but because our business demands it, our customers want it. We’re not designing a new collection just because we want to design a new collection. We are designing a new collection because it makes sense for the development of the business and the progression of the brand.

The show cycle, he says, is more than just showing for the sake of it. “For the past thirty years we have been a key partner for Paris Fashion Week. It is a key cultural moment, it is a tradition, it is something very important … to the economic activity of a city. We are very supportive of that.”  

None of that is disputed, of course. But if a major brand such as Saint Laurent is changing the way it operates, what might happen to the calendar?

Pavlovsky is politely dismissive.

“Each brand has to decide what they want to do. Any brand can do whatever they want. But I think there is a strong common interest in Paris, to support the Fédération de la Haute Couture et de la Mode [which organises Fashion Week]. But brands can decide not to participate, but at the end of the day, that will make life more difficult.”

As our time comes to an end, I ask Pavlovsky: how will the team celebrate this new collection, considering each show is usually followed by a sumptuous party? On this, he is subdued and reflective.

“We will celebrate with Virginie. [But with] the situation at the moment, we will continue working on the couture collection, the spring/summer collection. Our mindset is to be careful, we don’t want to go too fast. It’s not about celebrating so much but about getting back to something much easier, more normal, by September.”

Because, of course, the show must go on.

16 Jun, 2020
Will we ever wear suits again?
Financial Review

It's perhaps not surprising that the godfather of modern suiting, Giorgio Armani, has been pondering existential questions of late. Since the pandemic sent most of us home from the office – some of us, perhaps, never to return – our suits have largely been consigned to the cupboard. But what happens now, as things start returning to normal?

"As our idea of work and home blurs and our notion of workwear is consequently interrogated, we will seek comfort above all things in our garments, while also requiring them to do multiple service in different environments: professional, semi-professional and non-professional," Armani tells Life & Leisure via email.

 

The jackets and skirts in Armani's Autumn-Winter 2020 collection envelop the body with what the designer calls "a subdued romanticism". 

For the veteran Italian designer, the changes wrought by the virus present an opportunity to re-introduce consumers to the Armani world view. "My mission as a designer has always been concerned with the idea of comfort," he explains. "That is why I pioneered the idea of deconstructed tailoring back in the '80s, and experimented with new techniques and lighter-weight, fluid materials which I have continued to develop since."

Giorgio Armani's Autumn-Winter 2020 collections take these concepts further than before. The men's collection sees suiting stripped down to its essence, with fluid jackets cut like cardigans: lightweight and free of rigidity. For women, there are jackets and skirts – many crafted from soft velvet – that envelop the body with what Armani calls "a subdued romanticism."

Armani is not the only one betting on the resurgence of tailored pieces. "Suiting will always be a mainstay, no matter what the climate," says Camilla & Marc's co-founder and creative director Camilla Freeman-Topper. "There's a sense of confidence that tailoring brings that will always be relevant for women, especially now, with so much unease in the world."

Like Armani, Freeman-Topper believes comfort will define the clothes women wear to work for the rest of the year, and perhaps beyond. "While I do believe suiting will dominate, it will evolve to reflect the current mood," she says. "That means a more relaxed silhouette that is effortless, with a sense of ease – pieces that transition from the office to the lounge room. A soft tailored jacket and a relaxed wide-leg pant, styled with a T-shirt and flats, will be prioritised over more traditional corporate suiting styles."

The designer says Camilla & Marc's upcoming collections will mirror the simplicity women are craving. "Utilitarian pieces will rule the day: easy, durable pieces that will stand the test of time. When there is so much change going on in the world, a well-curated wardrobe makes life simple."

Australian retailers say there has been a move towards more comfortable and versatile workwear for several seasons, and that COVID-19 has simply solidified the trend. "We decided a while ago, in the midst of a much-needed reinvigoration of our menswear collections, that the 'Harrolds man' was needing versatility," says the luxury department store's head of buying, Kathleen Buscema.

"He also needed comfort and confidence that said, either in the boardroom or at dinner, 'I am here and an everyday man.'" As a result, Harrolds has recently introduced more separates, travel suiting, unstructured jackets, lightweight cashmere knitwear, jersey shirting and leather sneakers.

Chris Wilson, general manager of menswear at David Jones, says: "Suiting was already going through a revolution and this has really just been accelerated by the current situation. As we return to work, more casual lightweight and linen suiting will be key."

But not everyone believes the casualisation of the office wardrobe is inevitable: Patrick Johnson, of tailoring specialist P Johnson, reckons the coronavirus fallout could send us in the opposite direction.

"The biggest boost in suit sales in decades happened in 2008, after the GFC, because people were interviewing and they wanted to look sharper," he points out. "People also became a lot more conservative with their workwear: very clean, very classic. Necktie sales spiked around that time."

Johnson believes women will be key to smartening up office attire post-pandemic. "P Johnson has only just started making custom suiting for women, but we're seeing exponential growth, and I think that pattern is going to continue," he says.

"It's a new conversation," he adds. "It's not about women dressing like men: it's a woman's suit for a woman. And I think that's going to grow quite a lot, because the inequality we've seen in the workforce is getting balanced out, albeit incredibly slowly."

Matthew Keighran, managing director of Hugo Boss SEAPAC, believes suiting will remain de rigueur in corporate environments, but says louder and more expressive styles could gain popularity as professionals start mingling again. "I think the idea of going very conservative is not going to draw customers to stores or websites," he says.

"Suiting had been moving in a different direction for a few seasons prior to COVID-19 in that it had become something a customer wanted to buy to feel good, rather than simply something to wear to work," he adds. "I believe that desire to 'dress up' will re-emerge."

Bridget Veals, general manager of womenswear and accessories at David Jones, concurs. After terrible events, she says, fashion has historically returned to glamour and escapism. "Joy is brought back through the use of print and bold colour. As we come out of this period, I believe there will be a shift back somewhat to customers wanting to dress up once again."

One thing all the experts agree on: today's customer wants workwear that will last. "There's no longer time to waste on a disposable mentality," says Freeman-Topper. "Women and men want to invest in quality and longevity over all else."

It sounds like a good sales pitch for a well-tailored suit.

11 Jun, 2020
Harvey Norman sales skyrocket
The Australian Business Review

The billionaire co-founder and chairman of Harvey Norman, Gerry Harvey, believes many retailers will go to the wall in the midst of the recession, saying the coronavirus pandemic has probably accelerated the demise of businesses that were weak to begin with.

He said the ills afflicting many sectors of the retail industry were like an “act of God” and that while some categories such as hardware and food might not only survive but thrive, businesses in clothing or fashion had been caught out.

The retail strength of Harvey Norman was put on show yesterday when the chain released its latest trading update, reporting massive sales growth of 17.5 per cent for its Australian stores in the second half.

It also announced a special dividend of 6c per share to be paid at the end of June.

News of the dividend followed its April decision to cancel a ­planned interim payout of 12c per share.

This saved almost $150m at a time when Mr Harvey felt it was prudent to hold on to cash as many believed the world was heading for a depression. The special dividend helped put a rocket under Harvey Norman shares on Wednesday.

It came at a time when many investors hungry for yield are facing slashed or eliminated dividends.

Mr Harvey said it was the right time to pay a dividend.

“At the time we cancelled the dividend people were talking about the Great Depression and we were just about ready to pay it, we agreed to pay it, all the events happened and we could have been closed down. We had the money to pay it but we decided not to.

“We had no idea what could have happened and it would have been irresponsible of a board to pay it out.

“I’m in a situation where Katie (CEO Katie Page, Mr Harvey’s wife) and I argue about it at night.

“She thinks it is going to be better and I don’t agree with her but she might be right.

“I don’t think she knows and I’m bloody sure I don’t know.’’

Mr Harvey said many retailers would not survive the recession and economic shocks from the coronavirus pandemic. “Unquestionably some will (fail), but most of the strong ones I would have thought are OK.

“The ones that won’t last are probably the ones that wouldn’t have lasted anyway. Sometimes these things hurry things up a bit.

“If you are in food or electronics you are fine, or like hardware with Bunnings, but if you are in Flight Centre or travel or you are in clothes, shoes and things like that it doesn’t matter how good you are — they have taken a big hiding.

“This is act of god stuff.’’

Harvey Norman’s flagship Australian stores recorded first-half sales growth of 0.1 per cent, rocketing to 17.5 per cent for the second half to date. For the full financial year to date sales for its Australian franchise stores were up 7.4 per cent.

Harvey Norman said government decrees saw many stores across its network in New Zealand, Malaysia, Singapore, Ireland, Northern Ireland and Europe close between March and April. This had an impact on revenue, with sales in the second half to date down 38.2 per cent in Northern Ireland, 21.7 per cent in Singapore, 7.3 per cent in New Zealand, 5.5 per cent in Slovenia and Croatia, up 1.3 per cent in Malaysia and up 25.4 per cent in Ireland.

The special dividend will be paid on June 29 to shareholders registered as of June 23.

APPLY NOW

Upload Resume/Portfolio

Upload requirements
Upload requirements
* Required Fields. † For Designers, Design Assistants and Product Developers please attach your Portfolio including sketches, illustrations, trend boards, finished products etc... Please send through in pdf or jpg format. File uploads maximum size 5MB.