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Chinese fashion retailer Shein is reviving plans to list in New York this year and its founder is considering a citizenship change to bypass proposed tougher rules for offshore IPOs in China, two people familiar with the matter said.

It was not immediately clear how much the company was looking to raise from its New York debut.

The initial public offering (IPO), if finalised, would be the first major equity deal by a Chinese company in the United States since regulators in the world’s second-largest economy stepped in to tighten oversight of such listings in July.

Shein, founded by Chinese entrepreneur Chris Xu in 2008, first started preparing for a US IPO about two years ago, but shelved the plan partly due to unpredictable markets amid rising US-China tensions, the sources said.

Both sources declined to be named as the plans are confidential. A Shein spokesperson said the company had no plans to go public.

The Nanjing-based company is one of the world’s largest online fashion marketplaces targeting overseas consumers. The US is its biggest market.

The sources said Shein founder Xu was eyeing Singapore citizenship partly to bypass China’s new and tougher rules on overseas listings. The change in citizenship, if applied for and successful, would ease the path to an offshore IPO, they said.

Neither Xu nor other Shein executives have applied for Singaporean citizenship, the company spokesperson said, without elaborating. Xu did not respond to Reuters queries sent via this spokesperson.

New rules issued by China’s cyberspace administration and the offshore listing filing regime to be finalised by China’s securities regulator are set to make a US listing process for Chinese firms more complicated, if not lengthier.

The securities regulator’s draft rules for offshore listings targets companies where a majority of senior management are either Chinese citizens or reside in China, or whose main business activities are conducted in China.

Valuation jump

Shein ships to 150 countries and territories from its many global warehouses, according to its website.

It made around US$15.7 billion in revenue in 2021, taking advantage of the pandemic that shifted global consumption online, said one of the sources and another person with knowledge of the matter. Its valuation was around $50 billion in early 2021, they said.

The valuation is estimated to have as much as doubled in the past year, one of the first two sources said.

The company, whose investors include Sequoia Capital China, IDG Capital and Tiger Global, was valued at $15 billion in its last funding round in August 2020, according to CB Insights data.

According to Coresight Research, Shein’s estimated sales in 2020 jumped 250 per cent over the preceding year to $10 billion, with over 2,000 items added on its website weekly.

The Shein spokesperson said as a private company it did not disclose financial figures.

Shein has hired Bank of America, Goldman Sachs and JPMorgan to work on the IPO, said the source with knowledge of the company’s valuation, and another person familiar with the matter.

In 2021, periodproof underwear brand Modibodi ventured into new categories, launched a maternity and postpartum collection and rolled out considered leave policies to support employees experiencing miscarriage and menopause. 

On top of all that, Modibodi was named on Inside Retail’s list of Coolest Retailers in Australia. Here, Kristy Chong, founder and CEO at Modibodi, shares the highs and lows of a challenging year and the importance of normalising conversations around women’s health. 

Inside Retail: How have the last 12 months been for Modibodi?

Kristy Chong: The last 12 months have been both challenging and rewarding. Overall, 2020 was a good year for us, with numerous product launches including the launch of our Maxi 24-hrs maternity briefs, active running shorts and detachable bikinis for the adaptive and travel market. We also expanded our absorbency and style offerings, as well as four seasonal ranges across our youth and women’s range. The fact that we successfully grew at 100 per cent during a pandemic year is a testament to the great brand and products we have created.  

In 2021 Modibodi is proud to have released a new maternity and postpartum collection to support new mothers. With new additions such as the postpartum control brief and the patent pending breastfeeding bra, we wanted to make sure all consumers were taken care of. 

Modibodi Family also launched in 2021 with the release of our first product for babies, the reusable nappy – it’s better for your body, your baby and the planet. 

IR: What has been the highlight for you?

KC: As a mum of four, the launch of our Modibodi Family brand with our range of reusable nappies and extended maternity range has definitely been a highlight. As part of this launch, we partnered with Getty Images to create ‘Embodied: Postpartum Unfiltered’, an image gallery depicting women in the 12-month post-birth period. The raw images in the gallery provide a richer perspective on this intense and exhilarating new stage of life.

Driving social change for postpartum mums is a challenge, but is incredibly important and the driving force for the Embodied campaign. Breastfeeding and postpartum bodies are natural, normal and also beautiful. We want women to feel prepared, seen, understood and proud of their postpartum journey – whatever it looks like – by showing unfiltered images which acknowledge the tough times and the triumphs of this significant stage of motherhood.

In 2021 we launched a new Modibodi menstrual, menopause and miscarriage policy for employees. This new policy entitles all Modibodi employees extra paid leave explicitly for menstruation, menopause and miscarriage, in addition to the company’s existing sick leave entitlements. 

We have also committed 100,000 pairs (over 1,200,000 pound in product) to 20,000 people in need to manage periods and light incontinence in 2021. We do this through our Give A Pair program, where customers contribute to the donation of bundles of five underpants in a waterproof bag to women and girls who often don’t have access to alternatives. We hear so many extraordinary stories from our partners of how a reusable product provides dignity that it inspires us to continue to reach big goals. We also donate all returned sellable stock ensuring nothing ends up in landfill.

IR: What were some of the big challenges you faced as a business? 

KC: Like many businesses, when Covid hit, we were all concerned about what it would mean, but what we realised very early on was that business as usual was [off the table]. As an e-commerce native brand, one of the many benefits is the ability to pivot marketing creative and spend easily and quickly, and as a global business, it also means we can pivot into multiple markets and these two strengths worked to our advantage in 2020 and throughout 2021.  

IR: How has the move into the baby category changed the business?

KC: At Modibodi, we are fiercely committed to sustainability and reducing our reliance on single-use items such as pads, tampons and disposable nappies to manage leaks. The extension into Family aligns with our mission, given the average baby will use 6,500 disposable nappies between the ages of 1-3. 

The launch into the baby category hasn’t changed the business as such, but further extended our mission to develop products for all bodies and all leaks. Our goal was to create a product range which is not only better for mother and baby but better for the planet too, through reducing the need for disposables.

Alongside our maternity range, we have launched our baby collection of reusable nappies, liners and nappy boosters. Modibodi’s reusable nappies have been designed for high-performance and usability to encourage more parents to switch from disposables to reusable nappies for good. It’s the most absorbent reusable nappy on the market, fits like a disposable and is simple to use. 

IR: What has the response been to the activewear offer?

KC: Activewear is a growing category for Modibodi and provides an opportunity for our customers to experience the quality, comfort and protection they know and trust in Modibodi underwear and swimwear in a range of leggings, shorts and moisture wicking underwear. We have sold out of most of our active range and will have a new collection coming soon!

IR: What’s on the agenda for the next 12 months?

KC: The goal is to keep the conversation going so that menstrual health and self-care becomes commonplace at work, home and school, and so incontinence and excessive sweating are not seen as taboo subjects. To reach this milestone, we as mothers, fathers, daughters, sons, sisters, brothers and friends need to work together to replace shame with understanding and empathy. 

We have some exciting launches and partnerships in the next 12 months and will continue our commitment to help people all over the world. What sets Modibodi apart is our continued vision to create limitless positive impact, whether that is daring to design the most comfortable and effective products to manage bodily leaks in the most sustainable way; using our brand to celebrate diversity and inclusivity, promote self-acceptance and open conversations around our bodies and bodily leaks, and at times challenge unjust cultural or social norms in the name of equality; or donating our products to menstruating people in need to help end period poverty. 

Retail spending rose 5.8 per cent in November compared to the same period of 2020, the Australian Bureau of Statistics reported on Tuesday, while online spend, driven by Black Friday and Cyber Monday, rose 22.8 per cent.

Clothing, footwear and personal accessories led the way in sales during the month as Australians increasingly want to return to living life outside of their homes.

“Further easing of Covid-19 restrictions in the South-Eastern states and territories has seen the retail industry recover all lost momentum caused by the Delta outbreak,” said ABS Director of Quarterly Economy Wide Statistics Ben James.

“Victoria recorded the largest state rise, up 20 per cent, reaching it’s highest level of the series [following] the states lockdown ending in October.”

Australian Retailers’ Association chief executive Paul Zahra said retailers had overall enjoyed a strong November, driven by a record-breaking Black Friday period and rising consumer confidence heading into Christmas. This is, obviously, quite different to what the industry is facing currently.

“We’ve entered a new territory in the pandemic with Omicron decimating workforces and impacting supplies and deliveries of essential goods,” Zahra said.

“Whilst retailers had an upbeat trading period in the lead up to Christmas, post-Christmas sales are unlikely to be as strong as we anticipated given the rising number of cases and flow-on effects to businesses and consumer confidence.”

One thing that has remained consistent, however, according to eStore Logistics’ Leigh Williams, is the continuing popularity of online shopping.

“Trends constantly waver as we navigate the pandemic and the uncertainties that come with it, one thing that remains constant is the continued preference for online retail, from both shoppers and merchants,” said Williams.

“E-commerce has kept businesses alive throughout 2020 and 2021, with a huge number of merchants making the transition to a fully functioning ecommerce model. The leaps that e-commerce has made over the last two years have ensured that online retail will remain an enormous part of the economy, even in a post-pandemic world.”

Inside Retail: When I spoke with Gerry Harvey a few months into the Covid-19 pandemic in 2020, he described it as one of the best things for his business because of how much people were spending on their homes. What impact has Covid had on Greenlit Brands?

Michael Ford: I think he’s an anachronism if he felt it was the best thing for his business. It has probably been the most challenging situation any retailer could face, and it has culminated in a supply chain hiatus. There is less freight available than there’s ever been, and demand has never been higher, so your working capital is enormously at risk because demand is exceeding supply. 

I would say it is the most challenging [situation] we’ve faced, and unlike apparel, which you can air freight, in the furniture industry, you’ve actually got to get it in containers and ship it because they’re bulky goods. Persuading the consumer that it’s going to take anywhere from 20 to 24 weeks for the goods to arrive, it’s a pretty rough discussion. So, I wouldn’t say it’s the best thing that’s happened to our business – quite the opposite.

IR: I know Greenlit Brands has a vertically integrated business model, so presumably, you have more control over your logistics than some other retailers. How have you adapted to these supply chain challenges? 

MF: In terms of steps that we’ve taken, our key brands have endeavoured to place their orders further out. Obviously, they have quite sophisticated forecasting capabilities, but the demand is so high that the forecasting teams, if anything, probably under-forecasted the requirements. That’s been further compounded by freight, so we’ve put a significant emphasis on working capital, hired more capability in in-stock brands like Fantastic, and trained people in made-to-order brands like Freedom to sell into longer lead times.

IR: What are your expectations around when the supply chain will return to normal?

MF: We are getting fairly unsecured messages that it is improving. We haven’t seen evidence of that yet. Our view is that we will have to tolerate it for most of the 2022 calendar year. When the pandemic arrived, the people manufacturing freight, whether it be ships or containers, reduced their manufacturing significantly, and as a result, we’ve suffered. Our view and the view of our merchants is that 2023 is probably when we will see it stabilise.

IR: Can you describe the level of demand that you’re seeing now and what it means for your business? 

MF: Nothing is more important than cash, and we have the benefit of taking deposits up front, so our cash barometer is looking a lot healthier. We have paid off all our debt, local and offshore, and made sure that our balance sheet and our cash position is strong, and one of the reasons [we’ve been able to do that] is because of the efficiency of working capital in the furniture industry. There’s no local manufacturing, it all comes from offshore, so you have to sell into a lead time, and you have to take a deposit. If you manage that efficiently, it can be cash flow positive, and we’ve found ourselves in that situation. 

We do it obviously with a certain amount of subtlety because customers are reluctant to hand over their cash and [let us] sit on it for 12 weeks, but that’s a function of the industry we’re in. From the outset, from four years ago, we’ve endeavoured to shore up our balance sheet and cash position. If anything is a measure of your health barometer, it’s your cash position. As a result of recruiting excellent retailers, all our brands are cashflow positive and profitable, which is a healthy place to be [during] this sort of predicament where consumers are unpredictable to say the least.

IR: With the strong cash position that you find yourself in, what opportunities do you see to use that going forward?

MF: We will keep investing in our people and systems, particularly technology. I often say to our team, ‘If you’ve got $100 to invest, invest $60 of it in digital and technology, and $40 of it in conventional retail.’ We’re very strong in that sense. Over 20 per cent of our group sales are [from] e-commerce. Our best brand is Fantastic, which achieves 30 per cent of sales [online], which I think in this country in our category is probably best in class. Williams-Sonoma in the US gets up to 70 per cent, and interestingly, they’re closing stores. I’m not advocating that, but I think one of the inherent unspoken rules in the business is to only open AAA showrooms because bricks-and-mortar retailing is very capital intensive. 

You need a balance between bricks-and-mortar and pureplay. We are a digital-first business; that’s the priority for growth. The brands and retailers that are going to survive are those that adopt that philosophy, there’s no question about it.

IR: Are there any particular technologies that you’d like to invest in? Whether it’s automation in the warehouse, or something else… 

MF: When you’re vertically integrated, it’s terribly important that your integrations work, and one of the challenges is when you try to integrate new technology into legacy systems. We’ve faced significant challenges in that [area]; we’re over the hurdle now, but with Freedom, for example, we had a massive hiatus because we tried to put an integrated system into our legacy systems and there were gaps all over the place. 

Obviously, it’s important when you’re vertically integrated that you have integrations between your manufacturing, logistics, and stores. That will always be an area that we invest in. As e-commerce grows, you’re under more and more pressure to ensure that your systems are fully integrated. Everything starts with the customer, so our most significant investments will be at the front end of the business rather than the back end, but we have to watch the back end because if the back end doesn’t work the front end doesn’t work.

IR: What does being a digital-first business mean for you? We hear words like omnichannel quite a lot, and it can mean different things for different businesses.

MF: I think there’s no more important measure than sales. When I joined, we were doing around $60 million in e-commerce sales. Four years later, we’re doing over $300 million in e-commerce sales. The sales growth we’ve had has been phenomenal. We’re also now addressing the integration of an online marketplace where other people can tap into our e-commerce platforms. We’ve made arrangements with various vendors to sell through the strength of our brands. 

So it means deployment of capital, hiring capability, and those resources are scarce, particularly in this market. I think Australian retailers have been slow to adopt [e-commerce]. Bunnings has only been transactional for a couple of years – that’s extraordinary. Look at Lowe’s in the US, they’ve been transactional for 15 years. It’s been a slow adoption. If you talk to Gerry Harvey, he’s not so sure that it’s a significant influence anyway, but we’re of the opposite view. 

We’re scrambling to [appoint] the right people and the right talent. Talent is going to be scarce in that area. We’ve been very fortunate in having some really sound capability internally that we’ve latched onto. Particularly strong individuals come out of the apparel industry because it’s a high-risk [category].

IR: Do you see the Freedom store refresh as being emblematic of that? When I’ve seen advertisements recently for Freedom, they do have a very fashion feel to them. 

MF: If you took Freedom and said what strategically should be its next priority, it was design. That’s reflected very strongly in the recruitment we made of Kate Hopwood. She’s English and has a wonderful taste level and feel for the Australian consumer. You can see that reflected in our advertising, be it on television or other media. She’s a strong influence, and that’s reflected in our homewares category particularly. If you went into our stores now, you would probably be delighted with the improvement in the assortments. 

Our CEO Blaine Callard has a real passion for the brand and that’s reflected in the strategy and work streams he’s put in place. He also understands the importance of linking e-commerce platforms with bricks-and-mortar through CRM. He has a good feel for that, and he’s rebuilding the My Freedom [loyalty] program. I think the most important thing is what you experience when you walk into the store. There used to be a country club feeling about the store; now it basically understands the fact that you have to make sales, so the salespeople have been completely retrained. He’s made some great hires in his area leaders, so I’m very encouraged by the new Freedom. It’s a brand that’s being transformed.

IR: As you increase your digital sales, do you see yourself going after the same customer as Temple & Webster or Koala? And if so, how do you see your ability to compete with pureplay online businesses that might not have the intensive capital requirements of maintaining a store network?

MF: To think that pureplays are inexpensive is an understatement. You have to make significant investments in facilities and systems, and then you have the challenge of competing on free delivery. Australia as you know is a very large country, so deliveries are a big factor, and as pureplays become more competitive, you have the challenge of cancellations and returns. In the US, brands like Wayfair have been in pureplay furniture for 17 years and haven’t made a nickel. Ninety per cent of pureplays don’t make money, and they find it hard to compete with us because they don’t have the same tangible exposure to the consumer. The consumer can’t touch and feel the product in a pureplay, so they have to be very reliant on the content and the way the product is styled digitally. Seventy per cent of consumers do begin [their journey] on the internet, but then they’ll come into the store and make a final decision because we’re in such a tactile industry. 

I don’t know any pureplay in the furniture industry that’s making any money, so in terms of being cheaper to run, people have found it’s not the case at all. You don’t have rents, but you still have rent for your DCs, and then you’ve got this big challenge with the cost of deliveries, returns, and cancellations. It’s a misnomer to think it’s less expensive to run.

IR: You mentioned that even though you’re investing in digital, you aren’t necessarily looking to reduce the size of your store network. How many stores do you currently operate, and what is the store experience like? 

MF: Snooze has around 100 stores. Fantastic has around 100 stores. Freedom has around 50 stores in Australia and 14 in New Zealand. Across the group, we have around 330 stores. We will always look to get a balance. A brand like Fantastic probably has got another 20 stores in the course of time. They’re relatively weakly dispersed in Victoria, so there’s a good opportunity for them. Freedom would have to be very judicious. Freedom’s real estate is excellent, they’ve got very good locations, the stores are in very good shape, the floors are all very good, as well as the lighting and the ceilings – that’s where the capital is in stores. There are some stores we would close, but there’s probably an opportunity for 10 or 15 more Freedom stores. Again, we would only open those stores if they exceeded the financial hurdles that we set for them. Otherwise, there’s a better return for us to invest in digital. 

OMF, which is our mattress business, has serious upside. We could open another 50 stores over the next three to five years. It works at 400 to 600 square metres, so it’s very easy to find real estate for, whereas Freedom and Fantastic are upwards of 2200 square metres. Finding those boxes isn’t easy, particularly well-placed ones. 

IR: How do you view the shift towards experiential retail? That’s been a big topic for a lot of businesses, but maybe not so much in large format retail. 

MF: It’s a great question. When I rate our stores from an experiential standpoint, I think we’re at about five out of 10. Where would I like to see them? Benchmarking against the best in the world, it would be brands like Pottery Barn, West Elm, Crate & Barrel, John Lewis. In order to get there, you need to have the people in the organisation who understand it, and I believe in Freedom, we now have that team. Kate Hopwood understands it, Blaine Callard gets it. He’s just hired a very sophisticated visual merchandising director. 

I think we’re halfway to where we should be. If you go into the Freedom flagships, I think you’ll immediately see the improvement, but there’s a long way to go. And it’s got to be further embraced by how you communicate with the customer and how you link digital to tactile bricks-and-mortar. That’s coming on in leaps and bounds in Freedom. It’s less strong in Fantastic, and it’s an issue that the CEO of Fantastic and I discuss constantly. It’s not easy to implement, and you’ve got to have the capability within the organisation to put it all together. 

IR: Lastly, I wanted to ask you about leading the business through the accounting scandal at your parent company Steinhoff International. How did you first learn about it? 

MF: It was as big a surprise to me as it was to the rest of the world. I think it [ended up] being a bigger crisis than Enron – it was certainly the biggest financial crisis ever faced in South Africa. 

I had only just joined the organisation [then called Steinhoff Asia Pacific]. The background to that is that Steinhoff wanted to buy The Good Guys, which we ultimately sold to JB Hi-Fi. We were running a parallel process of trade sale or IPO, and Steinhoff made an offer for us. We turned that offer down, but they had gotten to know me through management presentations and meeting my team, and they approached me to double the size of Steinhoff Asia Pacific and list it. We had 12 companies, which included apparel businesses – Postie in New Zealand, Best & Less, and Harris Scarfe. All very mature apparel businesses, all chewing a lot of cash, but we’ll come back to that. 

I didn’t know anything about [the accounting scandal] until December 2017 [when] I was informed of the situation. It was drastic. Our share price was €3.50, and in four to five weeks, it went to 30 cents. And of course, the parent was funding the local operation. I found out about [the scandal] at the same time as the other board members and that was in early December. Immediately I was in front of what’s known as the ‘bad bank’. You have your relationship bankers, then you have the credit [bank], and then you have the bad bank. And it’s like walking into an ambush with those guys. They were going to pull our credit line on the 22nd of December, I remember it was a Friday, and we were faced with the dilemma of basically going into administration. That was very precarious. 

We got terms – we got 30 days, then 60 days, and then we got commercial terms. But during that period, we were on a knife’s edge. The cash required to fund those apparel businesses was very significant because you have to make commitments to yarns and wovens some 15 months out. We had to find a way to relinquish those, so we could [focus on] our strength in the furniture industry. But no sooner had we got our heads above water than along came Covid. To have that [challenge] and then roll into Covid with no credit lines, or limited credit lines, was precarious to say the least. Thank god those days are behind us.

IR: It sounds like the sale of the apparel businesses helped, but were there any other cost-savings measures that you instituted in that time?

MF: We wrapped down on every element of the cost of doing business. I mean, we stopped travel, we stopped everything. Covid has helped to a certain extent because we’ve learned how to run our business virtually. One area you have to watch is inventory levels. We’ve been very disciplined in the management of our inventory. We put in place governance and rhythms that we still abide by today. I’m a passionate retailer, so I do interfere a bit with our team. I try not to because they’re very capable. 

Hiring Blaine Callard was a coup for us, hiring [COO] Aaron [Canning] was a coup for us, particularly on the M&A and transactions side. Getting talent into the organisation was difficult [after the accounting scandal]. For Blaine to have joined us when he did – he not only confronted the legacy systems problems, he confronted Covid. We have been fortunate in that our frontline CEOs are good operators and very passionate about their businesses. 

IR: What do you see Greenlit Brands’ portfolio looking like in future? Do you have plans to sell any other brands, or bring any new brands into the fold?

MF: The number one priority is to enable these brands to perform better than they have historically, so that they appeal to acquirers who will be a great home for the colleagues in those stores. The shareholders’ direction is to transact the businesses, but there’s no hurry. Build them, make them successful, and give us the best possible value. That’s our goal. A white angel may come along and say, ‘Wow, this organisation looks so good, we’re going to gobble them up.’ Who knows? Our goal is to improve the businesses, and the customer experience is probably the most important measure.

Former McDonald’s Australia CEO Catriona Noble has been named as the head of Australia Post’s retail business. 

Noble, who most recently headed the retail division of ANZ Bank, takes up the Australia Post role of executive GM, retail, reporting to group CEO and MD Paul Graham. She will oversee the company’s network of 4320 post offices.  

In a statement, Graham said Noble’s appointment reflected the vital role the Post Office network plays at Australia Post.

“Over the past two years, we have seen how important our Post Office network has been in helping small businesses, connecting communities and building resilience.  Our Licensed Post Offices as well as our Corporate Post Offices provide essential services for mail, parcels, financial services plus an expanding range of other services for the community,” Mr Graham said.

“With her extensive customer experience working at McDonald’s Corporation and ANZ Bank, Catriona has the right skills, personality and energy to grow and evolve our Post Office network.” 

Noble worked with McDonald’s for 31 years, expanding its network across the region, and focusing on product development, customer advocacy and working with franchisees. She was CEO from 2010 to 2014. 

Her appointment to Australia Post follows Leonie Valentine’s commencement as executive GM customer experience and digital this month, and Tanny Mangos’s appointment as executive GM of community, sustainability and stakeholder engagement in December.

The next phase of the supply chain crisis will see retailers laden with too much stock in some categories, cycling retailer 99 Bikes predicts.

This inventory lumpiness is due to supply chain hold-ups being so prolonged that Brisbane-based Pedal Group, the company behind the 99 Bikes brand, is ordering stock 18 months to two years in advance

Before the COVID-19 pandemic, Pedal Group would order goods three months to six months ahead for its stores and wholesale division, which stocks gear from $4230 electric bicycles to $74 helmets.

The long lead time means some items will not sell as successfully as hoped while demand for other gear will exceed inventory.

“We’re having to place orders [up] to two years out – some categories – and you just can’t predict demand that far out,” Pedal Group chief executive Matt Turner told The Australian Financial Review.

“We’re going to have too much in this [one] category, and we’re going to have not enough in this [other] category.”

He expected other retailers to be affected. The prediction is another indication of pandemic fallout, with supply chains and logistics globally clogged up on deliveries of items from laboratory supplies to car parts.

Mr Turner said the business would compensate by being cautious with funding but also budgeting for higher inventory levels. “We’re going to have areas of overstock and that will just end up costing us money,” he said.

CEO to step down

He was speaking while discussing full-year accounts for Pedal Group, which showed profits had leapt in financial year 2021 to $38.05 million from $12.38 million. Mr Turner also revealed he will step down as chief executive next month after 15 years in the role, hoping to do something different.

“I actually want to get into the renewable energy sector,” he said. An internal candidate will replace him. Mr Turner planned to remain on Pedal Group’s board and retain shares.

Pedal Group is a venture partly owned by Mr Turner (15.44 per cent), his father Graham Turner (21.73 per cent), who is chief executive of travel company Flight Centre, and Flight Centre itself (46.6 per cent), with 15.82 per cent owned by people including staff, according to Flight Centre accounts. It has 800 staff and almost 60 stores in Australia and New Zealand.

The company’s massive profit followed a leap in interest in cycling during COVID-19 lockdowns. Mr Turner said the business had early on predicted a jump in demand, while some other sellers had not, so they struggled later in obtaining supply.

Selling stock straight away

Pedal Group had turned over far more stock than normal, leading to relative savings on storage and finance costs compared to sales revenue.

“Anything we got, we’ll just sell straight away,” he said. “That’s not going to last.”

The accounts showed a 61 per cent jump in sales revenues to $321 million, outpacing rises in other costs such as a 54 per cent lift in wages to $57.2 million.

Mr Turner said electric mountain bikes were among popular sale items. That was due to a trend of some people liking a “a bit of exercise but [not] a lot”, thrill-seekers enjoying doing jumps on the bicycles, and some fitness fanatics liking the idea of being able to “do the same amount of exercise [but going] twice as far”.

While Pedal Group did not take JobKeeper, it accepted $3.4 million in a new government “Boosting Apprenticeship Commencements” wage subsidy. That came as Pedal Group also declared a record $19 million dividend.

Mr Turner said the subsidy was used to help properly train staff, and Pedal Group now had 10 full-time trainers where it previously had none. “Because the government is generous, it has pushed us to invest in training [and make it] more relevant,” he said.

Related-party deals

Mr Turner said most of the dividend was reinvested as equity – Flight Centre and his father ploughing their take back into the business – and less than $4 million taken as cash. Mr Turner reinvested almost $2 million and took less than $1 million in cash, while some staff members also took cash.

The accounts also show more related-party dealings, part of the controversy that stemmed from the 99 Bikes venture given ASX-listed Flight Centre invested in a business with its chief executive Graham Turner and his family.

Pedal Group spent $208,000 on “other related parties”, which Mr Turner said included holding events at Spicers Retreats, an accommodation venture owned by his father Graham Turner and wife Judy.

Spicers’ Hidden Vale venue in south-east Queensland has 110 kilometres of well-reviewed biking trails. Mr Turner said “they’re the best place to hold the events”, with advantages such as being relatively close to Brisbane head office and the biking trails.

He also said the venue was hired at a fair price.

Flight Centre’s accounts showed it spent $35,000 last year on conferences at related-party entities, which the company said included Spicers locations. That was down from $94,000 a year earlier.

Flight Centre said transactions were conducted on normal business terms and there was no requirement to use Spicers.

What began as a pilot set-up to help out food court operators battling through the first lockdown of 2020 is rapidly maturing as a click-and-collect system across Scentre’s Westfield centres, allowing all of its customers to access products sold anywhere in the entire network of 42 malls.

For Scentre chief executive Peter Allen, the Westfield Direct initiative offering a click-and-collect service is not just the next evolution for the retail landlord, but one that takes advantage of the country’s most valuable shopping centre portfolio.

“From a Westfield point of view we have this interaction with our customer which is really strong, but only for the times when the centre is actually open,” he told The Australian Financial Review.

“So how do we leverage the location of the centres and how do we leverage time to be able to have Westfield wherever you are, so we can get more people to be able to shop at a number of our stores online.

“My ambition would be that we have all stores in Westfield available on Westfield Direct. You’d be able to have an aggregated click-and-collect point at each one of centres to be able to facilitate that.

“It will continue to build up in 2022.

“What we’ve seen is the majority of retailers taking advantage of it are those smaller retailers who don’t have the presence outside of their own market. So it gives them a presence across all of Australia and New Zealand to be able to sell a product to anyone.”

Further work on the 2020 pilot led the launch of the system last October. More than 150 retailers have signed up since the launch.

The move comes as the major malls not only weather the immediate disruptions caused by COVID-19 but also learn to live with a longer-term challenge from e-commerce.

Online shopping surged during lockdowns but, as Mr Allen points out, figures from the US show the proportion of total retail sales accounted for by online spending have already fallen back to pre-pandemic levels.

“What we are seeing in click-and-collect, it is not a fight against online,” he said on Tuesday.

“Online fits a purpose for a number of retailers, who don’t need a larger store network.

“The majority of online sales in Australia are from physical retail partners. It is not the Amazons, the Kogans, and the Icons. It is the Myers the JB Hi-Fis, the Premiers, the Cotton Ons. They are the ones which have the really strong online businesses.”

Online sales account for around 17 per cent to 18 per cent of all sales. Some of the early excitement is fading though, as customers become frustrated with delivery delays and what time of day their goods arrive, according to Mr Allen.

At the same time, Scentre’s portfolio of CBD and suburban real estate puts the malls within 30 minutes travel for 20 million people, across Australia and New Zealand, a perfect position to fulfil, in effect, the function of last-mile logistics.

“Our shopping centres have always been that,” Mr Allen said.

“That’s why we have been very focused on the locations we want our centres to be. They are on transportation nodes. We know we are in close proximity to our customers: how do we leverage that more?

“From a retailer point of view the most efficient way to sell a product or a service is for the customer to choose it and the customer to collect it and take it away by themselves.

“Think about the wastage that goes on in terms of postage, or transportation or even returns from an online retailer.”

Construction has kicked off on a large logistics facility in Melbourne’s south-east that could point the way for how many Australians will shop in the future.

The 19,650 square metre property on McNaughton’s Road in Clayton – a 10-minute drive from Chadstone Shopping Centre – will be the new national headquarters of listed toy, hobby and baby products retailer Toys R Us Australia when it opens this year.

Developed by industrial property giant ESR, it will house a 14,785sq m automated warehouse at the back and a first-of-its kind 3230sq m “experience centre” at the front where shoppers can touch, feel and interact with thousands of products.

Products ordered in the showroom will be delivered directly to customers from the adjoining warehouse via automated mobile robots (AMRs) – giant disc-shaped devices that transport stackable pallets.

“What we are doing [with our new warehouse] is not just how people are shopping today, but how they will shop in three to five years,” said Louis Mittoni, CEO and managing director of Toys R Us ANZ. “It’s the way of the future for many retail businesses.”

While the integrated Clayton facility may be among the first of its kind in Australia’s $6.3 billion toy, hobby and baby products retail sector, the crossover between logistics and retailing has become an established phenomenon during the pandemic as more people shopped online and embraced click-and-collect from their local neighbourhood centres.

Last year, listed convenience mall owner SCA Property Group highlighted the value of its portfolio as a last-mile logistics hub while noting that Woolworths was adding mini automated “e-store” distribution centres at the back of some supermarkets in its centres to cater for online orders.

“Woolworths and Coles are using our centres for last-mile fulfilment, both for pick-up and home delivery,” said SCA chief financial officer Mark Fleming.

Also seeing the opportunity created by online shopping has been Westfield mall owner and operate Scentre Group, which has been expanding its Westfield Direct click-and-collect service.

“My ambition would be that we have all stores in Westfield available on Westfield Direct,” Scentre Group boss Peter Allen told The Australian Financial Review this week. “You’d be able to have an aggregated click-and-collect point at each one of the centres to be able to facilitate that.”

Speaking at the AFR Property Summit in December, ESR Australia CEO Phil Pearce said land next to some shopping centres could make way for smaller warehouses or dark stores (warehouses for click-and-collect only) rather than be developed into additional retail space.

In the outer suburbs, where land values are lower, some bulky goods retail outlets would be converted to industrial use “over time”.

The Toys R Us retail warehouse is being built on a 6.4-hectare last-mile logistics site less than 20 kilometres from Melbourne, which ESR acquired for $35 million just over two years ago. A 10-year leasing deal was struck last year.

Close to all the major motorways, the Clayton Business Hub will also be home to an 18,000sq m logistics facility leased to ASX-listed beauty products maker and marketer BWX.

Toys R Us, which once had 44 stores across Australia before its global parent went into administration, was reborn as a digital-first retailer in Australia after Dr Mittoni’s Hobby Warehouse acquired the local brand licence in 2019. In late 2020, Hobby Warehouse merged with ASX-listed Funtastic and changed its name to Toys R Us ANZ.

Dr Mittoni said the company planned to roll out experiences centres across the country to complement its pure-play e-commerce strategy.

“There will be far fewer of these experience centres [than the previous physical retail network], but they will be larger, destinational centres where families can go and interact with toys in a unique and fun manner.

An added feature of the experience centre will be its “endless aisle” offering, meaning customers can order and receive products from an online catalogue of tens of thousands of items stored in the warehouse, not just the 2000 or so products displayed in the showroom.

The new warehouse – four times the size of its interim facility – will allow Toys R Us to consolidate its e-commerce and logistics operations under one roof and cater for its ambitious growth plans fuelled by the surge in online toys sales. The company reported a 74 per cent rise in online sales in September year-on-year.

“If you look at other markets, like the UK into which we are expanding, by 2025, one third of retail will be online,” Dr Mittoni said.

“That trend is absolutely apparent in Australia, if you look at the growth in Australia Post’s parcel delivery business. We are investing just to keep up.”

New Zealand-based outdoor giant Kathmandu has hired a new general manager of international, Alexandre Gilbert, to drive overseas growth of the business.

According to a statement from the brand, Gilbert will be focusing on expansion across Europe, Asia and North America.

Kathmandu has also set up showrooms across Germany, France, UK and Canada and made several appointments across key global markets.

Mathieu Lefin was named president of Rip Curl and Kathmandu for Europe, while Etienne Lassus as European sales manager. Florian Ascher was named country manager for Rip Curl and Kathmandu for Germany, Austria, Switzerland, and Max Wallder is now the business’ UK sales manager.

In Canada, Nick Russell is now VP sales and marketing, while Eric Eichberger is sales manager for Kathmandu.

The announcements come after the business committed to a global rebrand earlier this year in an effort to become more inclusive, accessible and fun to a wider audience.

According to global chief executive Reuben Casey, the business wanted to distance itself from the traditional ‘elitist’, masculine-focused outdoor experience.

“When we look at our competitors around the world, they’re very serious, masculine and achievement-focused – you see people climbing up a mountain in the snow and rain. That’s not us. Kiwis and Aussies like to get out there and have fun with their mates, that’s the spirit and attitude that we want to foster with our customers,” Casey told Inside Retail.

“Our new purpose is to improve the wellbeing of the world through the outdoors.”

Australians are tipped to spend $4 billion on Boxing Day this year – a premium on last year’s expectations of $2.6 billion – according to predictions from Commonwealth Bank.

The main driver of the excess spending, according to CBA executive general manager of everyday banking Kate Crous, are shoppers not wanting to pay full price after two years of pandemic has left them wanting to make their money go further.

“As the nation bounces back, Australians are embracing shopping and are excited to hit the sales,” said Crous.

“This is welcome news for retailers, who are keen to see consumers return after a tough few months, and is also great for consumers hoping to get good value from their shopping.”

Overall, shoppers are expected to spend 22 per cent more this December relative to all other months of the year.

And, while Covid-19 cases continue rising across the country as Omicron spreads, 41 per cent of those surveyed said they plan on shopping predominantly in-store, while 28 per cent will shop physically and digitally.

Research from Citi also found that, as Australia has continued to move beyond large-scale lockdowns and toward the holiday period, spending has risen.

“With Christmas only four sleeps away, we continue to see strong card spend,” said Citi Australia’s head of cards and loans Choong Yu Lum said.

“However, it remains to be seen if new Covid-19 variants and the rise in case numbers will extend restrictions in some states, which may result in a decrease in spending.”

Prime Minister Scott Morrison has pushed back against taking a heavy hand in dealing with the spread of the Omicron variant, advising state leaders to keep their economies open despite calls from health organisations to re-enforce certain preventative measures – such as mandated indoor mask wearing and QR code check ins.

Morrison, echoing NSW leader Dominic Perrottet, said it was up to personal responsibility to stop the spread, and noting that it was time to treat Australians like adults.

“Australians know what is a common sense, responsible action to look after their own health and to look after the health of those around them,” Morrison said.

“We all have our own responsibility in our communities and for our own health.”

The Australian Retailers’ Association is expecting Aussies’ pent-up demand for shopping to continue beyond Christmas, divining that a record $21 billion will be spent in stores and online in the period between Boxing Day and January 15.

ARA chief executive Paul Zahra said Boxing Day sales are always a key part of the retail calendar, but that that momentum will continue into the new year.

“[In] our post-Christmas sales forecast… all retail categories have recorded an increase in spending on last year, apart from food which is down slightly – not surprising given more people will be out socialising this year,” Zahra said.

“Hospitality is set to thrive as a result – up 10.7 per cent on last year’s post-Christmas period when the Covid threat was more severe and vaccines were yet to be rolled out.”

Roy Morgan chief executive Michele Levine said high vaccination rates across most of the country would contribute to higher in-store spending, and that two years spent in relative isolation will have allowed many consumers to build up a savings chest – allowing retailers to target higher spending levels.

This comes after both the ARA and NRA predicted 2021’s Christmas period would bring in close to $60 billion, and urged Australians to ‘shop early, shop often’.

“A silver lining to lockdowns is that when restrictions are lifted it does result in strong consumer spending from pent up demand,” NRA boss Dominique Lamb said.

“As horrible as 2021 has been for retailers who have been in prolonged lockdown, at least they’ll be open in time to cash in on Christmas.”

The chief executives of companies including Wesfarmers, APA Group, Graincorp and BHP have urged leaders and the community not to forget the front-line employees for whom remote working is not an option, as Australia’s corporate sector prepares to adopt hybrid work en masse in 2022.

The Chanticleer CEO Poll of Australia’s top 60 business leaders found the vast majority of major companies will move next year to a hybrid model that will see most staff spend two or three days each week in the office.

Many will use so-called ‘anchor days’ – when everyone from a particular team will be required to attend the office on a particular day – to try and foster collaboration and ensure company culture is maintained.

“Our new policy is that people can work wherever they choose subject to being able to meet safety and technological requirements,” said NIB chief executive Mark FItzgibbon in an answer typical of those shifting to a hybrid model.

“They will, however, be required to attend local ‘hubs’ on a regular basis for specific purposes such as induction, training, team building, ‘scrums’ and celebrations. How many days a week that might mean will vary between teams.”

Australia Post has just hired its first ever executive general manager customer experience and digital. 

Former managing director of Google Melbourne and Government Leonie Valentine will be stepping into the new role in January next year and will lead key functions including customer services, digital channels, data science, payments and financial services, according to AusPost. Valentine previously worked at Google, CSL and Telstra with more than 25 years of experience in sales, marketing and operations.

“Leonie’s global experience at Google will help lead us into the next chapter as we continue to transform our business. Whether you transact with us online, in a Post Office or through your favourite retailer, the customer experience should be seamless each and every time,” said Australia Post Group Chief Executive & Managing Director Paul Graham in a statement.

“We continue to make significant investments in our app, tracking capabilities and other digital channels and with the support of the whole Australia Post team, I’m confident Leonie will sharpen our focus on how we leverage and expand our digital presence.” 

Australians are expected to drop $20.5 billion in the remaining 10 days to Christmas, according to the National Retail Association.

“[We’re] expecting the shopping frenzy to really ramp up as we kick-off the 10-day Christmas countdown,” NRA boss Dominique Lamb said.

“Although there is a growing trend that sees consumers knocking off Christmas shopping earlier than in previous years, the final 10 days is still a frantic time for retailers across the country.”

Lamb added that online delivery delays have pushed more customers in-store to get their hands on their preferred presents, providing a much needed boost to CBD retailers that have been adversely affected by the Covid-19 pandemic’s movement restrictions.

Despite that, the NRA is predicting online spend will grow 18 per cent over the next 10 days to $2 billion.

Alongside the growth in sales and customer numbers, however, has also come an increase in abusive customers.

“Please remember to be patient and polite towards retail staff. It’s the busiest time of year for retailers, with many working at capacity, so please keep the Christmas spirit in mind and treat them with patience,” said Lamb.

Last month, Victorian retailers saw a spike in customer abuse, leaving many retail staff fearful of returning to work, with Lamb noting threatening behaviour toward retail staff in the state had grown 85 per cent year on year.

Lamb’s comments come after a Dymocks employee was knocked unconscious and pushed down an escalator recently, and a Vinnies in Melbourne was defaced with human faeces after staff enforced the Government’s vaccine rules.

“Retail workers are not the police or trained security personnel. A 19-year-old part-time worker in a book shop or a grocery store doesn’t have it in their job description to deal with physical confrontation – and nor should they,” Lamb said.

Nike has solidified its frontrunner position in the race to dominate the metaverse with its acquisition of non-fungible token (NFT) studio RTFKT on Monday.

Following its recent trademark applications to sell virtual goods in online environments, the move places Nike on a trajectory to being the biggest brand in both real world and virtual environments. 

“This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture,” John Donahoe, Nike’s president and CEO, said in a statement. 

Nike has made several significant moves to ensure it is ready for Web 3.0 and the metaverse. In December 2019, the brand patented Cryptokicks, a blockchain-enabled system that assigns NFTs to physical sneakers to verify their authenticity and ownership. It also has collaborated with Fortnite and Roblox.

But Donahoe called the RTFKT acquisition “pivotal”, noting that it includes “a very talented team of creators with an authentic and connected brand. Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”

What is RTFKT? 

Launched in 2020 by Benoit Pagotto, Chris Le and Steven Vasilev, RTFKT Studios creates virtual sneakers and streetwear collectibles for the metaverse. It has risen to the top faster than other NFT brands by uniquely leveraging cutting-edge game engines, blockchain technology and augmented reality. 

In the past year, RTFKT has released several major NFT drops, including collaborations with crypto artist FEWOCiOUS, designer Jeff Staple and old-school video game-maker Atari to create a futuristic digital sneaker. The most recent and noteworthy collaboration was with contemporary Japanese artist Takashi Murakami. Called CloneX, it involved a limited release of NFT avatars designed in Murakami’s internationally recognised artistic style. 

“This is a unique opportunity to build the RTFKT brand and we are excited to benefit from Nike’s foundational strength and expertise to build the communities we love,” Pagotto said in a statement. 

“Nike is the only brand in the world that shares the deep passion we all have for innovation, creativity and community, and we’re excited to grow our brand which was fully formed in the metaverse.”

By acquiring RTFKT, Nike has moved to the forefront of the nascent NFT industry. It’s an incredibly smart and efficient way to gain innovative knowledge and intellectual property at speed, particularly given the current pace of technological advancement. And it says a lot about Nike’s future products and how it imagines they’ll be used. 

When will the metaverse arrive?

The metaverse is not mainstream, yet. It could be years before digital platforms are fully interoperable and decentralised, and many aspects of existing technology and infrastructure will require major improvements, such as access to a stable internet connection, faster load time between applications and seamless integrations with digital wallets. 

However, as more companies of all sizes build businesses for this new digital economy, the transition to virtual worlds will happen organically. We’re already seeing greater transparency with fashion brands implementing systems for verifying authenticity and traceability across the supply chain, and interactive experiences are commonplace, bridging the gap between physical and digital via augmented reality filters. 

While it’s hard to imagine what the metaverse will look and feel like, the movement to build it is underway and worth its weight in virtual gold. According to digital currency investor Grayscale, it’s anticipated that the global market for goods and services in the metaverse will soon be worth $1 trillion. 

A boon for NFT start-ups

While the acquisition is a boon for RTFKT, especially since it is such a new business, it also highlights the importance of understanding digital products and NFTs more broadly as people look to invest in NFT fashion, art and experiences. 

The other movers and shakers in this space will be closely watched, and more brand collaborations with digital fashion houses are to be expected, as they develop a greater understanding of how to produce NFT goods. 

One of the first on the scene was Dutch digital fashion house The Fabricant. It has since become the go-to studio for international collaborations, such as the activation with Toni Maticevski at Afterpay Australian Fashion Week this year. Other partnerships include Under Armour, Puma, Tommy Hilfiger and Buffalo London. 

Digital Rags Studio in St Petersburg specialises in digital fashion for 3D modelling, digital design and augmented reality technologies. The Russian studio has worked with major companies such as Rebecca Minkoff and Vogue Italia. 

Closer to home, tech-luxe digital fashion house Myami Studio led by Brad Morris stands for the democratisation of fashion through blockchain technology and digital ownership. It creates digital fashion that can be used and traded in virtual realities.

As technology evolves and the quality of graphics advances, there will come a time when it’s hard to remember life before digital products, just as it’s hard to imagine life before smartphones and apps now.

Nike’s acquisition of RTFKT is proof again that our future will be lived in both physical and virtual environments.

Kmart has opened a new store in Melbourne's west at Highpoint Shopping Centre. 

The major retailer is the latest in a string of brands that have opened in the Centre recently, including Under Armour, R.M. Williams, Seed Heritage, Glue Store and Stylerunner. 

Officially opening the new store today (December 1), Kmart will welcome customers in with a range of activities including floral styling sessions, kids' art and craft activities and cupcake giveaways. 

Kmart CEO John Gualtieri said the retailer was proud to end the year with the opening at Highpoint.

"We’re so incredibly excited to welcome Melbourne’s west into our new Kmart Highpoint store today. 

"It’s our 75th store opening for the year, bringing our store network to 326 stores - and what a way to end 2021.

"Highpoint is such an iconic shopping destination and we are thrilled to be officially opening our doors here, giving customers access to our great value, on trend products, right in time for Christmas. 

"Our Kmart Wishing Tree will be set up at the front of store, helping to support families in need, and we encourage our generous customers to get involved if they can," he said. 

The new and elevated store layout spans all three of Kmart’s ‘coloured product worlds’ including apparel, kids and home. 

Highlight store features include central-served check outs, wider aisles for wheelchair and pram access, as well as bolder graphics for easy navigation and a convenient shopping experience. 

"Our shoppers have a strong appetite for Kmart’s fashion, lifestyle, kids and homewares offer, where accessible and affordable products don’t compromise on value and quality," Highpoint regional GM Rachel Duggan commented. 

"We are beyond thrilled to finally welcome the retail giant in centre during an exciting time when Highpoint is expanding in its lifestyle and fashion categories – further cementing Highpoint as the most in-demand shopping centre in Melbourne’s west," she said. 

Doors opened to shoppers this morning at 8am, following a Welcome to Country and ribbon cutting ceremony. 

In a retail career spanning over 30 years, the global supply chain crisis caused by Covid-19 has been one of the most challenging situations Greenlit Brands boss Michael Ford has ever faced. 

“There is less freight available than there’s ever been, and demand has never been higher, so your working capital is enormously at risk because demand is exceeding supply,” Ford, Greenlit Brands’ executive chairman and group CEO, told Inside Retail.  

Part of Steinhoff International, Greenlit Brands owns the household goods brands Freedom, Fantastic Furniture, Snooze, and OMF. 

“I would say it’s the most challenging [situation] we’ve faced, and unlike apparel, which you can air freight, in the furniture industry, you’ve actually got to get it in containers and ship it because they’re bulky goods,” he said.  

The global shortage of containers and backlog of ships waiting to be unloaded at ports has resulted in lead times of up to six months for made-to-order furniture in the Freedom business, and while in-stock businesses, such as Fantastic Furniture, have been less affected by these delays, they have seen a significant increase in the cost of shipping.

“Freight rates have gone up over the last nine months by four to five times what they were historically,” Aaron Canning, Greenlit Brands’ chief operating officer, told Inside Retail.  

“We hedge our freight requirements. However, freight forwarders and the like aren’t adhering to those contracts, so that’s totally changed the global logistics market.”   

Another 12 months of disruption

The rising cost of shipping has flattened off recently, though it’s still well above what it was two years ago, and factory disruptions in Asia have abated, but Ford believes it could be another 12 months before the supply chain returns to normal. 

“When the pandemic arrived, the people manufacturing freight, whether it be ships or containers, reduced their manufacturing significantly, and as a result, we’ve suffered,” he said. 

“Our view and the view of our merchants is that 2023 is probably when we will see it stabilise.”

However, while the supply chain crisis has made managing inventory and customer expectations difficult, it has been good for Greenlit Brands’ balance sheet. 

“We have paid off all our debt, local and offshore, and made sure that our balance sheet and our cash position is strong, and one of the reasons [we’ve been able to do that] is because of the efficiency of working capital in the furniture industry,” Ford explained.

“There’s no local manufacturing, it all comes from offshore, so you have to sell into a lead time, and you have to take a deposit. If you manage that efficiently, it can be cash flow positive, and we’ve found ourselves in that situation.”

Group profit was up 39 per cent in FY21 on revenues with written sales of approximately $1.5 billion. All four brands are cash flow positive and profitable, Ford said.

‘We were on a knife’s edge’

It’s a rapid turnaround from December 2017 when a massive accounting scandal at Greenlit Brands’ parent Steinhoff International threw doubt on its very survival. Steinhoff, which had been funding the local operation (then called Steinhoff Asia Pacific), saw its share price tank from €3.50 to 30 cents in a matter of weeks.

“Immediately I was in front of what’s known as the ‘bad bank’. You have your relationship bankers, then you have the credit [bank], and then you have the bad bank. And it’s like walking into an ambush with those guys,” Ford said.

“They were going to pull our credit line on the 22nd of December, I remember it was a Friday, and we were faced with the dilemma of basically going into administration.”

The business initially received credit terms for just 30 days, then 60 days, before ultimately receiving commercial terms. 

“During that period, we were on a knife’s edge,” he said. 

Every cost in the business was scrutinised for potential savings and new senior leaders with operational expertise were brought in, including Canning, Freedom CEO Blaine Callard, Fantastic Furniture CEO Kieron Ritchard, and OMF CEO Ian Vann. 

At the same time, the general merchandise division, which included Debenhams, Best & Less, and Harris Scarfe in Australia, and Postie in New Zealand, was offloaded to private equity firm Allegro in 2019 to allow the group to focus on its core strength in furniture.  

“The number one priority is to enable these brands to perform better than they have historically, so that they appeal to acquirers who will be a great home for the colleagues in those stores,” Ford said. 

Investing in technology to continue to improve the brands’ digital offerings is key. E-commerce sales have increased from approximately $60 million in 2017 to $300 million today, and they now represent over 30 per cent of total sales at Fantastic Furniture. Across the group, this figure is over 20 per cent.

“The shareholders’ direction is to transact the businesses, but there’s no hurry. Build them, make them successful, and give us the best possible value. That’s our goal,” he said.

Last month, Greenlit Brands sold Plush to Nick Scali Group for $110 million. 

Bailey Nelson is continuing its bricks-and-mortar expansion across Australia, opening its 51st store on Melbourne's Glenferrie Road in Malvern. 

Following the opening of its 50th store in Sydney's Castle Towers shopping centre, Bailey Nelson has revealed its newest Melbourne store, marking its 93rd location globally. 

Bailey Nelson co-founder Peter Winkle said the brand aims to grow its presence across Melbourne's south and east, beginning with Malvern. 

"We are very excited to be opening our 51st Australian retail store in Malvern. 

"This is one of Melbourne’s loveliest shopping spots. 

"It’s a fashionable area with a very diverse mix of people and a great sense of community. 

"Our other stores in nearby Camberwell, Chadstone and South Yarra have been very successful. 

"We see excellent growth opportunities in Malvern and across the city’s south and east among people who value great eyecare and beautiful Australian designs at fair prices," he said. 

Similarly to its counterparts, the Malvern store offers customers a range of the brand's Australian-designed frames, which feature 86 styles and 72 colourways. 

The store also houses the new Atelier collection, which introduces 24 optical and sun frames into the Bailey Nelson range, made up of five shapes in 12 new colourways. 

The Malvern site offers eye tests at least five days a week and is equipped with an OPTOS machine, one of the most sophisticated imaging tools available - allowing the optometrist to view the back of the eye at a resolution four times greater than a traditional retinal camera, which can only examine around 20% of the retina. 

It is run by manager Thom Johnson and optometrist Mike Bradley. 

Online pet supplies and services marketplace Pet Circle has cemented its place as Australia’s latest billion-dollar-valued “unicorn” company, after closing one of the biggest funding rounds of the year from Australian and international investors.

The journey from being a bootstrapped online dog food ordering service to a billion-dollar operation has taken a decade, and its sky-high valuation has been secured in a $125 million investment led by US-based Prysm Capital and Sydney-based TDM Growth Partners.

Other investors in the unicorn round, which was first flagged by Street Talk, include Australian venture capital firm AirTree Ventures, which has held a stake in the company since 2017, and UK-based investment firm Baillie Gifford.

Co-founded by former management consultant and investment banker Mike Frizell and data scientist James Edwards, the company has grown to offer a huge range of pet food and products, on an online platform that also provides video vet consultations and subscription-style ordering.

Mr Frizell told The Australian Financial Review Pet Circle had benefited from a boom in pet ownership during the COVID-19 pandemic, with its research showing pet owners spend more than $1000 a year on their furry friends. Over the past 18 months its website has seen a 50 per cent increase in puppy and kitten food sales across its specialty channel alone.

Having banked the huge funding round it plans to dramatically increase the range of products it stocks, while also expanding its number of warehouses across the country. It has established its own logistics operations after becoming disillusioned by those on offer from existing local providers.

“In Australia, you go into most of the pet businesses, and they have between 100 SKUs [stock keeping units] or maybe the biggest will have 5000 SKUs, our range will triple, so we’ll have 30,000 plus products,” Mr Frizell said.

“Right now you can’t get good products in Australia for animals. We will change that, and that means most of it will be sourced around the world.”

While Pet Circle has most obviously disrupted the likes of Pet Barn, by making regularly repeated purchases, like cans of dog food, simply arrive at a customer’s front door, Mr Frizell said investors were keen on the company because of the huge growth potential still left in a relatively immature market segment.

He said the US market for direct-to-consumer pet supplies was a few years ahead of Australia, and indicated there was a good chance Pet Circle could grow by 10 times over the next five years. At the time of the raise he said the company was cashflow positive and profitable, but would be investing for growth in the immediate future.

Like companies in other areas of the economy, one of Pet Circle’s biggest challenges is a groaning supply chain, with the boom in pet ownership globally and lengthy lockdowns meaning some product lines are unavailable.

The humanisation of pets is a significant macro tailwind impacting markets globally.

— Jay Park, co-founder and managing partner, Prysm Capital.

“We are in year 11 of the business and it is the worst supply chain issues we have seen in all that time,” Mr Frizell said.

“We are in a global pet boom, so factories can’t keep up making pet food. That’s just a fact. So the volatility of stock and lead times can be longer than we want. Toys, treats, accessories, anything that shares electronics components with other industries are hard to get. We are seeing very challenging stock levels and security of supply across almost every category.”

The funding round is the latest big-money deal involving Australian technology companies in 2021.

While fintech disrupter Athena Home Loans broke the record for the largest capital raise completed entirely from local backers, with a $90 million round in May, most of the larger rounds have comprised a mix of local and global funding.

A $221 million funding round in Brisbane-based Octopus Deploy in April was filled entirely by New York fund Insight Partners.

Former Adidas Australia colleagues Kevin Roberts and Tim Jackson are set to launch their own activewear label, No Timid Souls. 

Using their experience in the sporting world – Roberts was previously the 2XU and Cricket Australia CEO, while Jackson is a former Olympic sprinter and World Athletics Championship silver medallist – the pair have combined their technical sport knowledge with innovative fabric technology to create their own materials. 

Jackson said that No Timid Souls had to develop its own fabrics as there was nothing on the market that was at the level of performance that the brand wanted to offer. 

"The first two stages of our product development process focus on sports science and materials science, so all of our products respond to the biomechanical and physiological needs of the human body when running, training, or working out in the gym.

"The third stage is creative design. Our products look great thanks to our experienced designers and garment technicians who trained at the London College of Fashion.

"More than 75% of our first apparel range uses our own unique fabrics because existing options weren’t at the level we required. 

"What’s different about No Timid Souls is the combination of sports science and materials science that makes our products work better and feel better. 

"We’re also serious about sustainability, so 60% of the first No Timid Souls apparel range already includes recycled materials.

"We’re confident our line will take off quickly and attract endorsement from athletes in the arena, as well as everyday consumers who run, train or work out and want to get better," he said. 

The brand is also on a mission to support elite and developing Australian athletes, teaming up with crowd-sourcing platform Raise the Bar. 

The Raise the Bar point-of-purchase option invites consumers to ‘up’ their transaction to donate to an athlete of their choice in the program, even if they are sponsored by a rival brand.

Additionally, No Timid Souls will contribute a percentage of sales from various products to athletes in the program.

Sporting clubs can also benefit by receiving 7.5% of purchases that people in their extended communities make from No Timid Souls.

According to the Australian Sports Foundation, half of Australia’s top athletes earn less than $23,000 per year. 

Australian Olympian Tamsyn Manou praised the brand's support of emerging athletes. 

"I was lucky to have an incredible support network around me during my athletic career, but we know that many athletes don’t have the financial support or the guidance to help them deal with the ups and downs of elite sport and the transition to life after sport. 

"It’s really encouraging to see No Timid Souls taking up the challenge to facilitate financial support and other forms of support for athletes who need it most," she said. 

According to the brand, its name was inspired by the United States’ 26th President Theodore Roosevelt, whose 1910 Paris speech, 'The Man in the Arena,' gave credit to those who are in the arena, striving valiantly and spending themselves in a worthy cause.

"No Timid Souls is a brand that stands for inner strength and celebrating people who pursue physical endeavours," Roberts said. 

"We are ready to take on the global sportswear market with a premium product range that’s underpinned by deep expertise in sports science and materials science. 

"We have an international ecosystem of people and organisations contributing to the development of our business, including some leading international manufacturing partners. 

"Their support for our vision has been humbling. 

"Together, we are pursuing world-class product innovation and building a global community of elite, emerging and everyday athletes who share the No Timid Souls mindset," he said. 

The brand's first collection will be available in Australia in the second quarter of 2022 and in the US soon after.