16 Aug, 2019
Jobless rate steady even as extra 41,100 people find work
The Age
The Age

Australia's jobless rate was steady in July at 5.2 per cent, even after another 41,100 people found work across the country.

The Australian Bureau of Statistics reported on Thursday that 34,500 full-time jobs were created during the month in a result that surprised analysts. Over the past year, 255,600 people have found full-time work while another 77,000 have secured part-time employment.

The jobless rate fell in NSW, to 4.4 per cent, after jumping in June, while there was a steep fall in Tasmania, from 6.8 per cent to 6 per cent.

It was steady in Victoria at 4.8 per cent but rose sharply in South Australia to 6.9 per cent.

But on the more stable trend measure, national unemployment lifted to 5.3 per cent - its highest level in a year.

And underutilisation actually increased through the month to reach 13.6 per cent in a sign that there remains plenty of slack in the jobs market.

The figures came as global sharemarkets fell sharply on concerns about the world economy.

The S&P/ASX 200 was down 2.1 per cent, or $38 billion, shortly before midday after a terrible lead-in from the United States. Overnight, the Dow Jones Industrial Average index shed 3 per cent after a key economic indicator suggested the US is facing a recession.

The price of long-term government debt is now lower than short-term debt, a development called an inverted yield curve, as investors believe the economy is likely to deteriorate. The yield curve has inverted ahead of every recession in the past 50 years.

Concerns over the American economy plus poor indicators out of China and Germany, and growing fears about the impact of Brexit on the European economy were all cited as reasons for the sell-off.

Opposition Leader Anthony Albanese said the government had no plan to deal with the troubles facing the economy, instead thinking it could "put its feet up" for the next three years.

He said the issues facing households, the retail sector and the gyrations on global markets all pointed to economic trouble.

"It's not okay on the economy, it's not okay on the people who are falling behind," he said.

But Reserve Bank deputy governor Guy Debelle, in a speech on the major ricks facing the domestic economy delivered in Sydney on Thursday morning, said stabilising house prices and a boost from the Morrison government's tax cuts were likely to help strengthen families' bottom lines and the overall economy.

He said while household consumption had been muted over the past 12 months, there were some positive signs ahead.

16 Aug, 2019
Target to slash 80 head office jobs as it looks to go upmarket
The Australian

Target will make 80 positions at its head office redundant as part of a new strategy that will see it move upmarket by offering better quality clothing, fashion and home furnishings to put some distance between it and the rest of the discount department store sector.

Target will be repositioned over the next two to three years to represent a more quality product offer that delivers value rather than simply heavy discounting and bargain-basement prices.

Staff at Target began to attend briefings this morning, The Australian can report, where they were informed about the corporate restructure that will see large changes across key management roles in buying, sourcing, marketing and other head office roles.


It will see 80 corporate roles made redundant. There will be an attempt to redeploy staff to other parts of the retailer and its parent company, Wesfarmers.

Changes within the stores would be seen over the next two years, with managing director Ian Bailey telling The Australian he believed it was the right time to recast Target as offering shoppers a better quality fashion or homewares product that could match it with more middle market or up-market retailers like Myer or Country Road — but at much more affordable price points.

The re-engineering of key buying and sourcing teams under Kmart managing director Mr Bailey, who is also responsible for Target and recently acquired Catch Group, is part of his gambit to accelerate the business transformation of the struggling chain of stores and return it to the successful retailer it was almost a decade ago.

Mr Bailey has told his staff today that Target will switch its attention to improving its offer, and the quality of the offer, around three categories — women and men’s clothing, “soft” furnishings (bedding, cushions, linen etc) and toys — and that the head office management needed to be restructured to meet this challenge.

“It is really about the acceleration of the transformation of Target, to do that we know we need to make ongoing improvements to the offer both in terms of the product, the stores and online, and so what we have done is reorganise our teams to go after that,’’ Mr Bailey told The Australian.

“So we are making some adjustments to the number of people we have, so when we go to the old shape to the new shape we have about 80 roles that are no longer required.”

He said Target needed to stand for better quality products, and it would stand apart from stablemate Kmart and other retailers in the discount sector such as Big W and Best & Less and instead would take the fight to more upscale chains.

“To a large degree it is what customers are already asking us to deliver, which is in many ways what we did in the past, which was really good quality products, stylish and at a good price. So when you are looking at who we would benchmark ourselves against I think the benchmark is less about Kmart and Big W it is much more about the specialty retailers and others who are out there who sell similar products at a higher price.

“It could be Cotton On, Country Road, it could be Myer, so anybody within that space which is selling good quality products but at a higher price than Target would sell. It is very much this value based offer but for higher quality products.

“And if you looked at Target’s history this is where it performed at its best, going back to around 2010, 2012, that era and it was exceedingly strong in some of those categories at that time.’’

He said it was still a discount department store, in terms of prices, but at much better standards and quality.”

Target has been in the doldrums for almost a decade, writing off hundreds of millions of dollars and struggling to turn a decent profit.

In January, Wesfarmers, which owns Kmart and Target, revealed that sales at Target was still under pressure, only growing 0.2 per cent for the first half and same store sales up 0.5 per cent. Last year Target booked total impairments of $306 million against the carrying value of its brand name, remaining goodwill and property and equipment.

To help resuscitate earnings and drive more efficiency from the business Mr Bailey told investors last year he intended to reduce around 20 per cent of Target’s selling space in the next five years.

16 Aug, 2019
Super Retail bucks market meltdown on back of strong result despite ‘brutal’ consumers
The Australian Business Review

Super Retail Group boss Anthony Heraghty believes shoppers are in a “brutal and volatile” state as they assess their household budgets against spending needs, and that as the retail sector goes through one of its biggest transformations in its history his business will up its investment in a wide range of operations from online to cyber security to protect its long-term earnings.

Unveiling Super Retail’s fiscal 2019 results this morning, Mr Heraghty also told The Australian that Amazon remained a massive threat to local retailers, including his BCF, Rebel, Macpac and Supercheap Auto chains, and that the US retail giant’s power shouldn’t be underestimated.

Super Retail was nominated by many analysts as one of the biggest losers when Amazon arrived 20 months ago in Australia, but the company this morning posted strong sales and profits which helped its shares rally more than 6 per cent amid widespread carnage on the market.

Shares in Super Retail bounced 6 per cent this morning on the release of its fiscal 2019 performance and at noon were up 33 cents, or 3.8 per cent, at $9.01.

Super Retail has posted an 8.6 per cent rise in full-year net profit to $128.3 million as sales lifted 5.4 per cent to $2.57 billion. Pre-tax earnings increased 7 per cent to $314.7m. The result included $8.9m in expenses in relation to revision of wages underpayment estimates and remediation costs with a $9m in extra charges to EBITDA for 2020 to be booked due to a new wages agreement.

A trading update showed a mix performance for its businesses, with Supercheap Auto sales for the first six weeks of fiscal 2020 up 3 per cent, sales at Rebel better by 2 per cent, BCF was 5 per cent up and Macpac down 3 per cent with that fall blamed on a shift in the timing and duration of its winter promotion.

Mr Heraghty said the retail environment remains highly competitive as it faces structural disruption at an unprecedented scale.

“The retail market in Australia is going to be challenging for some time yet, I think you still going to have a pretty brutal and volatile customer and the industry is still going through it’s single biggest transformation since its inception and as we consider online, role of technology, costs etc, I wouldn’t declare that we are through that period in any way, shape or form.’’

This has seen Super Retail up its investment in its own capabilities and operations to cope with this level of disruption and ultimately benefit from it as well.

“The area we are focused on is investing in the business to deal with that change, we are seeing our depreciation (costs) increase, it has gone up 16 per cent in this period, and that’s invested in the business, so we have not only invested in our core store network, invested in e-commerce platform, we have rebuilt our integration systems, we have even set up new product information management, we have had to strengthen in cyber security — which if you think about it that is a concept that would be foreign to retailers ten years ago — we had to invest heavily in the business to be able to navigate this change in the market.’’

Turning to the results, Supercheap Auto, which accounts for more than half of its earnings, posted sales increase of 3.4 per cent to $1.04bn as EBIT rose 5.3 per cent to $120.6m.

At its Rebel chain sales were up by 3.8 per cent to $1.016bn as EBIT lifted 2.5 per cent to $93.8m. Key categories of apparel and footwear delivered solid sales growth and fitness accessories also performed well.

At Boating Camping Fishing (BCF) sales rose 3.3 per cent to $514.6m but earnings fell from $27.3m to $20.8m as heavy discounting in the sector and strong competition pinched profitability.

Its recently acquired Macpac business improved sales from $81.5m to $138.8m as its business was fused together with Rays with earnings hitting a combined $13m from $2.3m in 2018.

Super Retail declared a fully franked final dividend of 28.5 cents per share, up from 27.5 cents, payable September 26.

16 Aug, 2019
‘A lot of great work’: JB Hi-Fi CEO shares highlights from FY19
Inside Retail Australia

JB HI-FI Group improved annual net profit and group sales for the seventh year in a row in FY19, despite the challenging retail environment felt by many during the election cycle.

This improved result was felt across JB HI-FI’s Australian and New Zealand business, as well as homewares retailer The Good Guys, which cumulatively saw NPAT up 7.1 per cent to $249.8 million, and sales reach $7.1 billion – 3.5 per cent higher than FY18. 

Murray also pointed to a strong online showing – which grew at 23 per cent year-on-year, now making up 5.5 per cent of total sales – though maintained that the company’s physical stores remained incredibly important to its overall health. 

“We’ve been doing a lot of great work. I think 23 per cent growth over a number of years is pretty solid growth,” Murray told Inside Retail

“What’s most important to me is that we’re growing online, but doing it in a way that doesn’t damage the store network.

“We’re not trying to have one at the expense of the other. You get the same price in-store, you get the same price online. I want to make sure that customers get a great outcome shopping at JB whichever channel they shop in.”

Additionally, while the business isn’t rolling out as many stores as it has previously, it is looking at each new opportunity as a chance to learn. For example, the big-box retailer opened its first small-scale stores in Sydney’s Virgin and Jetstar domestic terminals.

The lesson learned? The JB HI-FI formula works just as well when shrunk down.

“We can run a 75sqm store and make money. [That is] an incredibly small footprint store relative to our normal stores,” Murray said. 

“Obviously, for us that is interesting, because if you can make a 75sqm store work, and a 1200sqm store work, what are the options in between?”

Murray stopped short of saying JB HI-FI would invest into further smaller-format stores, as has been seen by the likes of Coles, Woolworths and Ikea, but told Inside Retail it is something the management team thinks about often.

“We need to make sure that all of our stores remain productive, and that we find the right store size for the right location,” Murray said. 

Turnaround in NZ

While JB HI-FI has almost 200 stores in Australia, it holds a comparatively slim market share in New Zealand at only 14 stores. However, Murray maintains that the electronics retailer is in fourth position in its only overseas business, and holds some of the highest-turnover stores in the New Zealand market.

“You have two strong competitors in Noel Leeming and Harvey Norman, and they’re turning over [approximately] $700 million each. Our presence is smaller, so therefore our market presence is smaller,” Murray said.

“The best decision we made [in New Zealand] was putting Cherie Kerrison as managing director. That’s been terrific. I think the results we’ve achieved since she started in October have been really pleasing.

“We’re a year into a [multi-year] turnaround program, so we’ll see how we go,” Murray said.

Despite the improving performance from the New Zealand side of the business, Murray said JB HI-FI has no plans to expand into other international markets.

13 Aug, 2019
Retail appointments
Inside Retail

Yum recruits Pepsico VP 

Yum Brands has announced that Pepsico executive Chris Turner will join the company as chief financial officer, closing out a nearly five-month-long search to fill the position. The appointment is effective August 8.

Turner will report to chief executive officer Greg Creed, and will assume global responsibility for finance, corporate strategy, supply chain and information technology. 

At Pepsico, Turner led its Walmart business as senior vice-president and general manager. Before that, he was a senior vice-president with Pepsico’s Frito-Lay North America. Before joining Pepsi, Turner spent more than 13 years at management consulting firm McKinsey & Co.

Yum Brands, based in Louisville, Kentucky, has over 48,000 restaurants in more than 145 countries and territories primarily operating the company’s restaurant brands – KFC, Pizza Hut and Taco Bell.

Apple’s Ive goes independent

Apple’s chief design officer Jony Ive will leave the iPhone maker later this year to form an independent design company, with Apple as one of its primary clients.

Ive, a close professional confidant of founder Steve Jobs, has long been a major part of Apple’s phenomenal growth story. He joined the company in 1992 and led its design teams from 1996. He took up his current role as chief design officer in 2015.

Apple CEO Tim Cook praised Ive’s contribution to the company, saying, “Jony is a singular figure in the design world and his role in Apple’s revival cannot be overstated.” 

Ive’s new company will be called LoveFrom, the Financial Times reports, and will be based in California. Ive told the newspaper he would work on Apple priorities wearable technology and healthcare in addition to unspecified “personal passions”. 

Rooney to join CBRE

Simon Rooney, one of Australia’s leading capital markets brokers, will join CBRE as executive managing director, retail investments, Shopping Centre News reports.

Rooney is well known for the volume of retail transactions he has executed totalling more than $20 billion over his career, including the recent sales of Brisbane’s Indooroopilly shopping centre, Westfield Eastgardens in Sydney and the Vicinity Centres portfolio.

Rooney is joining CBRE on August 1, after 25 years at JLL, where he carved a niche as the market leader in institutional retail transactions and ranked as one of the firm’s top three brokers globally.
Rooney has also been instrumental in significant mixed-use transactions such as 80 Collins Street in Melbourne and the MLC Centre and Wynyard Place in Sydney.

12 Aug, 2019
King Living launches showroom in Canada

Australian furniture business King Living has opened its first showroom in Canada, continuing the brand's global roll-out which has seen stores open in Shanghai, Singapore, Malaysia and New Zealand. 

Located in a newly renovated 1000sqm heritage building in shopping district South Granville, Vancouver, the showroom will offer sofa designs, dining ranges, contemporary bed and mattress ranges and outdoor collections. 

King Living chief executive Anna Carrabs said the Canadian launch is a key component to the furniture retailer’s global growth strategy – with Vancouver being the first of many more showrooms in the American region. 

“King Living has already expanded into the Asian market with showrooms in Singapore, Malaysia and Shanghai, which have proven to be very successful in the roll out of King Living internationally,” Carrabs told Inside Retail.

“Showrooms will always be a huge part of the King DNA. We want customers to see, feel, test, and get to know the pieces in the flesh. All our designs are investment pieces made to last, so the tactile experience a showroom offers will always be incredibly important.”

According to Carrabs, the Australian reputation for quality goods has set them apart from international competitors, and has been the driving force behind its global expansion.

“One of our biggest challenges has been challenges has been ensuring we find the right location for our King Living showrooms,” Carrabs said.

“It is so important that our stores reflect our core values and Australian way of life. It took a considerable amount of time to find our showroom in Vancouver.

“We wanted to be part of the vibrant shopping district which features around great galleries and gourmet restaurants so now, King Living is right at home.”

12 Aug, 2019
June was a good month for fashion; 'retail is breaking from its slumber'

Clothing, footwear and accessories retail turnover rose 2.0% in June according to the latest data from the Australian Bureau of Statistics (ABS). 

This rise follows a 0.2% decline for the sector in May. 

Overall, Australian retail turnover increased 0.4% in June, following a lacklustre 0.1% rise in May. 

Despite the strong results from the Clothing, footwear and accessories category, ABS director of quarterly economy wide surveys, Ben James said that the retail industry is still facing challenges. 

"There were rises in five of the six industries this month, although overall the retail environment remains subdued.

"Rises were seen in Clothing, footwear and personal accessory retailing, Other retailing (0.6%), Cafes, restaurants and takeaway services (0.5%), Food retailing (0.1%) and Household goods retailing (0.2%). 

"Department stores (-0.6%) was the only industry to fall this month," he said. 

Online retail contributed 6.1% to the total retail turnover in June 2019, while in June 2018 its contribution was 5.7%. 

In seasonally adjusted terms, New South Wales (0.3%), Western Australia (0.8%), Queensland (0.4%), Victoria (0.3%), Tasmania (1.5%) and the Australian Capital Territory (0.3%) all experienced rises in June, while South Australia (-0.3%) and the Northern Territory (-0.2%) experienced declines in the month. 

In a statement, National Retail Association CEO Dominique Lamb said that the most recent results show that retail has bounced back. 

"Just hours after some had been declaring that there was a ‘retail recession’, the Australian Bureau of Statistics (ABS) sales figures for June saw a healthy spike in turnover for the month.

"In the final month of the 2018-19 financial year, retail sales soared by 0.4 per cent, a welcome sign following underwhelming results in previous months. 

"But what’s also important to note is that last week’s figures don’t include the impact of the personal tax cuts or the latest reduction in interest rates (both of which took place in July).

"This does not mean that retail is out of the woods and there are still challenges ahead, however, there is reason to be optimistic that retail is breaking from its slumber and is ready to surge in the second-half of 2019," she said. 


12 Aug, 2019
Mirvac profit dips in ‘challenging market’

Mirvac has reported a 6.0 per cent dip in full-year profit to $1 billion as the property group says trust in its brand is helping sustain it as the residential building industry goes through a rough patch.

Revenue for the 12 months to June 30 was down 1.0 per cent on the previous year to $2.78 billion and Mirvac will pay an unfranked final distribution of 6.3 cents, up from 5.5 cents in the previous corresponding period.

“Despite a challenging market, we have seen sustained sales throughout the financial year, and we achieved our settlement target and maintained our default rate at less than two per cent,” said Susan Lloyd-Hurwitz, Mirvac chief executive.

“This is testament to the enduring quality of our products and our trusted brand.”

The company’s earnings from residential building fell 33 per cent from the previous year to $201 million – a result it said was as expected and due to fewer apartment lot settlements.

Earnings before interest and taxes from Mirvac’s office and industrial division rose 26 per cent and its retail segment edged up 4.0 per cent.

Lloyd-Hurwitz said their retail division delivered another solid result, which is pleasing news given the highly competitive and rapidly evolving retail sector.

“Our commitment to constantly curating retail mixes and creating unique experiences has created a portfolio of thriving retail centres that offers the right retail in the right urban locations – densely populated with low unemployment, high incomes and strong population growth,” she said.

“We are also seeing the increase in value that our retail expertise is able to deliver to our office and residential portfolio.”

Mirvac shares were up 4.23 per cent to $3.325 at 1305 AEST on Thursday.

8 Aug, 2019
Australian Retailers Association

The Executive Director of the Australian Retailers’ Association, Russell Zimmerman, said June retail trade figures from the Australian Bureau of Statistics showing annual growth of 2.55%, with Queensland (5.68%) and Victoria (3.47%) continuing to outpace the country, were best viewed as “mostly positive, with areas of concern.”

Addressing month-on-month figures showing growth in June of 0.4%, after a 0.1% rise in May, Mr Zimmerman said these underlined the ARA’s belief the federal election dampened spending, which was starting to rebound.

“My first point is the “election effect” has now washed out of the retail trade figures, and the numbers for June – with strengthening in both year-on-year and month-on-month indices – underline that,” Mr Zimmerman said.

“That said, whilst the overall picture is positive, these numbers do highlight some areas of concern,” he added.

Mr Zimmerman noted that ARA commentary around patchy but nevertheless positive overall retail trade in recent months appeared to be correct, but stressed that this overall sentiment did not whitewash the fact – borne out by today’s figures – that some parts of the retail sector remained heavily subdued.

“We’ve had comment today, for example, from David Jones that they’re finding it tough; the exit of Debenham’s from Australia in a tough environment for department stores is further underlined by two consecutive months of contraction in that sector, for a year-on-year expansion of just 0.93% ,” Mr Zimmerman said.

“In contrast, continued growth in the café, restaurant and takeaway sector shows strengthening expenditure in a very discretionary category, so we certainly know consumers have money to spend,” Mr Zimmerman said.

Mr Zimmerman said that annual growth in food retailing was being supported by strong growth in supermarket trade (3.81%), whilst a fall in specialised food (-1.55%) possibly reflected the impact of the drought.

“So again, the overall picture is pleasing, but when you unpack it, there are these areas for concern,” he said.

Mr Zimmerman noted that continued year-on-year falls in furniture retail figures (-3.31%) were probably compounded by the effects of an entrenched culture of permanent discounts in a densely competitive sector.

“On the other hand, we’ve seen increases in the clothing (1.89%) and footwear and personal accessories (6.36%) categories, but these may be at the expense of margin due to ‘end of year’ sales,” Mr Zimmerman said.

Mr Zimmerman said he suspected end of financial year sales at reduced margins had similarly compounded the disappointing numbers in the department store sector in today’s June figures.

Mr Zimmerman again noted the longstanding decline in newspapers, books, and other recreational goods, but said substantial growth in sales for pharmacies, cosmetics, toiletries and online reinforced the ARA’s view that these categories – viewed overall – were emblematic of consumers’ shift to online purchases in certain areas.

Mr Zimmerman noted Queensland and Victoria – accounting for 44% of the national population – continued to drive retail sales nationally, and that spending in NSW appeared to be recovering in today’s figures.

“Even so, we remain deeply worried about Northern Territory retailers, who continue to experience declining volumes, and we’re concerned South Australia has declined for two consecutive months, so as I said these figures are mostly positive, but there are certainly areas of concern that we’ll watch,” Mr Zimmerman concluded.

7 Aug, 2019
Mike Ashley wins race to buy Jack Wills
BBC News
BBC News

Mike Ashley has emerged as the winner in an auction to buy the UK fashion retailer Jack Wills for £12.7m.

Mr Ashley's company Sports Direct has bought Jack Wills out of administration after competing against Edinburgh Woollen Mill Group.

It will acquire 100 Jack Wills stores in the UK and Ireland and take on 1,700 staff as part of the deal.

It is the latest in a series of struggling companies that Mr Ashley has acquired, with mixed results.

Sports Direct recently admitted that it regretted rescuing House of Fraser a year ago after discovering problems that it described as "nothing short of terminal" - and that it will have to close more stores. 

Commenting on Jack Wills, Sports Direct said: "We will look to work with the landlords to reduce the rents to keep as many stores trading as possible."

The company has 10 stores overseas and KPMG, which is the administrator to Jack Wills, is examining options for those assets.

Suzanne Harlow, chief executive of Jack Wills, said that while the company has worked on improving its financial performance: "The challenging trading environment led us to conclude that the company's long-term future would be best served as part of a larger group and Sports Direct will enable us to do this."

Jack Wills reported an operating loss of £14.2m for the year to 28 January 2018, the most recent results available. 

The company will be housed in a new division at Sports Direct which will focus on buying and building fashion and sports brands.

It will report to Michael Murray, Sports Direct's head of elevation and Mr Ashley's future son-in-law who is engaged to the retail tycoon's daughter Anna.

7 Aug, 2019
Boohoo moves for Karen Millen and Coast but 1,100 jobs at risk
The Guardian

More than 200 UK outlets of Karen Millen and Coast are to close, putting up to 1,100 jobs at risk, after the fashion brands’ online business was bought out of administration by internet retailer Boohoo for £18m.

Administrators at Deloitte said 62 head office staff had been made redundant with immediate effect and stores would only stay open for “a short time” while stock was sold off.

The two chains currently trade from 32 standalone stores and 177 concessions in department stores including Debenhams and House of Fraser in the UK.

Like many other retailers, the fashion chains have suffered from higher costs and falling shopper numbers on the high street amid weak consumer confidence and changing shopping habits.

Other fashion chains to have collapsed this year include Jack Wills, LK Bennett, Pretty Green and Select. Others have been forced to seek rent cuts to survive, including Philip Green’s Topshop group Arcadia, Debenhams and Monsoon.

Rob Harding, joint administrator at Deloitte, said: “As we continue to see, the retail trading environment in the UK remains extremely challenging.” He said Karen Millen had tried and failed to find a buyer for the whole business, but the deal with Boohoo would enable “the survival of these iconic British brands through an online platform”.

Boohoo said the two brands had online sales from their own websites of just over £28m and would be “highly complementary additions” to its portfolio of brands, which already includes PrettyLittleThing, Nasty Gal and MissPap.

John Lyttle, the group chief executive of Boohoo, said the acquisition was“another milestone in the group’s growth story as it continues to invest in its scalable multi-brand platform and gain further share in the global fashion e-commerce market”.

Analysts said the acquisitions would help Boohoo, which focuses on young fashion, shift towards a more grown-up market as its shoppers got older and shied away from disposable fashion.

Kevin Stanford, who co-founded the group with his former wife Karen Millen in 1981 before the pair sold the business to Icelandic investment firm Baugur in 2004, said he thought Boohoo would make a better job of looking after the brand than its current owner, the Icelandic bank Kaupthing.

“Its really sad for all the people working there but something had to happen as the current owners have sadly destroyed the brand … That’s what happens when banks run fashion companies.”

Millen added: “I feel a great sense of loss that a brand that became iconic on the high street and across the world is now likely to close its doors and put an end to everything we put our heart and soul into. I feel sad for everyone who stands to lose their jobs . It’s the end of an era. It’s a very, very sad day.”

Karen Millen and Coast together employ about 1,100 people across the UK, none of whom have been taken on by Boohoo under the deal.

Both brands also have outlets overseas. Coast has concessions in the Middle East and outposts in Singapore and Malaysia. Karen Millen has three flagship stores in the US – in New York, Chicago and Santa Monica – and others in Australia as well as concessions and franchise stores in 63 other countries. Deloitte said the overseas businesses would continue trading “in the short term”, suggesting that these stores would also close in coming months.

The Karen Millen holding company lost £5.7m in the year ending February 2018, after losing £11.9m in the previous financial year. The two brands had combined sales of £174m in the year to February 2019.

Deloitte was hired as adviser about six weeks ago to assess options, and quickly decided a sale was the best option.

A large number of Coast’s concessions are inside Debenhams and House of Fraser department stores, which are being forced to close branches to weather the high street trading crisis. Coast was owed £1m when House of Fraser went into administration a year ago and closed more than 20 stores in a prepack administration deal in October 2018 when it was acquired by sister company Karen Millen.

Both brands have endured a rocky history since being bought by Baugur which collapsed in 2009. They have since been controlled by failed Icelandic bank Kaupthing.

Boohoo has been one of the few retailers to buck the trend of painful decline in the sector. In June, the company reported a 39% sales rise in the three months to 31 May.

It was founded by the fashion entrepreneur Mahmud Kamani and Carol Kane in Manchester in 2006. It floated on the stock market in 2014 and its value has since soared. Its shares climbed 4% after the Karen Millen deal was unveiled, valuing the business at £2.8bn.

7 Aug, 2019
Country Road launching new range for teens
Inside Retail Australia

Luxury fashion brand Country Road is tapping into a new market: pre-teen and teen girls and boys. 

The retailer on Wednesday revealed its first-ever Teen Collection, including denim, sweats, t-shirts, dresses, skirts and swimwear for girls and boys aged 8-16. 

The collection closes a gap in Country Road’s previous offering of women’s, men’s and kids fashion and homewares. 

Elle Roseby, managing director of Country Road, called it “a milestone” for the brand. 

“Up until now, Country Road has designed for most children in a family, from newborn to kids, leaving a gap for pre-teens and teens. We’re thrilled to be launching an age-appropriate collection for a fashionably conscious generation whilst demonstrating our connection to the environment,” Roseby said in a statement.

The collection was developed with sustainability at its core, which reflects the brand’s broader commitment to sustainability. 

Denim styles in the first teen collection are made from recycled fibres, meaning a percentage of the denim is made from ‘pre-loved’ denim, and all the t-shirts and heritage sweats in the collection are made from organically grown cotton.

Dresses, denim jackets and denim styles use Better Cotton Initiative denim, and swimwear uses recycled nylon from discarded fishing nets and factory offcuts. 

All items in the collection will be available in-store and online at David Jones from August 8. 

As part of the launch, Country Road is profiling 13-year-old author Bella Burgermeister. Her book Bella’s Challenge offers a kid’s take on the United Nations’ sustainable development goals.

7 Aug, 2019
Menswear brand lands in Myer
Inside Retail Australia

Menswear retailer yd. Australia is unveiling 15 new concession stores in Myer over the next three weeks.

The first concession store opened on Wednesday, August 7, and the remaining stores will roll out in Sydney and Melbourne shortly. 

“yd. is excited to introduce its smart product offering and world-class customer service to Myer customers,” said general manager Vlad Yacubson. 

The concession stores will extend the retailer’s bricks-and-mortar presence beyond the 108 standalone stores it currently operates across the country. 

Yd. this month is also announcing the winner of its nationwide  
#ydcrewsearch campaign to find a new ambassador for the brand. Seven finalists are currently vying for the much coveted title.

“The yd. crew search has been a huge success for the brand. We had over 1500 people apply for the yd. crew search competition and the winner will receive a six-month contract as a key influencer for our brand. We’ve been able to create highly-engaging content using guys who genuinely and absolutely love yd,” said yd. Australia’s head of creative, Jeremy Taylor.

6 Aug, 2019
US slaps 10 per cent tariff on extra $US300bn of Chinese goods
The Australian Business Review

President Trump said that the US would impose 10pc tariffs on an additional $US300 billion ($440bn) in Chinese goods and products beginning on Sept. 1, after trade talks this week failed to yield any significant results.

In a series of tweets, Mr Trump, who received a briefing from his trade team Thursday, said that negotiators still planned to resume their discussions, as scheduled next month, and expressed his interest in reaching “a comprehensive Trade Deal” with China.

However, he said that China’s promise to increase its purchase of US agricultural products, as well as its promise to stop the sale of fentanyl to the US have fallen short.

Unlike previous rounds of tariffs, which have focused largely on industrial goods, the $US300bn tranche is set to include a host of consumer products, from electronics and cellphones to apparel.


The tariffs would include Apple‘s iPhones unless such phones are granted an exemption or otherwise excluded from the final list. Mr Trump said in July that Chinese-made parts for Apple’s Mac pro computers won’t get exemptions.

The tariffs would also affect practically all the groups of products not hit previously, with the exception of select categories, such as medicines.

Stocks, bond yields and oil prices dropped following Mr Trump’s announcement. The Dow Jones Industrial Average erased a rebound of more than 300 points, oil dropped 6 per cent and the yield on the benchmark 10-year US Treasury note plumbed fresh 2019 lows. The blue-chip index dropped 60 points, or 0.2 per cent, to 26800. The S&P 500 fell 0.4 per cent and the technology-heavy Nasdaq Composite slid 0.4 per cent.

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met this week with Chinese Vice Premier Liu He in Shanghai after a monthslong freeze in trade discussions.

Apart from small steps, however, expectations were low for making significant progress in resolving a trade dispute that has rattled global markets and seen both sides slap punitive tariffs on about half the more than $US600bn in goods they trade.

Speaking to the Fox Business Network earlier Thursday, Mr Trump’s China trade adviser Peter Navarro indicated that the president sees an economic benefit to tariffs.

“Tariffs are good. Tariffs are raising revenues,” he said. “They’re helping defend our steel and aluminum industries. They’re helping us get China to the negotiating — do you think China would be at the negotiating table right now?”

6 Aug, 2019
Ralph Lauren opening five new stores this year
Inside Retail Australia

US fashion brand Ralph Lauren is ramping up its presence in Australia with the launch of its first standalone women’s store in Sydney’s CBD last month.

The store, located in the iconic Queen Victoria Building, is part of the transformation over the last five years of the brand’s previously known ‘Blue Label’ into ‘Polo Ralph Lauren for Women’.

“Polo Ralph Lauren for Men is well-established in the Australian market and we see an opportunity for our women’s business to grow as we further expand our offering across different channels,” the brand told Inside Retail.

Four more stores carrying both womenswear and menswear collections are slated to open across the country in September and October. The stores will be located in Indooroopilly and Sunshine Plaza in Queensland, Melbourne Emporium in Victoria and Canberra Centre in the ACT.

“The store openings build on Ralph Lauren’s targeted expansion across Australia and around the world as part of its Next Great Chapter strategy to deliver sustainable, long-term growth and value creation,” the brand said.

The brand told Inside Retail it is committed to the expansion of the Polo Ralph Lauren business in Australia, where it is distributed through owned, standalone stores, as well as through David Jones, Myer and Glue, and online through The Iconic.

The business has a 25-year history in Australia. Initially operating as a licenced brand, Polo Ralph Lauren took back control of the local business in 2013.

1 Aug, 2019
FY19 results will be mixed, but conditions are improving: Citi
Inside Retail

The 2019 reporting season is expected to reflect a highly challenging period for retailers, but it could set the stage for a more comfortable FY20, according to analysts at Citi.

Citi analyst Tony Brennan told media on Wednesday that slowing momentum in the last financial year may not reflect the conditions they will be trading under over the next few years.

“While much is negative now, the next two to three years could be far more positive,” Brennan said. 

Retail analyst Bryan Raymond said that in the short term, Citi expects retail to deliver mixed trading updates – which has already been reflected by the likes of Temple & Webster, Kmart, Kogan, and David Jones. 

“While 2h19e was a particularly challenging period, only Kmart, Target, Adiars and Michael Hill downgraded on weaker trading conditions,” Raymond said. 

“Retailers have worked hard on generating cost efficiencies to offset a weak sales growth environment. As a result, we expect the focus of reporting seasons to be on result quality and the read through they provide for FY20e.”

Much of this growth is expected to come from tax refunds and rate cuts putting more cash in consumers’ pockets. This is unlikely to be reflected in August trading updates, and more likely to be fully reflected in future updates in October.

“I know it feels tough out there, but I think things are starting to improve,” Raymond said. 

Citi largely is forecasting a slowdown in like-for-like sales across the broader retail industry – though certain retailers are tipped to buck this trend.

Coles, for example, is expected to see strong growth over the second half of 2019 due to food inflation boosting the industries top line growth.

With the success of Coles’ Little Shop campaign last year, the Little Shop 2 campaign could have a large impact on the quarter, despite Woolworths’ Ooshies campaign occurring at the same time. Raymond called it an “interesting period” for the supermarket.

In terms of the full year, however, Raymond expects fairly low-level growth for Coles, with an NPAT of $897 million – down 4 per cent year-on-year.

Raymond expects JB Hi-Fi’s July trading update to be ‘critical’ to restoring confidence in its earnings outlook, after trade disruption from the election period, weaker activity levels, and an elevated TV deflation.

As such, the retailer’s earnings before interest and tax is expected to decline over the second half of FY19 by 5 per cent, depending on the gross margin recovery of The Good Guys.

“The Good Guys gross margins fell by ~200bps in 2H18, which we expect to recover by 80bps year-over-year in 2H19e,” Raymond said. 

“While the competitive environment has been better, the guidance range indicates this recovery may take longer than expected.”

Dean Blake

30 Jul, 2019
New Super Retail Group CEO wants to grow customers rather than stores
Financial Review

The owner of Supercheap Auto, Rebel and BCF is shifting its focus to customer growth rather than new stores and same-store sales growth as revenues move online.

New Super Retail Group chief executive Anthony Heraghty says traditional retail metrics such as like-for-like sales and sales per square metre are becoming increasingly irrelevant as e-commerce accounts for a larger share of revenue.

SRG's online sales are growing as much as 41 per cent for brands such as Rebel and now account for about 7 per cent of group sales.

Mr Heraghty says the retailer is starting to focus on growing total customers and the amount of money they spend in stores and online rather than how much they spend in each channel.

"We'd like to measure the annualised value of the customer membership base and its movement," Mr Heraghty told The Australian Financial Review in his first interview since taking the helm from long-serving CEO Peter Birtles in February.

"If you have six million customers and you can lift that to 6.5 million and increase spend by $10 that's a pretty good result if you keep your [store] network stable," he said.

"You're fractionalising costs over every channel, not just stores, and then [you can] make decisions about cost-to-serve and invest marketing dollars where you get better returns.

"We're down the track on that, building a customer value model."

Same-store sales growth is still the key measure that analysts and investors use to judge a retailer's sustainability, but as online sales penetration increases and store sales stagnate, this metric is becoming increasingly immaterial and even misleading.

Retailers who measure online and store operations as separate entities are in danger of mis-allocating resources as the demarcation between offline and online channels blurs and more consumers shop across multiple channels – researching online before shopping in stores, for example, and researching in stores before completing their purchases online.

At SRG, while 7 per cent of sales are online, 9 per cent of customers shop both in store and online and only 2 per cent shop online exclusively and never go into stores. About 4 per cent opt for delivery and 3 per cent order online and pick up in store (at Rebel more than 25 per cent of sales are click and collect.)

"That changes your mindset around the way you leverage the network and think about online profitability," said Mr Heraghty.

Between 60 per cent and 80 per cent of SRG's transactions are made through its loyalty club, which has 5.5 million active members.

Mr Heraghty is keen to better leverage the data collected through the program to understand who its best customers are and spend more marketing funds on them rather than targeting less profitable customers, such as those who only shop during clearance sales and ask for home delivery, which costs the retailer more than click and collect.

"It's not about being punitive but going where the love is," Mr Heraghty said.

"We have a single view of the customer and transactional data for every single customer [in the loyalty program] and that's a gift," he said.

The 45- year old father of two joined SRG in 2015 to run its outdoor leisure business after almost six years running Pacific Brands' Bonds business, three years as marketing director at Foster's Group, three years as managing director of advertising agency George Patterson Y&R and nine years as managing director of McCann Australia.

As managing director of outdoor leisure, Mr Heraghty repositioned boating, camping and fishing chain BCF, restructured Ray's by closing loss-making stores, initiated the acquisition of Macpac and voncerted Ray's stores to Macpac stores.

"We're transitioning from a product-oriented to a customer-oriented company," Mr Heraghty said.

"We're working out how to put all the transaction data together, how we can leverage that and activate it ... and looking at what capabilities we need to  manage that," he said.

At the same time the company is opening fewer new stores, with the exception of the fast-growing Macpac brand, "slowly colouring in the map vs rolling out," he said.

Like-for-like sales across the group rose 4.3 per cent in the 17 weeks ended April 27, buoyed by 4.2 per cent same-store sales growth at Supercheap Auto.

Echoing the comments of several retail leaders, Mr Heraghty said retail sales had been soft since the federal election and the benefits from promised tax cuts had largely been offset by consumers' concerns about the economy amid record low interest rates.

However, he expects a sales boost when tax rebates for low and middle-income earners start flowing through in the next few months.

On Friday, Mr Heraghty completed a restructure of his senior management team, appointing former Coles executive Paul Bradshaw as managing director of BCF, effective November 25.

Mr Bradshaw has worked for Coles for nine years in several positions including chief store operations officer and group general manager for store development.

Mr Heraghty says Mr Bradshaw's store operations expertise will complement the skills of new Supercheap Auto managing director Benjamin Ward,  who starts on July 29, and new Rebel managing director Gary Williams.

23 Jul, 2019
Super Retail Group names new managing director for BCF
Inside Retail

Super Retail Group has appointed former Coles executive Paul Bradshaw as managing director of its Boating, Camping and Fishing (BCF) business.

Bradshaw, who will sit on the company’s executive leadership team, will commence with his role on November 25.

The former supermarket chain exec will replace Ethan Orsini who has occupied the role in an interim capacity since February 20, when Anthony Heraghty was promoted to the role of Super Retail Group managing director and CEO.

Bradshaw was with Coles for the past nine years in several executive leadership positions including its chief store operations officer and group general manager for store development.

“Paul has significant frontline retailing expertise and is a great fit for Australia’s leading outdoor goods retailer BCF and its large, dedicated customer base,” Heraghty said.

“Paul describes himself as a customer-obsessed retailer, which is perfectly aligned with BCF’s customer-centric approach to retailing.”

Heraghty said with Bradshaw having worked with some of the world’s most successful brands in his 30-year career in the retail sector, he will bring hands-on leadership, extensive operational experience and a sharp focus on retail execution to their company.

BCF has 130 stores across Australia selling a broad range of quality boating, camping and fishing brands. 

Bradshaw will be based in Brisbane when he takes on the role.

23 Jul, 2019
What Barney’s bankruptcy means for luxury retail
Inside Retail

Barney’s department store has been synonymous with luxury brands since it was founded nearly a century ago, but last week the US retailer announced it is in the midst of a potential bankruptcy filing.

The cost of renting retail space in prime locations (in this case New York City’s Madison Avenue) is a contributing factor to the American retail conglomerate’s downfall, which has struggled to keep up with changing consumer shopping trends in the luxury goods market. 

But although Barney’s is the most recent victim to the retail downturn, it’s not the first. Earlier this year, Sears, another well-known department store giant, announced the closure of over a third of its 700 US stores following a file for bankruptcy. 

So what does this mean for the broader luxury goods market, especially for the Australian market?

With the cost of rent rising exponentially, retailers are under pressure to prove the worth of their physical stores and make them work harder. Gone are the days of consumers relying solely on a bricks-and-mortar to enjoy a luxury shopping experience. Barney’s potential filing for bankruptcy underscores the need for department stores and the wider retail industry to truly justify their existence as intermediaries of brand experience.

Brand experiences at your fingertips

In times gone by, highly sought after luxury brands were only available through physical store visits, primarily via department stores. However, as more brands have gone directly after the customer, the role of physical stores in the buying journey has changed.  

In the wake of digital shopping, consumers can have the same experience at their fingertips, be it via a tablet, laptop or mobile. 

Luxury goods are now so much more accessible to consumers. The proliferation of technology means that luxe items not only are available at consumers’ fingertips, but also in every major Westfield and international airport, where they provide a consistent, almost regal experience that far outstrips the dimly lit, big box department stores of yesteryear.

While many high-end shoppers still demand the personal touch of a physical retail experience, foot traffic is undeniably dwindling. ShopperTrak data indicates foot traffic in Australian retail stores saw its worst December on record in 2019, followed by a 4 per cent fall in the first week of January, year on year.

Retailers need to be smarter about integrated shopping, by mixing offline and online channels and optimising the physical space bricks-and-mortar stores possess.

Known as an omnichannel retail experiences, brands keeping up with market changes have adopted a multi-faceted and seamless approach to marketing, selling and delivering goods to consumers all the way from social media campaigns to same-day delivery.

Physical stores not only act as customer experience centres, they can also act as hubs for customer service, click and collect or dispatch centres for online orders.

But that’s not to say luxe brands can only thrive in offline environments.

The rise of online luxury

The Undone is a prime example of a successful online luxury retailer in the Australian market. Born from the fashion blogger Harper and Harley, the site offers a minimal, curated selection of ‘elevated wardrobe staples’ representing Australia’s rising designer brands.

Rather than investing in rental space, The Undone focuses on curated selections of current-season trends through high-quality editorial content. They offer express shipping and same-day delivery in the Sydney metro-area, returns and a live chat to offer advice on sizing through to styling. 

Digital marketplaces have filled the void that ageing department stores are leaving in a new generation of retail experiences. Even if department stores follow fast on evolving their online presence, the lack of additional services offered – like on-demand delivery, personalised website journeys and valuable content – makes their competitive advantage unclear.

While Barney’s next move hangs in the balance, it’s clear that if bricks-and-mortar stores want to not only survive, but thrive, they need to create a strong presence in the digital retail space offering unique customer service experiences. 

The same could be said for the likes of David Jones and Myer who are at the mercy of the rise of omnichannel shopping. Unless there is significant digital transformation in this space, the role of large format,  luxury goods retailers will continue to come under threat. 

23 Jul, 2019
Bunnings eyes tech solutions in Israel
Australian Business Review

Bunnings boss Michael Schneider will lead his first delegation of executives to Israel this week, but rather than checking out hardware stores for new ideas they have a full itinerary of meetings with technology and venture capital funds, as cyber security looms as the next big opportunity for the hardware retailer.

Across a number of company visits, dinners and coffee catch-ups, Mr Schneider and his senior managers will meet Israeli technology companies engaged in cutting edge developments across security, online fraud detection, data analytics, robotics and artificial intelligence.

Fresh from a tour of Germany for its parent Wesfarmers, its chief executive Rob Scott and his board, where they kicked the tyres of local hardware chains and other retailers to gain fresh insight into the sector, Mr Schneider now wants to expand the group’s knowledge of technological innovations and specifically how retailers can benefit from cyber security.

“Over the last 25 years we have spent millions of dollars in sending people all around the world to study retail, for operational store development, property and supply chain, and as retailers we send people everywhere. We organise study trips every year all around the world and the prominent focus on that in the last 25 years has been to look at store formats,’’ Mr Schneider told The Australian.

“That helped us, but as we recognised a few years ago, we needed to undertake a digital transformation. And we wanted to learn from the world’s best, so we started with the most obvious places and we went to the US and met with the big companies like Google, Facebook, Adobe and Apple to see the sorts of tools and platforms that are there.”

Other recent tech-related trips by senior Bunnings executives included visits to Europe, particularly Dutch telecommunications and banking companies, but now Mr Schneider is keen for himself and his senior leadership team to investigate cyber security. The obvious next stop is Israel.

“Those trips to the US and Europe have been good and have informed our thinking. And this year the plan is to go to Israel and what we see in Israel is real innovation in technology. Personally it will also be my first time in Israel — and a number of our leadership team will go on this trip.

“The thing that really impresses us out of Israel is the technology space and definitely in that space you are seeing a lot of good work in cyber security, and privacy. It’s so important to us as we execute our digital strategy.

“We want to keep our customers’ information secure, so we are understanding where some of the world’s best thinking on cyber security is, as we are told a lot of it comes from Israel.

“What we are seeing is us shifting the way we educate our leadership team from purely looking at store formats to stores and technology.”

A full week packed with company visits will complement Bunnings’ rollout of its new “click & collect” offer, which is now operating in Tasmania and is being launched across Melbourne as the company prepares to roll out the offer nationwide.

Accompanying Mr Schneider to Israel at the end of the week will be key Bunnings executives including Keith Murray, the chain’s general manager of marketing, and Leah Balter, new director of digital and analytics.

Bunnings will meet with dozens of tech companies and investors, including global venture capital fund JVP, data and content analytics firm Glassbox, artificial intelligence company Twiggle, on-demand robotic supply chain business CommonSense Robotics, behavioural analytics firm Clicktale and fraud prevention group Riskified.

There will also be a cyber and tech industry dinner for Bunnings hosted in Tel Aviv with Australian ambassador to Israel, Chris Cannan.

Mr Schneider believes Bunnings’ increasing pivot to online platforms and other tech-based applications will increase the importance of data protection, cyber security and other risk mitigation capabilities for the hardware retailer.

Mr Schneider believes because Bunnings as a retailer is coming late to the digital party, it can actually benefit from being able to quickly and efficiently take up new tech ideas and platforms as it isn’t wedded to old systems.

“We are coming a little bit later to the digital age than some other businesses and we are fortunate in that we can adopt some of the most current tech platforms because we are unencumbered from proprietary platforms that we have to write off and jettison.’’


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