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Higher interest rates and soaring inflation have not dampened households’ enthusiasm for opening their wallets, with new data showing Australians spent a record $34.7 billion at stores in July.

Retail sales climbed 1.3 per cent last month, according to the Australian Bureau of Statistics, well above market forecasts of a more modest 0.3 per cent gain.

Markets are now pricing the Reserve Bank’s cash rate will peak at 4 per cent in July 2023, up from Friday’s 3.8 per cent forecast.

The monthly retail figures do not reveal how much of the increase in turnover came from higher prices rather than consumers buying more items.

The July figure marked the reversal of a gradual slowdown in monthly spending growth that began in February.

Overall, Australians spent $34.7 billion at retail outlets in July, a $430 million increase on June and a 16.5 per cent increase over the year.

ABS head of retail statistics Ben Dorber said turnover increased in five of the six retail industries included in the release.

“This shows that, despite cost-of-living pressures, households are continuing to spend,” he said.

Spending at department stores increased by 3.8 per cent in July, while purchases of clothing were up by 3.3 per cent. Spending at cafes and restaurants rose by 1.8 per cent.

BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said the data would “do nothing to dissuade the RBA from raising interest rates by another 50 basis points at the September meeting”.

“Momentum in retail sales looked to be faltering over the last few months, but today’s data are ahead of expectations and suggest household spending remains resilient to mounting headwinds,” Mr Langcake said.

Markets are tipping the RBA will increase rates by another 50 basis points next week to 2.35 per cent and the cash rate is forecast to hit 3.2 per cent by the end of the year.

JPMorgan chief economist Ben Jarman said higher rates and falling asset prices would not have a material effect on spending in the next few quarters thanks to elevated levels of household savings and growing incomes.

“In the early days of the hiking cycle, which are also the months most at risk of abrupt adjustments given the pace of normalisation, the belt-tightening narrative has not been borne out so far in the labour market or spending data,” Mr Jarman said.

Commonwealth Bank senior economist Belinda Allen said there was a three-month delay between an increase in the cash rate and higher repayments being deducted from a CBA customer’s bank account.

“Between August and December this interest rate impact quadruples based on the already announced policy changes. This impact will lift again depending on what the RBA does to the cash rate in September and beyond,” Ms Allen said.

Household goods was the only industry that experienced a decline in spending in July, with sales falling by 1.1 per cent, which was the sector’s third decline in four months.

Ms Allen said spending on household goods was closely linked to housing market conditions, so the softness was not surprising given property sales volumes had trended lower since November.

Victoria and the ACT experienced the biggest increase in sales, posting monthly growth of 1.8 per cent.

KPMG senior economist Sarah Hunter said economic data over the past month had been “patchy”, but generally suggested the economy was cooling.

“But with the economy still operating at near-full employment and price pressures building, today’s data will confirm the RBA’s view that inflationary pressures are broad-based and will reinforce the need for another rate hike in next week’s meeting,” Dr Hunter said.

Brett Blundy-chaired jewellery retailer Lovisa is the latest business to reveal robust consumer spending, with revenue up by close to 60 per cent for 2022 as shoppers across the world splashed out on accessories.

The fast fashion brand’s boss Victor Herrero told analysts on a call on Monday that Lovisa’s product offering was resonating with consumers during a period of wobbly consumer confidence.

“At this moment, we are very happy with the product offering we have on a global basis. It is something that is capturing the attention of existing markets and new markets,” he said.

Analysts had been waiting for Lovisa’s results as an indicator of the strength of consumer spending, given the stock had been affected by lockdowns across the world over the past year. The stock had been sold down in the first half of 2022.

But the company’s numbers surprised on Monday, with net profit after tax up 116.3 per cent to $59.9 million.

Revenue was up 59.3 per cent to $458.7 million, and while the costs of doing business increased in the face of inflationary pressures, Lovisa was able to keep costs at 58 per cent of sales, below what it was in 2020.

Herrero said sales momentum had stayed strong in the first weeks of the new financial year, up 66.1 per cent on the same time last year.

Lovisa’s growth strategy involves expanding its bricks-and-mortar store network right across the world, and the business now has 629 stores.

Herrero said the company managed to open a net 85 new stores throughout 2022, and had worked hard to find efficiencies in spite of rising costs and construction delays in a range of markets.

Shares jumped 6.2 per cent higher on the back of the results closing at $19.82.

Lovisa was not the only ASX-listed jewellery retailer pointing to strong consumer sentiment.

Michael Hill also surged at the open, up 9.3 per cent to $1.12 after the business reported a 13.9 per cent jump in profit to $46.7 million. Its shares closed at $1.06.

The company, which has undergone an extensive strategic overhaul including the shuttering of underperforming stores, saw sales up 13.4 per cent for the first weeks of 2023. Sales were up 18.5 per cent overall, but the same period last year was impacted by retail lockdowns.

Chief executive Daniel Bracken told The Sydney Morning Herald and The Age that while the business had been classed as a discretionary retailer in the past, many of the purchases that consumers made with the brand were not optional.

“You can’t propose to your loved one without an engagement ring, whereas you can go out to a party without a new dress,” he said.

While bricks-and-mortar sales were booming, online cosmetics retailer Adore Beauty released earnings on Monday that suggested e-commerce sales were slowing.

Adore revealed on Monday that trading in the first seven weeks of the new financial year was down 28 per cent on this time last year.

The business reported an 11 per cent jump in revenues for 2022 to $200 million, but warned conditions were challenging.

Outgoing chief executive Tennealle O’Shannessey said that despite tough trading conditions, Adore’s product range was unmatched by any other local retailer and the business had a strong cohort of premium beauty customers.

“They very much view it [beauty products] as an essential,” she said.

Adore Beauty shares slipped as low as 15.7 per cent Monday’s session. They closed at $1.64.

Gerry Harvey, the chairman of retailer Harvey Norman, says consumers are still spending on big-screen televisions, computers, ovens, new beds and sofas and there is no sign of any slowing even though cost-of-living pressures are rising.

Mr Harvey said the negativity of constant headlines when bank economists make predictions of heavy house price falls as the Reserve Bank of Australia liftsinterest rates to stomp on inflation, is at odds with what his stores are doing in daily sales in late August.

“We question what the hell is going on,” he said. The negativity needs to be tempered. “It feeds on itself,” Mr Harvey said.

He expects the low jobless rate and high levels of household savings will keep underpinning solid sales in the group’s stores, although he acknowledges that future steep increases in energy bills is a wild card that could affect confidence. But for now, trading is at solid levels.

“It’s right across the board. It doesn’t matter what department we’re talking about,” he said. He said the tradie shortage across Australia was causing some heartburn with the group’s “pending” deliveries at the highest levels ever in warehouses.

Customers who had bought new cookers, fridges and other appliances ahead of an expected finish date for their renovation or new home build were ringing up and saying the delivery date needed to be pushed further into the future.

The retailer’s Australian franchisees had a 10.7 per cent rise in sales since July 1, compared with the year-earlier period when lockdowns and restrictions curbed growth.

Mr Harvey, who is a regular on The Australian Financial Review’s Rich List, said sales were particularly strong in stores in regional locations where farmers were having very good seasons. “They’re very bullish at the moment,” he said.

On a comparable store basis, sales growth rose 10.3 per cent in the first two months of 2022-23, but the company emphasised that did not factor in the lockdowns and restrictions on the eastern seaboard in particular, which hurt sales in July and August a year ago.

Net profit fell 3.6 per cent to $811.5 million in the year ended June 30 with COVID-19 restrictions in the December half in major markets of Sydney and Melbourne a large handbrake, even though trading picked up substantially in the June half, the company told the ASX.

Earnings before interest, tax, depreciation and amortisation slipped 1.4 per cent to $1.44 billion. Revenue fell by $163 million to $9.56 billion. The group is paying a final dividend of 17.5¢, up from 15¢ a year ago.

Mr Harvey said supply chain disruptions were starting to lessen. “Supply is getting better,” he said. He estimated that price tags on most items had risen by between 5 and 20 per cent over the past two years as the group passed on inflationary rises from manufacturers, and higher freight and transport costs.

On August 15, JB Hi-Fi, Harvey Norman’s biggest competitor, reported a record full-year profit and said many younger consumers would further spend on technology, phones and computers because they are deemed as essential in the modern world.

JB Hi-Fi’s record sales revenue was propelled by consumer electronics and home appliances, helping to push its bottom line up 7.7 per cent to $544.9 million.

Analysts think that appliance retailers could be in for a more difficult time in the next few months because of rising interest rates and cost-of-living pressures.

Harvey Norman shares on Wednesday traded 2.8 per cent lower to $4.22 in late trade. They were at $5.71 on March 30.

Jarden analyst Ben Gilbert said overall, Harvey Norman looked to have reported “a good set of numbers” although the trading update for July and August was a little bit softer than rival JB Hi-Fi. He has a 12-month target price on the stock of $4.30.

The company has 109 overseas company-owned stores across New Zealand, Slovenia, Croatia, Singapore, Malaysia, Ireland and Northern Ireland. The overseas retail stores generated 25 per cent of total pre-tax profit excluding net property revaluations.

Harvey Norman also has an extensive network of property and land holdings. At June 30, 2022 the freehold property portfolio was valued at $3.74 billion, an increase of 10.9 per cent on a year earlier. The group said it had 544 Australian franchisees.

Mr Harvey said even if the Reserve Bank lifts interest rates a few more times in this cycle, those rates needed to be viewed in context. “They will still be historically low”.

From humble beginnings as a car parts by mail order business to a retail conglomerate selling everything from basketballs to puffer jackets, the business behind popular automotive retailer Supercheap Auto has lived up to its slogan of being everything auto – and much, much more.

With nearly 700 stores across the country and a stable of well-known retail brands, it’s little wonder Super Retail Group has been a popular stock for investors, who have driven up its share price more than 400 per cent since it first listed on the Australian Securities Exchange.

Today, the business has capitalised on a strong COVID-fuelled sales boost and built its online offering, while also reversing the fortunes of its struggling outdoors retailer Macpac.

However, with consumer confidence waning and the cost of living increasing, there are some concerns the business may not be able to maintain its strong sales growth.

How it started: The business began in Brisbane in 1972 as a mail-order service for car parts started by husband-and-wife duo Reg and Hazel Rowe, which soon grew into having bricks-and-mortar stores. In 1981, the Rowes changed the company name to Super Cheap Auto.

By 1991, Super Cheap had eight retail stores across Queensland with nearly $20 million in annual sales. By 2002, it had 100 stores, and in 2004 the business listed on the ASX at $1.97 a share, netting an $81 million windfall for the founders.

A year later, the business acquired CampMart’s four camping and outdoor leisure stores, which would become the foundation for BCF. In 2010, it acquired Rays Outdoors and renamed the broader business to Super Retail Group. Rebel Sport joined the stable a year after, and Macpac was purchased in 2018.

How it’s going: Today, the company’s four brands – Supercheap Auto, Rebel, BCF and Macpac – have about 700 locations across Australia and New Zealand, with a collective annual revenue of $3.5 billion. It is one of the larger retailers on the ASX, with a market capitalisation of $2.3 billion. Its shares are changing hands for about $10.30.

Like many businesses, the company has grown swiftly through COVID thanks to an online shopping boom, aided by a $200 million capital raise early in the pandemic to help bolster its online and omnichannel offering.

Industry: Automotive, sports and outdoors retailing.

Main products: Car parts, sporting goods, camping equipment, puffer jackets.

Key figures: Chief executive Anthony Heraghty, chair Sally Pitkin, non-executive director and co-founder Reg Rowe.

The bull case: At the company’s full-year results last week, Super Retail revealed a 2.8 per cent increase in annual sales but a 20 per cent drop in net profit and a fall in margins. While these seem like significant falls, they are compared to record highs of COVID-fuelled 2021, with analysts saying the business is still in good shape.

MST Marquee senior analyst Craig Woolford told clients in a research note Super Retail reported a “strong result with good momentum”, highlighting the company’s preliminary trading figures for the start of the new financial year, which showed 17 per cent sales growth across the group, led by outdoors brand Macpac, which reported 42 per cent growth through July.

Macpac’s performance has been of particular focus for investors, as the business has spent many years in the doldrums. Its sales over fiscal 2022 grew 15 per cent, aided by a strong bout of cold and wet weather.

Online trade continues to be a standout, thanks to its investment throughout the pandemic. Over the past 12 months, the company reported a 44 per cent uptick in online sales to $601 million, comprising nearly 20 per cent of overall sales.

The bear case: While analysts were praising the company’s sales growth, simultaneously they were wringing their hands over a potential issue which has hurt many of Super Retail’s peers: too much stock.

The business has about $800 million in stock, up 15 per cent on last year. Some analysts flagged a risk that a slowdown in consumer spending could see the company with excess inventory it is unable to move, leading to heavy discounts and weaker profit margins.

Heraghty defended the choice, saying it is “safety stock” to hedge against any further delays in shipping, and Citi analyst Adrian Lemme said a $100 million decline in inventory, compared to the first half of the financial year, “takes away at least part of the bear case downside”.However, Super Retail could still be exposed to a deterioration in consumer spending, as businesses such as Macpac, Rebel and BCF are largely discretionary and could be cut out as household budgets tighten.

Furniture retailer Nick Scali credits its Plush acquisition for driving sales growth – however it says widespread supply chain disruptions muted profits.

For the year to June 30, the business reported sales increased by 18.2 per cent to $441 million however its tax-paid profit fell 11.1 per cent to $74.9 million. 

In November last year, the group acquired Plush from Greenlit Brands Household Goods for $102.5 million. Subsequent to the acquisition, the brand contributed $88.8 million to group revenue while also contributing to an “elevated” order bank at the end of the period.

E-commerce written sales orders contributed $37.6 million of sales – double the volume of the previous year. That helped the company overcome the closure of 55 per cent of its stores during the first three months of the financial year.  

Anthony Scali, MD of Nick Scali, described the year as a “challenging period” for the business as lockdowns in sourcing countries and store closures at home impacted the business.

“Despite these challenges, the group was still able to deliver a strong result and end the year with a significant order bank which will translate to revenue in the next financial year.” 

The business does not plan to provide any additional guidance for the next financial year due to ongoing economic uncertainty and inflationary pressures in the market. 

Global plus size fashion retailer City Chic says it has accelerated growth across all regions, and reached an “exceptionally strong position” in the US market.

For the 53 weeks to July 3, group sales rose 39 per cent to $369.2 million while tax-paid profit increased 4.7 per cent to $22.3 million. Comp sales rose 25.5 per cent.

Organic growth in all channels drove US sales up 53.9 per cent to $162.4 million while Australian sales reached $161.8 million, up 11 per cent notwithstanding Covid-related store closures. 

The business lost 13.4 per cent of its trading days in Australia however online sales continued to surge – up 27.5 per cent following the introduction of the “conservative” product range.

The company’s global customer base grew 30 per cent to 1.4 million active customers while its website registered 78.6 million visits – a 35 per cent increase year on year.

Phil Ryan, CEO and MD of City Chic, said the business adapted to overcome challenges presented by the pandemic and still pursue its growth plans.

“To ensure sustained growth into the future, we established a sophisticated global distribution network through our own websites and a global partner network. This included diversifying our global supply chain into new sourcing regions and investing in inventory ahead of the curve.”

The business expects to increase retail prices where necessary, to protect margins and will boost inventory by 52 per cent to protect itself from potential shortages rising from supply-chain interruptions during the next financial year.

Retail conglomerate Wesfarmers has reported a 1.2 per cent decline in tax-paid profit to $2.35 billion following significant pandemic-related disruptions to trading.

The retail wing of the group comprises Bunnings, Officeworks, and Kmart Group — which includes Kmart, Target and Catch.

For the period ended June 30, overall group sales increased 8.5 per cent to $36.8 billion while earnings before interest and tax fell 2.3 per cent to $3.6 billion.

Strong demand from commercial customers drove Bunnings’ revenue up 5.2 per cent to $17.7 billion. During the year, the business also expanded its range, store network and fulfilment capabilities to enhance customers’ shopping experience.

Kmart Group’s sales fell 39.7 per cent to $418 million largely due to Covid-related store closures in the first half, coupled with stock congestion at domestic ports and distribution centres.

Growth in its marketplace offering drove Catch’s gross transaction value (GTV) by 1.6 per cent to $989 million for the year.

Officeworks’ revenue increased 4.6 per cent to $3.16 billion, however higher fulfilment costs associated with lockdowns and temporary inefficiencies during its transition to a new customer fulfilment centre in Victoria impacted earnings.

Wesfarmers MD, Rob Scott, said the group will continue to invest in its business and “renew” its portfolio despite the disrupted trading environment.

For the first seven weeks of FY23, retail trading conditions for the business have remained “robust” despite the effects of inflation on household budgets.

The OnePass membership program — a digitally native subscription service — will be extended to its other retail businesses (Bunnings and Officeworks) in the next financial year.

Coco Republic is to launch two flagship stores in California ahead of a progressive rollout in selected US markets and other global locations, the company has announced. 

The plan coincides with the appointment of two key executives in the US: Eric Bauer as global CEO and Skye Westcott as president of North America who will lead what Coco Republic, the Australian-founded furniture and homewares chain, describes as an “accelerated global expansion, initially focused on the California market”. 

“Coco Republic is an exciting opportunity to introduce the leading Australian furniture and lifestyle brand to a global consumer,” said Bauer. “We believe that our product design ethos and Australian essence will resonate globally enabling us to build a global community, be an influential design-lead authority and act as a guide to those who seek a well-designed life.”

The US expansion will commence with a flagship store in San Francisco’s Union Square in October and another at Culver City in greater Los Angeles late this year. It follows the success of a partnership with Restoration Hardware and the launch of an outdoor collection at an HD Buttercup store in Los Angeles in 2019.

Underpinning the strategy is Coco Republic’s acquisition of the assets and intellectual property of California home furniture retailer HD Buttercup in October last year. Evan Cole, who founded HD Buttercup, has joined Coco Republic’s board and the Culver City store will open in a converted HD Buttercup site.  

The new appointees have extensive experience in brands and consumer-fronting businesses. Bauer has more than 30 years of leadership experience with brands including Gap, International Vitamin Corporation, and PepsiCo. Westcott has nearly 40 years of omnichannel leadership experience in merchandising, marketing, product design and global sourcing, including with HD Buttercup.

Coco Republic, now majority-owned by Story3 Capital Partners, was founded in 1979 and has 15 showrooms in Australia and New Zealand, along with e-commerce stores in both markets.  

“We are incredibly excited to introduce our brand to the California market and inspire a new world of consumers to design beautiful interiors,” said Anthony Spon-Smith, vice chairman and creative director of Coco Republic.

“Our partnership with Story3 has been a tremendous catalyst in executing our strategy and the new growth capital investment is a testament to the strength of our brand and the potential we see ahead.” 

The leadership additions of Bauer and Westcott will play a significant role in cementing the brand globally as a leading design-led Australian luxury furniture and lifestyle brand and leading the next phase of the company’s growth and success,” Spon-Smith concluded.

Ongoing Covid-related issues, government-mandated store closures in the first half and freight delays have eaten into the profit of bedding and homewares retailer Adairs.

The company, which owns and operates Adairs, Focus on Furniture and Mocka brands, says group sales rose 12.9 per cent to $564.5 million in the year to June 26, while tax-paid profit fell 29.6 per cent to $44.9 million.

Online sales registered $195.4 million and contributed 35 per cent of all sales. Like-for-like sales, excluding its Focus brand, fell by 2 per cent.

Adairs’ cost of doing business was higher than the previous year at 8.3 per cent, largely due to one-off Covid-related warehousing inefficiencies, rent rebates, and higher salary and wages to team members, despite store closures.

The brand upsized 11 Adairs stores and opened four new stores during the year. Its National Distribution Centre (NDC) in Melbourne was completed during the first half of the year.

Mocka’s sales were up 6.5 per cent to $64.1 million although higher import freight costs and increased domestic delivery charges resulted in a decline in its gross profit margin.

In its seven months under Adairs’ ownership, Focus on Furniture contributed $81.7 million to sales. Adairs says the brand’s acquisition has a “complementary” customer and product overlap with its existing businesses.

Mark Ronan, CEO and MD of Adairs said: “Significant operational disruptions related to Covid, particularly within our supply chain, impacted the group’s cost base and meant that this growth did not translate into an increase in profits.”

He added that a majority of these costs are not expected to carry into the future years despite recent macroeconomic headwinds.

Retail sales continued to strengthen in July with trade increasing 17.9% compared to the same month last year, according to Mastercard SpendingPulse.

Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment.

According to its data analytics, most retail categories recorded substantial year-on-year sales growth, led by lodging (up 63.3%), jewellery (up 47.6%) and apparel (up 31.3%).

Overall, retail sales across the board continued to strengthen in July with trade increasing 17.9% compared to the same month last year.

Australian Retailers Association (ARA) CEO Paul Zahra cautioned that sales in discretionary retail categories are elevated in comparison to a year ago, when businesses in NSW and Victoria were severely restricted.

“In July last year, our two largest states were in lockdown and spending dried up as many non-essential retailers were forced to close their doors,” Zahra said.

“It wasn’t until October that businesses in NSW and Victoria finally reopened, and consumers were able to shop in-stores once again."

With Australia strictly locked down travel in 2021, Zahra said it’s no surprise that lodging is “leading the way” with sales up 63.3% as people gear back into local and international travel.

“The current retail trade environment is very different to a year ago and businesses are dealing with a whole new set of challenges due to inflation and rising costs associated with fuel, energy, supply chains and rents,” Zahra continued.

“What’s pleasing is that sales are currently holding up well despite the rising cost of living and interest rates, although it appears as though we haven’t seen the full impact of this hit consumers.

“The ARAs forecasts with Roy Morgan on Father’s Day gift spending are down 7.7% compared to last year, with 42% of consumers saying the current cost of living challenges will impact how much they’ll spend.

“The concern is with inflation yet to peak, consumers will start to be squeezed when it comes to their discretionary purchases.”

Other areas that saw increases in year-on-year sales included fuel and convenience (up 26%), electronics (up 22.6%), home furnishings (up 18.7%), and groceries (up just 4.5%).

The findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check.

The Australian Retailers Association (ARA) is a national retail body, representing a $400 billion sector that employs 1.3 million Australians. It is the largest private sector employer in the country.

Endeavour Group has marked its first year as a standalone business with a minor increase in profit on static sales, results released today show. 

The former Woolworths Group subsidiary, which owns Dan Murphy’s and 344 hotels and clubs, achieved sales of $11.6 billion and a profit of $495 million, up 2.8 per cent. The result was significant given the disruption to hotel trading due to Covid movement restrictions during the first half, offset in part by increased online sales of liquor to house-bound consumers. It also shows how the group overcame widespread disruption on the eastern seaboard from flooding which saw some of its stores and hotels closed for weeks due to damage. 

On the retail side, Endeavour Group opened a net gain of 32 stores during the year while on the hotel side it completed 40 renewals and acquired five new properties. 

“The investment in our digital connections with customers has been accelerated in recent years given Covid-19 restrictions and we emerged from FY22 with both record sales and record numbers of customer connections,” said Endeavour Group MD and CEO, Steve Donohue. 

He said the company’s fortunes continued to improve during the first seven weeks of the new trading year, as the hotel division recovered further and retail trends “are consistent with a return to normal patterns of trade”. 

Compared to the same period in FY20 – prior to the advent of Covid-19 – retail sales were up 12.7 per cent and hotels by 13.4 per cent. The company warned that sales comparisons to last year are not meaningful given the impact of Covid restrictions in place at the time.

Australia’s largest retail landlord is adding basketball courts, community centres, libraries and swim schools to its tenant mix as it dives deeper into an experience-based shopping trend that drove $12 billion in half-year sales across its malls.

Scentre Group, which owns and manages dozens of Westfield branded shopping centres, has upgraded its full-year guidance per security to 19 cents after experiencing a strong rebound in revenue, occupancy and rent collection.

Scentre’s incoming chief executive, Elliott Rusanow, estimates the group’s malls, like those in Sydney’s Chatswood and Melbourne’s Doncaster, are in proximity to 20 million people in Australia and New Zealand, about 10 million of whom visit once a week.

“We’ve grown customer visitation, portfolio occupancy, rental income and cash collection resulting in strong profit growth for the half,” said chief executive Peter Allen, who will step down from running the group in October.

Operating profit for the six months to June was up 17.5 per cent to $540.5 million, compared with the previous corresponding half-year, and about $12 billion in sales flowed through retailers at its 42 Westfield malls, half a billion more than it reported for the same period in 2019 before the pandemic.

Jarden analyst Lou Pirenc labelled the landlord’s first half result as “well ahead of expectations”, noting that the group is still trading at a 25 per cent discount.

“I don’t think it’s revenge spending because, if it was, it would have been all out there and then slowed down.”

Scentre’s outgoing chief executive Peter Allen

“We believe more evidence of a recovery in rents and superior funds from operations growth to most REITs, should drive a re-rating,” Pirenc said.

Occupancy was up to 98.8 per cent, average rents increased by $5 per square metre, gross rent collection was $1.25 billion, and 585 new merchants were signed up across its centres, with 108 of those new to the portfolio, during the half year.Allen said the uplift in sales across most categories was not a consumer-driven “revenge spending” spree following the end of lockdowns and successive waves of virus variants, but rather a sustained shift in spending despite the threat of inflation and interest rate rises.

“I don’t think it’s revenge spending because, if it was, it would have been all out there and then slowed down. We haven’t seen that. We’re seeing it grow. Our three months sales growth is stronger than our six months sales growth,” he said.

When Scentre Group was first spun out of billionaire Frank Lowy’s Westfield empire eight years ago leaving it all the Australian assets, roughly 10 per cent of stores in its centres were experience-based, focused mainly around restaurants and casual dining.

“Today, 43 per cent of our 12,000 stores are experience-based,” Allen said. Now they extend beyond food to categories such as wellness, health, beauty and sports.

In a bid to consolidate Westfield’s standing as “town centres” and prime locations to visit - where customers are entertained, socialise and shop - the landlord is adding attractions such as basketball courts on the roof of its Chatswood centre, and swim schools at Westfield Warringah and its revamped Knox mall, which is also gaining basketball courts, a community centre and public library.

“Those types of interactions are really creating the destination,” Allen said.

Scentre recently opened a $55 million rooftop entertainment, leisure and dining precinct at its Westfield Mt Druitt mall, which it said increased customer visitations and dwell time.

Scentre shares were up 2.52 per cent in early afternoon trade to $2.85.

The Swiss group will sell an additional 3.2 percent to Symphony Global, leaving YNAP without a controlling shareholder. The deal paves the way for Farfetch to potentially take control of the loss-making e-tailer, the companies said.

E-commerce operator Farfetch and Symphony Global, the investment vehicle of Emirati real estate mogul Mohamed Alabbar, will acquire a 47.5 and 3.2 percent percent stake in Yoox Net-a-Porter (YNAP) respectively, from Cartier-owner Richemont, the companies said in a statement.

The deal leaves Yoox-Net a-Porter without a controlling shareholder, and paves the way for Farfetch to potentially acquire the remaining YNAP shares. As part of the agreement, Richemont’s brands will also adopt Farfetch’s technology to power their digital activities, according to the statement.

“This investment and work we will do with Farfetch Platform Solutions for YNAP will pave the way to a potential acquisition by Farfetch, which would create a complementary portfolio of iconic luxury destinations, appealing to different demographics, price points and regions,” Farfetch CEO Jose Neves said.

The deal provides a long-awaited, albeit painful exit for Richemont from a costly foray into multi-brand e-commerce. The Swiss group, which acquired full control of YNAP at a €5 billion valuation in 2018, will receive shares in Farfetch valued at just $440 million, which it has agreed to hold as an investment, as well as receiving another $250 million in Farfetch shares in 5 years.

The transaction values YNAP at around €1 billion, materially lower than Richemont’s investment, as well as below recent estimates of the unit’s value. As a result, Richemont said it would claim a €2.7 billion writedown on the asset.

Still, investors and analysts welcomed the news. Bringing its stake in YNAP below 50 percent will allow Richemont to deconsolidate the e-tailer in its reporting, where the unit’s steep losses have dragged down the company’s valuation for years. Richemont shares were up more than 3 percent in early trading on Wednesday.

Richemont, which is controlled by South African billionaire Johann Rupert, has faced mounting pressure to report progress on selling or turning around YNAP, which fell behind rivals during the pandemic even as online shopping surged.

Sales and profits in the group’s jewellery houses including Cartier and Van Cleef & Arpels have boomed in recent years, but the company trades at a discount due to the drag on profits from YNAP, a governance structure that deflates the voting power of minority shareholders, and a pattern of idiosyncratic fashion investments. Activist shareholder Bluebell recently proposed a shakeup to Richemont’s governance, including an expanded board and bringing on a former Bulgari CEO, Francesco Trapani, to represent minority shareholders’ interests.

The Farfetch deal will boost Richemont’s operating profit margin by around 4.5 percent, RBC analyst Piral Dadhania said in a note to clients.

Farfetch, which reports its first-half earnings Thursday, will gain exposure to a broader base of customers by investing in its biggest rival. It’s also opened the door to acquiring major clients for its business-to-business services: providing white-label solutions for Richemont’s brands will be a boon for Farfetch’s Platform Solutions unit, which is seen as an increasingly important growth engine for the group as some key luxury brands like Gucci reduce their exposure to third-party sellers.

“This seems very good news for both companies. Richemont will finally remove YNAP from its perimeter … Farfetch secures the number two in multi-brand digital distribution,” Bernstein analyst Luca Solca wrote in a research note.

The addition of Richemont’s brand portfolio to the Farfetch platform is likely to give the e-tailer a much-needed traffic boost, Solca added. “Prima facie, this seems an excellent deal for Farfetch,” he said.

Super Retail Group has reported a “record” year of sales in its full-year results marked by a strong second-half performance – but its bottom line did not fare as well.

For the year to July 2, the business says sales grew 2.8 per cent to $3.55 billion although tax-paid net profit fell 20 per cent to $244.1 million.

Online sales grew 44 per cent to $601 million with click-and-collect accounting for 55 per cent of online sales — surging 73 per cent to $332 million. The number of active loyalty club members increased by 14 per cent to 9.2 million.

Sports retail subsidiary Rebel’s sales increased 1.3 per cent to $1.21 billion with strong performance registered in basketball and licensed products. While low foot traffic and shipment delays impacted business during the first half, the chain recovered steadily and stocks are now replenished.

Online sales grew 39 per cent contributing $268 million and representing 22 per cent of total sales.

Like-for-like sales for the year in the BCF division rose 4 per cent to $829.7 million, with online sales up 36 per cent to $117 million. Sales were particularly strong over the summer and Easter holiday periods.

June winter sales helped improve Macpac’s revenue by 15.3 per cent to $176.8 million. Key growth was seen in insulation apparel and rainwear categories in Australia as like-for-like sales increased by 12.4 per cent. In New Zealand, due to Covid-related restrictions on tourism, like-for-like sales fell 6.5 per cent.

Macpac’s e-commerce revenue grew 35 per cent to $41 million – representing 23 per cent of sales. The business says wholesale sales in this channel grew 95 per cent since its products were expanded to 200 outlets of BCF and Rebel stores.

Group MD and CEO, Anthony Heraghty, said the business has been focussing on transforming from a traditional brick-and-mortar retailer to an omnichannel retail business.

“The successful execution of our omni-retail strategy, our enhanced digital capability, proactive supply chain management, and an outstanding contribution from our team members were central to this performance,” he said.

“Our solid inventory levels enabled us to capture consumer demand when retail spending rebounded in the second quarter following the end of Covid-related lockdowns.”

Over the next two years, the business says it will make significant investments in leveraging its first-party data by launching a new loyalty program, creating a customer data platform and enhancing its customer analytics.

The retailer has plans to open 30 new stores across its four core businesses in the next financial year and add five new Rebel Customer Experience-format stores.

Rebel has recorded a 1.3% increase in sales to $1.21 billion for the 2022 financial year.

The result was driven by an increased contribution from new rCX format stores and strong performance in key categories including basketball and licensed products.

While like-for-like sales fell by 2.8% for the year, they rebounded strongly in the second half.

The 5.9% fall in the first half was blamed on lower footfall in CBD and large shopping malls from the pandemic, as well as delayed shipments which impacted product availability.

Second half like-for-like sales grew by 0.5%, as foot traffic recovered and footwear and apparel stocks were replenished at the end of the fourth quarter.

Online sales grew by 39% to $268 million, representing 22% of sales, with Click & Collect comprising 41% of online sales.

Super Retail Group CEO Group Anthony Heraghty cited strong performance in Rebel rcX stores, with five stores set to upgrade to the new format in the coming year. 

“Looking forward, over the next two years the Group will make a significant investment to leverage our first-party data by launching new loyalty programs, developing a customer data platform, and building our customer analytics," he added.

"This investment will enable the Group to make increasingly personalised offers to our customers utilising analytically driven data and insights."

Rebel active club membership increased by 2% to 3.3 million in FY22, with club member sales representing 69% of total sales.

During the year, Rebel opened three stores and closed one store, resulting in 155 stores at period end.

Macpac sales increased by 15.3% to $176.8 million during FY22, driven by record June winter sales.

Like-for-like sales grew by 4.4% overall and by 8.5% in the second half.

In Australia, like-for like sales increased by 12.4% reflecting growth in rainwear and insulation apparel sales due to cold and wet weather.

In New Zealand, like-for-like sales fell 6.5% due to the impact of COVID-19 and reduced tourism and travel.

Sales of Macpac product in Rebel and BCF stores, both owned by parent company Super Retail Group, was expanded to over 200 outlets.

The move saw wholesale sales in this channel grew by 95%.

Online sales grew by 35% to $41 million, representing 23% of sales, while Click & Collect comprised 17% of online sales.

Group CEO Anthony Heraghty praised the result in a statement to shareholders.

“I am pleased to announce that the Group has delivered a strong set of financial results with another year of record sales.

"The successful execution of our omni-retail strategy, the Group’s enhanced digital capability, proactive supply chain
management, and an outstanding contribution from our team members were central to this performance."

Active club membership increased by 22% to 0.6 million, with club members representing 72% of Macpac total sales.

Macpac opened ten stores and closed one store, resulting in 85 stores for the financial year. 

At a time when bargains are top of the list for shoppers, analysts are watching fashion jewellery business Lovisa closely.

The Australian Securities Exchange-listed retailer has grown into a vast international network of bricks-and-mortar stores that offer statement pieces at a lower price than many high street jewellery brands.

While the business has grown, it’s also had to face lengthy COVID-19 lockdowns and interruptions over the past two years.

All eyes are on consumer spending in the lead-up to Christmas, and some stock watchers are using brands such as Lovisa as a barometer for consumer spending appetites.

As interest rates continue to rise and inflation affects the cost of everyday items, will younger shoppers still have an appetite for spending on accessories?

How it started: Founded in 2010, Lovisa was launched as a fashion jewellery retailer at a lower price point for consumers than speciality or department stores. The business, which was part of Brett Blundy’s BB Retail Capital, floated in 2014 with shares listed at $2 each.

How it’s going: The shares are up more than 750 per cent since listing, but the business has seen periods of heavy selling over the past few years, including March and April 2020, when pandemic lockdowns hit, and between April and June this year.

Industry: Fashion retail.

Main products: Fast fashion jewellery, in the $5 to $50 price range.

Key figures: Chairman Brett Blundy, chief executive officer Victor Herrero.

The bull case: Despite jitters about slowing consumer spending, recent retail figures have shown consumers still have cash to deploy, including into fashion and accessories. Clothing, footwear and fashion spending rose 1.3 per cent in June, hitting $2.9 billion.

Analysts say Lovisa, with its network of hundreds of stores across Australia and overseas, is well-placed to capture this spending enthusiasm.

“We expect the strong sales recovery and international store rollout to remain significant tailwinds for Lovisa over the medium term, driving solid earnings growth,” Jarden analyst Wilson Wong said in a research note to clients earlier this month.

Wilson Asset Management portfolio manager Oscar Oberg says companies that offer fashion for events are well-placed in this environment.

“It’s now about those companies who are exposed to ‘going out’ apparel – dresses, suits, jackets and that kind of retail,” he told The Age and The Sydney Morning Herald a fortnight ago, citing Lovisa as a potential winner from this trend.

The bear case: Lovisa shares are down 2.9 per cent so far this year and declined to $12.89 in June, amid a broad sharemarket sell-off. They are changing hands for about $19.40 this week.

Company watchers who are more cautious about the stock are asking whether it can maintain sales momentum if consumer spending slows further.

UBS downgraded its rating on the stock to “neutral” this month, noting that a bounce-back in the share price over the past month in the lead-up to its full year financial results makes the risk/reward trade-off less compelling.

Then there are the rising costs of doing business, which are impacting margins for retailers across the board.

“Near-term headwinds for Lovisa include labour and supply chain costs, yet we expect these can be well managed with scale and price optimisation, e.g. promotional bundles, re-ticketing,” UBS analyst Shaun Cousins wrote.

Lovisa is also looking to grow its global store footprint, but has warned investors this has been slower than expected in the first half of the year because of COVID-19 interruptions and labour shortages.

Jarden’s team says it will wait for an update on how new store rollouts are performing.

“We estimate Lovisa added 39 net new stores in 2H22E, which implies 22 net new stores from May to June 2022,” Wong and his team said.

They’re the slick orange-and-white cartons that have become a mainstay in Australian coffee culture. Championed by baristas, chosen by McDonald’s, Starbucks and Muffin Break, and beloved by lactose-avoiding consumers, Milklab’s plant-based products are a common sight in cafes across the nation.

But few coffee drinkers would know that Milklab’s manufacturer is at the centre of one of the most spectacular corporate implosions in recent Australian history.

Milklab’s maker, an ASX-listed company once known as Freedom Foods, is still struggling to recover from revelations two years ago of significant accounting irregularities worth over half-a-billion dollars.

The irregularities, preceded by the sudden resignations of two top executives, forced the company into a nine-month trading halt. Two class action lawsuits and an investigation by the corporate regulator, ASIC, have followed.

Freedom Foods has changed its management team, secured support from a new cornerstone shareholder - the billionaire Perich family, one of western Sydney’s biggest landowners - and rebranded itself as Noumi (pronounced “new me”).

Despite this, the company behind a wide range of dairy and plant-based milk products and health supplements has failed to win back the trust of investors.

“Noumi was a ‘market darling’ as recently as a few years ago,” class action law firm Phi Finney McDonald associate Muhammad Arayne says. “The financial irregularity revelations made in mid to late 2020 genuinely shocked the market and caused the company to lose a substantial amount of trust from investors. The share price collapse ... was catastrophic.”

Noumi shares, currently hovering around 28 cents, are about 90 per cent below a September 2018 peak price of $5.30. With a market value of $78 million, Noumi is worth less than 5 per cent of a company once valued at nearly $2 billion.

Throughout this turmoil, Milklab has been one bright spot for the company, enjoying stratospheric growth and strong customer loyalty among baristas.

But now, even Noumi’s most prized brand, and the company’s future prospects, are hanging on a knife’s edge.

And this week, the company disclosed that a separate legal battle has been launched by French tea and coffee company Sunday Collab over rights to distribute Milklab in Europe, claims Noumi says are “without merit”.

Noumi had already been accused of fraud by its former supplier, Californian almond grower Blue Diamond, which sued Noumi for breaching a licensing agreement between the two parties relating to Milklab.

The pair of companies have reached a settlement of $US35 million ($49 million) – more than the embattled Noumi can afford. So to pay it all off, Noumi wants to sell its stake in a separate company – but this needs shareholder approval.

The future of Milklab rests in the hands of these shareholders, who will vote on whether to approve the stake’s sale at an extraordinary general meeting on Wednesday.

Spilt milk

The first sign something was wrong at Freedom Foods came on Tuesday, June 23, 2020, when then chief financial officer Campbell Nicholas suddenly resigned.

The following morning, CEO Rory Macleod went on leave. Trading on the ASX was suspended, pending a further announcement, but not before shares dropped to a five-year low. An unusually high volume of 21.5 million shares traded hands (there have been no allegations of insider trading).

Then on Thursday of that week, the company released a statement to the ASX revealing that its estimated value of useless assets, $25 million, had blown out to $60 million. A review of inventory levels showed there was more out-of-date stock, some from cancelled orders, than originally thought. Sixty-one staff positions were made redundant.

Almost simultaneously, the company held a conference call. With the CFO and CEO gone, the unenviable task of hosting it fell to then-chairman Perry Gunner.

The most pressing question from investors and stakeholders was: where did things go wrong? The outdated stock and cancelled orders went as far back as 2017. Why wasn’t it picked up earlier?

The company had been shifting stock from five external warehouses into its own facility, the chairman explained that. They knew there was “some amount” of stock that needed to be reworked (for instance, turned into dry powder) but didn’t realise just how much there was.

Over the years, vast amounts of milk had been going off in warehouses, and either no one had noticed or no one had reported it.

But getting rid of it was expensive. Simply put, there was so much milk that had gone off that it was cheaper to write it off than to rework it.

“The difficulty is the cost of getting that milk out of the packages and into a vat ... to allow it to be processed, does not justify the protein or the value of the milk powder that you would obtain from doing it,” he said, according to transcripts of the investor call. “That’s why the ... likely provision has been increased from $25 million to $60 million.”

Household spending in June was up more than 10 per cent compared with the same time last year, as Australia struggles through skyrocketing cost of living.

The latest monthly spending figures, released on Tuesday by the Australian Bureau of Statistics, show household spending increased 10.2 per cent through the year, with a 15.9 per cent increase on services and a 5.0 per cent increase on goods.

Both discretionary and non-discretionary spending increased – not surprising given the rate of inflation is 6.1 per cent.

Discretionary spending rose by 10.8 per cent, driven by spending in recreation and cultural activities, while non-discretionary spending on essentials rose 9.8 per cent, due to the rising cost of transport.

The most significant area of spending was on transport, up 22.7 per cent, driven by higher petrol prices due to the ongoing war in Ukraine and the demand for air travel.

Spending at hospitality businesses like hotels, cafes and restaurants was up 17.1 per cent in what is viewed as a positive return to pre-pandemic levels.

There was also strong growth in spending on clothing and footwear – up 16.3 per cent; as well as a 15.5 per cent increase in recreation and culture.

Jacqui Vitas, from the Australia Bureau of Statistics, said June marked the 16th consecutive month of through-the-year increases in total household spending.“This was off the back of consistent decreases in total household spending from March 2020 to February 2021, as responses to Covid-19 were experienced across the country,” she said.

“Spending categories most impacted from Covid-19 responses – transport, hotels, cafes and restaurants, and clothing and footwear – have now returned to pre-pandemic levels.”

Queensland and Victoria recorded the highest state-based increases in spending through the year, spending 12.4 per cent and 11.8 per cent respectively more.

Trans-Tasman electronics retailer JB Hi-Fi has reported record earnings backed by strong online growth in its full-year results.

The business says total sales grew 3.5 per cent to $9.23 billion while tax-paid profit rose 7.7 per cent to $544.9 million. E-commerce revenue grew 52.8 per cent to $1.63 billion, accounting for 17.6 per cent of all sales.

In Australia, sales remained relatively strong throughout the year however, ongoing customer demand for electronics and home appliances drove sales up by 11.7 per cent in the second half. Sales increased 4 per cent to $6.2 billion while online sales grew 52.3 per cent to $1.19 billion, or 19.2 per cent of sales.

In New Zealand, sales were up 0.3 per cent to $237.76 million of which online sales – up by 56.7 per cent –contributed $39.23 million or 16.5 per cent of all sales.

Sales by JB Hi-Fi’s The Good Guys business reached $2.79 billion (up 2.7 per cent) with online sales up by 53.7 per cent to $397 million, or 14.2 per cent of all sales.

Group CEO, Terry Smart, said the results “reinforce” the trust customers have in the retailer’s brands.

“As we enter an increasingly uncertain retail environment and household budgets come under further pressure, customers will gravitate to trusted value-driven retailers.

“Our ongoing strategy of providing customers with the best value and outstanding service every day will ensure our brands continue to deliver for our customers and remain a destination of choice into the future.”

The group says it will continue to invest in its multichannel strategy across both online and supply chain channels, upgrade its website and expand delivery options for customers.

Meanwhile, the company has appointed Tim Edwards as its new MD of operations in New Zealand.