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How do you get customers back to your store after a two-year disruption? You give them a show.

That is the thinking at David Jones, which will host the first runway show at its Elizabeth St, Sydney, store in 50 years on Wednesday night. Five hundred of the department store’s most valuable customers will attend.

“We know customers want more experiential elements in store,” said David Jones chief executive Scott Fyfe. “When I started in the job, I was committed to bringing more experiences in store, a better assortment of Australian and international brands and improved customer service.”

Mr Fyfe became CEO of the company in October 2020, amid widespread COVID-19 lockdowns. Back then, the idea was to “keep the doors open”.

Now, he said, the business is seeing a buoyant return that he characterises as “screw it” spending.

“In men’s tailoring, particularly, we are seeing bridal parties come in and spend big. Groomsmen who might have spent $1500 on a suit are now spending more like $1800, $2000. It’s like people are saying, ‘screw it.’”

Footwear and apparel in general are performing well, he added.

But with interest rates and the average cost of consumer goods rising, Mr Fyfe is aware that “those headwinds might change”.

So far, he said, hints of a retail downturn have not reached the upmarket chain, which recently refurbished its Bourke St, Melbourne, flagship store and has heavily invested in its Elizabeth St store.

“We know that our customers have extensive savings from the lockdown period,” he said.

“We saw that over Christmas 2021, and we are finding that our consumers are not being impacted by external economic pressures. Actually, people are buying into newness.

“The Australian consumer is very connected with local fashion and that is a key strategy for us.”

Still, foot traffic, Mr Fyfe conceded, has not completely returned.

“We’re not back to 2019 levels in terms of physical retail, but Friday, Saturday and Sunday have been very good for us,” he said, pointing to the return of events and office hours as drivers of sales.

Still, late night shopping is “nowhere near what it was”.

Retail activity lifted just 0.2 per cent in June following the Reserve Bank of Australia’s decisions to lift the cash rate, according to the Australian Bureau of Statistics.

The result was softer than expected and prompted some economists to tip that retail trade had reached its zenith after six consecutive months of growth.

Deloitte analysis shows that though local retail has fared better than anticipated, spending is expected to slow toward the end of the year, and any growth will likely come from price rises, rather than sales volume.

Mr Fyfe dismissed this.

“We are confident about trading into Christmas, especially after the upheaval of the past few years,” he said.

“We have 33 new fashion brands, and we know that DJs is a destination for Christmas. So, we are very optimistic.”

Fine-Day is set to open a pop-up space at David Jones in Sydney, trading for three months from August 13.

The custom pop-up space will be located at the Elizabeth Street store, on Level 2 alongside women’s contemporary fashion and denim.

The curated collection will include its organic cotton and silk sleep range, bed linen in organic cotton and jersey, loungewear and a pet collection.

Fine-Day launched in April 2022, with an online store and flagship site on High Street in Armadale, Melbourne.

Fine-Day collections are pitched as genderless, inclusive, and produced from sustainable materials.

The launch collection was largely produced in Europe from sustainable fabrications, with an organic cotton tee priced at $50 and bath robe at $180.

Fine-Day is owned and operated by BrandBank Group, parent company of French Connection, Kikki K. and Seed Heritage.

A parcel of 19.2 million Myer shares changed hands in a pre-market crossing on Thursday, with fingers pointing to Solomon Lew’s Premier Investments as the buyer.

The trade was done at 50¢ a share, a 13.6 premium to the last close of 44¢, implying the buyer was keen to pick up the stake.

Fingers were pointing to Solomon Lew’s Premier Investments, already Myer’s biggest shareholder, which had been able to buy more since July 28.

The stock was handled by Blue Ocean Equities, which Lew has used in the past for Myer shares purchases. The transacted stake represented 2.3 per cent of the company.

It comes after Myer, on July 26, told market it expected full-year sales to be between 12.3 per cent and 12.7 per cent higher to hit up to $2 billion.

Lew last bought Myer shares in late January, picking up 3.9 per cent (or 31.7 million) of the company and pushing Premier’s shareholding to 19.9 per cent. That trade too was done at a premium to the market price.

The retail billionaire has been a thorn in Myer board’s side since 2017 and has tried to spill the board while Myer failed to turn a profit for two years.

Myer, in turn, has accused him of trying to take control of the company without paying the premium. It also hired Ron Malek’s Luminis Partners and law firm Clayton Utz last year as defence advisers.

Solomon Lew’s Premier Investments is creeping higher on the share register of Myer just a week after the department stores group issued an upbeat trading update, and six months after he last bought shares.

Premier has yet to post a substantial shareholding notice, but The Australian Financial Review’s Street Talk column reported on Thursday morning that his investment vehicle had snared another 2.3 per cent of the department store, boosting his holding to about 22.2 per cent.

The trade was done at 50¢ per share, a 13.6 per cent premium to Wednesday’s closing price of 44¢. Myer shares shot up over 9 per cent to 48¢ on Thursday.

Although Premier’s holding is now beyond the 20 per cent threshold, which would normally trigger a takeover bid, Premier is allowed to “creep” by buying up to 3 per cent of the target’s shares every six months.

Kerry Stokes’ Seven Group used the same aggressive creep strategy over several years before finally taking out building materials company Boral.

Mr Lew increased his stake to 19.9 per cent in February. While he has no obligation to bid, some say the increased stake gives him more clout to gain a board seat. It is understood there has not been any contact recently between Premier/Mr Lew and the Myer board led by JoAnne Stephenson.

Myer and Mr Lew both declined to comment.

The move by its biggest shareholder and long-time thorn in its side, comes a week after Myer revealed that it expected full-year 2022 sales to climb between 12.3 per cent and 12.7 per cent to as high as $2.995 billion – helping to double its bottom-line profit in its best result since 2018.

CEO John King has been shutting stores and shrinking floor space as part of his overhaul of the company.

There is obvious strategic value in the two companies coming together, with Premier able to offer its brands like Smiggle and Just Jeans immediately in concessions-type stores in Myer, helping to boost sales and profitability.

Mr Lew has a long, twisted history with Myer. He was entangled 40 years ago, buying an initial stake and then was forced off the board of the former Coles-Myer in 2002. He re-emerged in Myer snapping up a 10.8 per cent stake in 2017 via Premier.

A year ago last July, the billionaire retailer was making a push to take control of Myer, demanding that its non-executive directors – David Whittle, Jacquie Naylor and acting chairman Ms Stephenson – step down before he accepted Myer’s offer for board representation.

There is also speculation about any role that Mark McInnes might play. He is the former CEO of David Jones and also ran Premier until he resigned in January 2021 to spend more time with his family.

Wilson Asset Management lead portfolio manager Oscar Oberg has been a long-time backer of Myer because he believes in the future of department stores.

“We see at the moment the business is doing incredibly well. It’s a very tough environment, so it’s positive that someone sees value in the business because it’s grossly undervalued,” he said.

Mr Oberg added that Myer had a strong balance sheet, putting it on more solid footing should a recession hit Australia. He noted that Myer also has been slimmed down and managed well throughout the past five years amid COVID-19 closures and supply-chain constraints.

Myer is launching donation stations in its Melbourne, Eastland and Fountain Gate stores.

The donation stations are part of its partnership with Moving The Needle, a Salvation Army Australia initiative to reduce waste in the fashion industry.

According to the Salvation Army website, all donated items are individually sorted, evaluated, and placed either in store or into one of its recycling streams. 

“Once donations are received by a store, they are moved to a sorting room where the store team will separate them into clothing categories or season. 

“Each category will be carefully sorted by a team member who will review each item and decide, for example, which pieces of clothing are in saleable condition (clean and undamaged), and which will need to be repurposed.”

“Clothes that have been processed for sale are then priced based on their condition, quality, and original retail value before being displayed on the shop floor for them to find a new owner.”

This move forms part of Myer’s commitment to implementing initiatives that reduce packaging, minimise waste from landfill, promote recycling, and support circular economy schemes. This includes a focus on increasing Myer's recycling diversion rate of 63.6% to minimise landfill.

According to its online report into sustainability, Myer is continuing to improve its packaging standards, which includes a paper reduction project in stores, substituting 70% of soft home packaging to natural fibres, and phasing out plastic shopping bags.

Regarding the latter, the online report states that Myer has decreased plastic bag consumption in stores, with the total number of units ordered down 4.96 million in FY20.

The launch of its donation stations joins over 550 textile drop-off points throughout Moving The Needle’s network.

The initiative will run until October 9.

Retail sales in June registered $34.2 billion in turnover however rising costs of living and inflation will likely impede growth for businesses, according to data released by the Australian Bureau of Statistics (ABS) today.

Seasonally adjusted retail sales are still higher at 12 per cent year-on-year, although compared to May they were up by just 0.2 per cent, a figure dwarfed by the current inflation rate.

Cafes, restaurants, and takeaway food services had the largest rise at 2.7 per cent, followed by clothing, footwear, and personal accessory retailing at 1.3 per cent, and other retailing at 0.5 per cent.

Department store sales fell by 3.7 per cent while food retailing and household goods also recorded poor turnover at 0.3 per cent each.

Ben Dorber, head of retail statistics at the ABS, said results were mixed across the six industries as cost-of-living pressures appear to be slowing the growth in spending.

Australian Retailers Association CEO, Paul Zahra, said the results are not necessarily a “full reflection” of business performance as consumer prices have increased across the country.

“Consumers are paying more for everyday items, while at the same time, business operating costs have increased significantly.”

He cautioned consumers are anxious about the rising costs of living and interest rates which will likely impact spending in the coming months.

Dominique Lamb, National Retail Association chief, said retail businesses face a “challenging” period ahead in this inflationary climate.

“The impact of interest rate hikes will come to a head for many family-run and small business operators, who are struggling to keep up with the rising costs of business and dwindling consumer confidence,” she said.

On a state basis, NSW was the only state where retail turnover fell (by 0.2 per cent) while the NT posted the highest rise (1.8 per cent). Sales in Queensland were down 0.7 per cent), in the ACT by 0.6 per cent, and in both WA and Tasmania, by 0.5 per cent.

Trans-Tasman online retailer Kogan has reported a return to adjusted profit during the first quarter, but not by enough to prevent a 69 per cent slump for the full year to June 30.

Sales for the year were static, up by just 0.1 per cent, to $1.18 billion, while adjusted EBITA was $19.1 million – down from $61.8 million last year and $49.7 million the year before.

Significantly, the majority of its EBITA for the latest year came from New Zealand, where it earned $12.2 million from its Mighty Ape marketplace. The core Kogan.com operation earned $6.9 million, down 87.4 per cent year on year.

However, despite what the company described as tough trading conditions – impacted on both sides of the Tasman by Covid – Kogan’s active customer base has grown to 3,972,000 and its Kogan First loyalty program membership surged by 210 per cent.

Ruslan Kogan, founder and CEO of Kogan, said consumers don’t want to alter their lifestyle but are happy to shift the way they shop in uncertain times.

He said the company is working to become “leaner” and to pass on cost efficiencies to customers through lower prices in response to changes in the macro environment.

Earlier this year, the business said consumer demand did not meet its expectations as it moved through a challenging market condition in its third-quarter results.

Meanwhile, the group’s total stock inventory has been reduced from $227.9 million a year ago to $161.1 million, with $139.2 million worth in warehouses and $21.9 million worth in transit. That has also assisted in boosting its net cash position from $12.8 million at the end of last financial year to $32.1 million.

Kogan’s portfolio of businesses includes Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Travel, Kogan Money, Kogan Cars, Dick Smith, Matt Blatt and Mighty Ape.

Inflation could turn negative by late next year as petrol prices decline and supply chain pressures ease, allowing the Reserve Bank of Australia to avoid being too aggressive on interest rate rises.

Economists expect some major global inflationary pressures to be temporary and Australia’s quarterly headline inflation to be low or negative by the final quarter of calendar 2023.

An expected easing of inflation pressures next year meant the RBA should not lift the cash rate too far above the estimated 2.5 per cent neutral rate, said Outlook Economics director Peter Downes.

The sharp rise in the cost of oil, shipping, freight and manufacturing stems from Russia’s war on Ukraine driving up energy prices, China’s COVID-19 restrictions choking global supply chains, ultra-loose monetary policy and government spending.

“These special factors will begin to reverse,” Mr Downes said.

“If global growth slows and global oil prices fall back to around $US60 a barrel, fruit and vegetable prices fall back, freight rates return to pre covid rates as they are already most of the way there and building costs return to some sort of normality, then the through the year headline rate could be negative by the end of next year.”

Bond traders have reduced the outlook for long-term interest rates in response to central banks worldwide aggressively raising rates towards “neutral” – the theoretical rate that is neither stimulatory, nor restrictive.

The RBA meets on Tuesday and is widely expected to increase the 1.35 per cent cash rate by another 0.5 of a percentage point to 1.85 per cent, with more increases to follow in coming months.

The 6.1 per cent annual inflation rate for the June quarter reported on Wednesday meant a 0.5 of a percentage point rise was likely on for next week, said Commonwealth Bank of Australia economist Gareth Aird.

“We believe the case to move the cash rate by more than 50 basis points at the August board meeting is weak,” Mr Aird said.

“The inflation data did not surprise to the upside.

“And whilst the annual rate increased, the quarterly pulse of inflation did not accelerate.”

Treasurer Jim Chalmers and Reserve Bank of Australia governor Philip Lowe have warned inflation will spike above 7 per cent by late this year, but expect inflation to ease next year.

A negative quarterly headline inflation rate was “not out of the question” later next year if the global price of oil and petrol prices fell significantly, said ANZ economist David Plank.

However, Mr Plank said the RBA would be more concerned about underlying inflation, which ANZ tips to eventually fall below 3 per cent in annual terms by mid-2024. Annual underlying inflation was 4.9 per cent to June 30, the Australian Bureau of Statistics said this week.

Key will be wages

“The real inflation key will be the behaviour of wages if the unemployment falls below 3 per cent as we are now forecasting,” Mr Plank said. In June, Australia’s jobless rate fell to a 48-year low of 3.5 per cent, the ABS said.

It is possible that headline quarterly inflation could turn negative late next year if the oil price plunged, but the RBA’s more important measure of underlying inflation would still be firm, said HSBC Australia chief economist Paul Bloxham.

“The important part is domestic non-tradables inflation, which will remain above target given the tight labour market and likely momentum in wages growth by next year.”

Mr Bloxham tipped the RBA cash rate to hit 2.6 per cent by this December.

The RBA could get “lucky” next year as global inflationary forces recede, if the bank managed to keep a lid on inflation expectations, he said.

While Dr Lowe appears confident much of the supply-side inflation pressures from overseas will ease, he is keeping a close eye to make sure a wage-price spiral doesn’t develop to underpin a new burst of inflation.

He has said it is important to keep a lid on inflation expectations, to deter businesses from rising prices too much and workers making excessive wage claims.

Globally, a big jump in soft commodity prices such as corn, wheat, canola, cotton, live cattle, lamb and pork has driven food inflation. After surging, prices for most of these farm products have declined.

Japanese apparel retailer Uniqlo is set to open its first South Australia store, in Adelaide’s Myer Centre.

The new store spans 1000sqm and occupies a brand new addition to the Myer Centre. It will sell a range of LifeWear apparel for men, women and kids, alongside seasonal collaborations with designers.

Kensuke Suwa, COO of Uniqlo Australia, said: “Our South Australian customers have shown tremendous support since we arrived in Australia. This opening is not only a special milestone for the shoppers in the Myer Centre, but it is also for everyone at Uniqlo.”

“The addition of Uniqlo will further enhance the overall vibrancy of the centre and contribute to creating an unparalleled shopping experience for our customers,” added a spokesperson for Myer Centre Adelaide.

The new store will open later this year once construction is complete.

Department store group Myer says its sales will nudge $3 billion for the full year as burgeoning online sales and “positive outcome” across all metrics drove solid growth, despite the loss of trading days to Covid during the second half.

In a trading update for the 52 weeks to July 30, the business said it expects second-half sales to be up by about 17 per cent. Based on unaudited accounts, sales for the year will range between $2.85 billion and $2.995 billion.

Online sales accounted for 24 per cent of total sales and are expected to range between $715 million and $725 million highlighting strong growth momentum in the half. That represents year-on-year growth of between 32.5 and 34.4 per cent.

Post-tax net profit for the year is expected to be between $55 million and $60 million, an increase of 86 to 103 per cent over last year if the impact of JobKeeper subsidies is excluded from the prior year, when the results included Jobkeeper support of $22 million after tax.

In response to global supply chain issues, the business’ store stock in hand levels is 9.6 per cent higher than at the same time last year.

Myer’s CEO John King, said the momentum in the second half in terms of sales growth both in-store and online, profitability and strengthening of the company’s balance sheet “place us well as we go into the new financial year”.

Strandbags is developing a youth brand and preparing to unlock opportunities within men's bags, following the launch of Evity and Nere.

Evity development started two years ago, as lockdowns and restrictions made their impact on businesses.

With the brand now on track to exceed $100 million in sales during its first year, Strandbags CEO Felicity McGahan said further opportunities have been identified in the market. 

“There's a youth brand that we're working on - which is our next one," McGahan confirmed. "We're also very focused on unlocking the men's opportunity in the business.”

The venture comes as discretionary spending on bags and accessories grows, following a period of disruption during the COVID-19 pandemic. 

At the genesis of COVID-19 in early 2020, fewer consumers required new bags as travel movements were restricted. 

“But then once we got into COVID-19, people were gifting themselves with those small purchases,” McGahan said. 

This included a rise in the sales of wallets and purses, which were slowly being impacted by the influx of mobile phone cases that could double as card holders.

Then, in regard to the impact of travel, people shifted from holidaying via airplane to holidaying via the car, travelling locally.

“Through COVID, the categories really moved around for us through the last two years. And that's when our supply chain and our team had to pivot very quickly," McGahan said. 

“We went from hard cases to soft cases. It went from big cases to small cases. Consumers weren't going for big trips; they were going for weekenders.

“And then now we're seeing a complete flip around again, where we're back to international travel and big trips and family vacations.”

To continue riding the wave of consumers travelling nationally and abroad, Strandbags released a new range of travel products called Nere on Thursday, July 21.

“The launch of Nere far exceeded our expectations, and our expectations were very high," McGahan said. 

“We did an early launch with our loyal customers a couple of days earlier, and that was incredible. We're now seeing travel exceed the pre-COVID numbers.

“What you're seeing at the airport is reflected to what we're seeing in stores.”

According to McGahan, Nere’s name arose from the term ‘near’, highlighting the way many Australians travelled local during the height of the covid pandemic.

“'Nere' was where everyone was travelling because it was very local. Suddenly we all had to adapt our travel style.

“And, when you think about your luggage, it's with you; it's by your side when you're travelling.

“When we presented to the board, they're like, ‘is everyone going to understand this?’ It's easier to just create a brand name that you won't be able to trademark around the world.”

What consumers want

McGahan said that the media is so focused on the airport right now, where everyone is used to seeing the negative side of travel. The long queues, the delays, the disruptions.

“What we're not seeing is that families are travelling again, friends are travelling, kids are travelling, they're reconnecting.

“People are living, they're celebrating life.”

“I think that's what this is all about now, that people want to live again, and they want to be out there and connecting.

“It's a sad thing that we're not seeing more of that right now.”

Because of this, Felicity believes that much of the current rise in travel luggage purchases is from consumers wanting fresh and new.

“You’ve probably had two cases sitting in your house for years. And then you begin to think ‘I want fresh luggage.’ I think there's a lot of people that want a fresh start.

“And we're also seeing a lot of packages, where consumers want the whole set. It's not just updating one.

“In luggage, it's gone from being this commodity to being part of your personal style. And this is the whole point of Nere: it's got to be Instagrammable.

“Whilst people want function, they also want fashion and style. Let's maintain the functionality, but let's bring in the style now."

Prior to COVID, McGahan said travel luggage used to be built for the airport journey.

“Is it light enough? And is it durable enough? And whilst that's all important - and we're certainly not walking away from that - it's got to be about where were the bags going. Does it also belong on the trip?

“That’s the evolution and the modernization of making sure that the category now is exciting and fashionable, and as well as functional.

In the end, while brands at Strandbags cover the functionality of their overall purpose, McGahan said they’ve identified “the importance of having a real reason for them to exist.”

“We’re going through each of our brands to make sure that we're clear on the role they play in the portfolio, the customer, how we give them their own purpose and their own look and feel. To build a brand, not just the product." 

Investors sent Myer Holdings stock to its highest close in nearly three months on Tuesday after the department store chain flagged its 2022 full-year sales would soar by double digits, helping to double its bottom line profit in its best result since 2018.

Myer shares surged 21.25 per cent to 48¢ after Myer provided the upbeat trading update for the year to July 30, noting that its sales momentum had extended into the second half, helping its net profit to rise to as much as $60 million.

Myer expects full-year sales to gain between 12.3 per cent and 12.7 per cent to between $2.985 billion and $2.995 billion, compared with the $2.66 billion for the previous year which included an extra week of sales.

Shoppers appear to have kept spending after Christmas. Total sales in the July half gained between 16.5 per cent and 17.3 per cent, outpacing rival David Jones, which flagged its second half sales had rebounded by 4.3 per cent.

Myer had a tough first half year after the first quarter was heavily influenced by store closures and a January affected by the omicron variant, and declining consumer confidence.

Chief executive John King said the execution of the Customer First Plan strategy continued to deliver positive outcomes and that all categories had achieved sales growth over last year, even though more trading days were lost due to COVID-19 this year.

“The momentum in the second half in terms of sales growth, both in-store and online, profitability and strengthening of our balance sheet places us well as we go into the new financial year,” he said in a statement.

Full year net profit, excluding any significant items, is expected to be between $55 million and $60 million, an increase of between 86 per cent and 103 per cent when the $22 million of JobKeeper support payments are excluded from the prior year when stores were shut.

The South African owners of rival David Jones said that despite the impacts of rising inflation and interest rates, strong consumer demand had resulted in a better than expected rebound in sales in the second half after a tough start to the year.

David Jones sales fell by 2.6 per cent for the full year. Online sales increased by 28.7 per cent, making up nearly 23 per cent of group sales.

Woolworths of SA also owns Country Road Group (which includes Country Road, Trenery and Politix brands). Sales grew by 9 per cent in the second half, helping full-year sales into positive territory.

Investors Mutual analyst Lucas Goode said Myer management was executing on the turnaround strategy, which had helped the retailer to deliver its highest second half profit since 2013.

Mr Goode said: “While bricks and mortar is facing some structural headwinds, Myer started dividends again in the financial year. Myer will be delivering $1 billion of sales online within the next two years, and they already sell more online than Adore Beauty and The Iconic combined, so it’s a significant online business and one that actually generates a lot more profits.

“Homewares will likely trail off (in 2022), but apparel should be booming.”

Myer’s online revenue in fiscal 2022 is tipped to rise by between 32.5 per cent and 34.4 per cent. It makes up about 24 per cent of sales, between $715 million and $725 million.

Its balance sheet provides a strong foundation to finish the full year in a positive net cash position of more than $155 million, which could be used for a special dividend.

Stock on hand is nearly 10 per cent more than at the same time last year, mainly due to the bulking up of inventory to mitigate global supply chain delays. Mr King said clearance inventory, at 6.2 per cent of department store stock on hand, continued to be well-managed.

Myer anticipates releasing its 2022 final results during September, following a full audit that will include any significant items or other one-off costs.

Melbourne-based billionaire retailer and major shareholder Solomon Lew has long been a thorn in Myer’s side. Mr Lew was unavailable for comment.

In February, his Premier Investments bought another $15 million in shares, lifting its stake to the 19.9 per cent takeover threshold and giving Mr Lew a major say over Myer’s future.

In March, Myer’s long-suffering shareholders received their first dividend since 2017 – a 1.5¢ per share payout – indicating the department store was getting back on track.

Mr King about five years ago launched a turnaround strategy seeking to improve performance, which included closing stores and shrinking floor space and introducing new brands.

Ruslan Kogan’s eponymous online retailer has come a long way since it was founded in a garage in 2006, and the business has had its fair share of troubles along the way.

Known for its cheap electronics, Kogan experienced a boom during the pandemic, as shoppers flocked online to deck out their home offices with new monitors and laptops.

However, since then, the company’s share price has plunged due to ongoing issues with excess inventory levels and shipping delays. Investor sentiment has waned, with most analysts relatively pessimistic about its future.

Still, with Kogan’s share price in the ditch, are there some opportunities for investment?

How it started: Kogan’s origin story is classically startup: the business began out of Kogan’s parents’ garage in 2006, initially selling LCD televisions online that were assembled in Chinese factories for less than half the price similar models were being offered in bricks-and-mortar stores.

Early success saw the operation grow and expand its offering into other electronics – all sourced overseas at lower prices. By 2012, the business was reporting revenue of more than $100 million.

Ruslan Kogan made somewhat of a name for himself as an agitator, issuing bold bets and challenges to the likes of Harvey Norman founder Gerry Harvey and JB Hi-Fi boss Terry Smart.

In 2016, Kogan floated on the Australian Securities Exchange with an offer price of $1.80, giving the business a market capitalisation of about $150 million. It has also made a number of acquisitions, including Dick Smith, Matt Blatt, and New Zealand retailer Mighty Ape.

How it’s going: Today, Kogan’s market capitalisation is $323 million and its shares trade at about $3, a massive decrease in value since late 2020, when COVID-fuelled online spending helped its revenue and earnings soar and investors hoped the pandemic might entrench online shopping habits.

Several missteps and worse-than-expected trading performance have hammered Kogan shares. In early 2021, the business hinted at some growing pains, which were laid bare in May when the company said it would slice its earnings forecasts after buying too much inventory.

Kogan profit for the 2021-22 financial year plummeted 86 per cent and the company axed its dividend payout.

The company also drew shareholder ire at its annual meeting for poor performance and perceived mismanagement, with investors also protesting a generous share grant to Ruslan Kogan and David Shafer in the year prior.

Industry: Online retail.

Main products: Electronics, household goods.

Key figures: Chief executive Ruslan Kogan, chief financial officer David Shafer.

The bull case: With Kogan’s share price just a few dollars above its 2016 initial public offering price, much of the bull case stems from hope it may be able to again reach the levels of performance it was reporting through the pandemic.

Barrenjoey analyst Tom Kierath told clients in a research note in June that Kogan may be able to turn a corner if consumer conditions improve at a better-than-expected rate, and overall online penetration in the market exceeds forecasts.

It is possible Kogan may also be able to improve its standing through some “strategically compelling” acquisitions, Kierath says. The company has been fairly active in the mergers and acquisitions space, most recently acquiring NZ retailer Mighty Ape.

The company’s recently launched marketplace – where third-party sellers can offer their goods on the Kogan website – could also deliver higher sales and profits, with UBS analysts giving the company a 12-month share price target of $6 under this scenario.

A downbeat economy could also see more shoppers opt for cheaper goods, which Kogan sells through its private-label range, which makes up about half its profit.

The bear case: Many analysts remaining pessimistic about the company following its half-year results in February.

Primary among their concerns are the company’s continued high levels of inventory, an issue it has been wrestling since May last year.

UBS analyst Tim Piper told clients last month the company was still carrying “significant levels” of excess inventory.

“We forecast Kogan’s gross margins to remain somewhat compressed in the near term while this is cleared, while this additional inventory should also drive an elevated warehousing expense,” Piper said. Kierath notes Kogan’s inventory levels are still about $30 million higher than they should be.

Investors are also concerned over the weak consumer environment as inflation continues to rise. Data out this week from major banks CBA and NAB shows spending on discretionary items, including Kogan’s key lines such as household products and electronics, has begun to fall.

Finally, the uptick in online spending during the pandemic has been both a blessing and a curse for Kogan, as other retailers are now pouring more resources into the channel, further increasing competition.

A clear example is Woolworths’ recent $250 million acquisition of MyDeal, a close Kogan competitor. This, alongside Wesfarmers’ Catch, means there are now numerous well-funded competitors in the market.

“This, coupled with increased investment by omni-channel peers and continued investment by Amazon will result in a permanent step-change in customer acquisition costs and competitive intensity, reducing Kogan’s long-term earnings power,” Kierath says.

Wesfarmers’ Catch.com.au has tapped Cotton On Group executive Brendan Sweeney to run the online marketplace as the battle for digital dominance heats up.

At Geelong-based Cotton On, Mr Sweeney is leading the group’s international online strategy across seven retail brands, including Rubi, Factorie, Typo and Cotton on Kids.

Former Catch managing director Pete Sauerborn left the business on June 30. The Australian Financial Review’s Rear Window column reported his planned exit in April.

Catch operates an online marketplace selling products from food and liquor to clothing, furniture and electronics but it was a serious underperformer for Wesfarmers in its first half-year results when sales fell 4.3 per cent and earnings were hit by more discounting.

Mr Sweeney takes the helm of Catch at a tough time for digital retailers, following a surge in pandemic-led spending.

Tech giant Shopify boss Tobi Lutke warned overnight that the Ottawa-based company was slashing 10 per cent of its global workforce and expects sales to fall after making a “wrong” bet on how long the COVID-19-fuelled online shopping boom would continue.

This not only paints a troubled outlook for Catch, but also for others like Kogan.com, online beauty and cosmetics retailer Adore Beauty and home retailer Temple & Webster.

Many retailers bet big on digital capabilities, capacity, supply chain capex and inventory based on assumptions of compound growth and market share gains to online, which do not appear to happen as was expected, said DNR Capital analyst Chris Tynan.

“For large retailers, the phasing of digital investments may need to be re-assessed, and less profitable pure play online retailers could face real challenges in a normalising environment,” he said.

Catch is now part of a new data and digital division, OneDigital led by Nicole Sheffield, at Perth-based Wesfarmers. This unit also includes the OnePass subscription program (formerly the Club Catch) and the Advanced Analytics Centre.

“Under OneDigital, Catch is transitioning to a broad-based Australian marketplace offering, focused on brands customers know and love,” Ms Sheffield said.

“Brendan has significant experience leading large-scale eCommerce and retail investment programs and will spearhead this transformation,” Ms Sheffied said. “He will also lead the Fulfilled by Catch program, a multimillion-dollar investment in cutting-edge fulfilment centres and delivery technology to drive faster delivery for Catch and other Wesfarmers retail business.”

Wesfarmers snapped up Catch in June 2019 for $230 million in the hopes of building out online sales at its Kmart and Target retail chains. The group has heavily invested in Catch in new automation and fulfilment capacity.

Before joining privately held Cotton On in 2015, Mr Sweeney previously headed the strategy function at Coles Group, where he led the supermarket’s multichannel offering.

He has also held executive retail roles in the UK, including as commercial director at department store John Lewis where he led the growth of its online business.

Mr Sweeney will take up his new role at Catch in late October, and said he was keen to join as Catch prepares for what is expected to be its busiest Christmas ever.

Sales at LVMH, the world’s largest luxury group, rose by 19 per cent in the three months to June, as robust growth in the US and Europe helped it offset a new round of lockdowns in China.

LVMH, which owns dozens of high-end labels ranging from Tiffany to Moet & Chandon, said sales came to 18.73 billion euros (US$18.95 billion) in the second quarter, beating analyst expectations for 17.13 billion euros in a Visible Alpha consensus cited by UBS.

The growth pace in the second quarter was a tad slower than in the first three months of 2022, when group sales had climbed by 23 per cent.

Demand for fashion and leather goods from its star labels Louis Vuitton and Dior eased up slightly from high levels at the start of the year, rising by 19 per cent in the quarter, as flows of travelling shoppers returning to Europe helped to mitigate disruptions to business in China.

The wine and spirits division bounced back strongly from logistical and supply constraints earlier this year, growing 30 per cent, while sales from selective retailing, which includes Sephora, rose 20 per cent.

LVMH has been tapping into strong, post-pandemic demand for its designer labels as socialising resumes and shoppers continue to spend savings from lockdowns, brushing off concerns about turbulent stock markets and rising prices.

The company’s strong second quarter is setting the tone for rivals, with Gucci-owner Kering reporting its own first-half results on July 27 and Hermes on July 29.

Electronics and white goods retailer JB Hi-Fi expects to post record sales and earnings for fiscal 2022, boosted by a 50 per cent plus jump in online revenue and by the return of shoppers to stores as COVID-19 restrictions eased.

Group revenue rose 3.5 per cent to $9.3 billion from a year ago, supported by strong same-store sales growth of 10.9 per cent in its Australian business in the June quarter, according to preliminary results.

JB Hi-Fi is the first major retailer to show the year to June 30 was a boon but it did not provide any hard sales outlook for the new financial year. It will provide a July sales update next month and said it had faced a number of different, state-based COVID-19 restrictions in July 2021, including store closures in greater Sydney and Victoria.

The stock raced higher by 3.7 per cent in afternoon trade on Tuesday, hitting $42.40. But it is well off its 12-month peak of $55.85 hit on March 30 after it said net profit after tax would be up 7.7 per cent to $544.9 million for the year to June 30, beating analysts’ expectations of $414.8 million profit.

Many market watchers believe the rising cost of living and higher prices for petrol and food will hurt discretionary retailers in the year ahead.

JB Hi-Fi, which also owns The Good Guys, flagged on Tuesday that its group online sales rose 52.8 per cent to $1.6 billion, representing 17.6 per cent of sales for the year.

Preliminary full-year earnings before interest and tax climbed 6.9 per cent to $794.6 million and second half earnings rose more than 33 per cent, driven by elevated sales growth and improved gross margins.

Higher demand

In the June quarter, the group continued to see higher customer demand. JB Hi-Fi New Zealand same-store sales gained 7.7 per cent in the last quarter and The Good Guys’ same-store sales jumped 7.3 per cent.

Chief executive Terry Smart said he was pleased to report record sales and earnings for the year.

“The benefits of having a strong multichannel strategy were especially evident in the second half as COVID-19 restrictions eased and customers returned to shopping in-store, whilst continuing to shop with us online,” Mr Smart said.

“It is a credit to our over 13,000 team members who continue to remain focused on providing outstanding customer service and worked tirelessly to deliver this record result.”

Mr Smart, and his predecessor Richard Murray, are known for delivering beyond expectations.

JB Hi-Fi had not put out any 2022 full-year market guidance. It will release its full-year, audited statutory results on August 15.

Muted reaction

UBS head of consumer research Shaun Cousins told The Australian Financial Review that while JB’s update was a clear beat on market expectations, the share price reaction was muted due to the tough consumer outlook.

“Trading for the fourth quarter was stronger than expected, especially gross margins, but the challenge for the company, and the discretionary retail sector, is the consumer outlook is deteriorating,” he said.

“Cost of living pressures are building. Some consumers have enjoyed a lift in household savings and asset prices. But many consumers are facing pressures which will definitely bite, and we’ll see them rein in their spending.”

Mr Cousins expected sales to fall in the next financial year at JB Hi-Fi, and it was all about “how the macro will play out and how that will impact the retail sales made later this year and into 2023”.

High savings rate

While consumers face increasingly challenging conditions, they are in a strong position, as the savings rate is more than double the 30-year average, leaving people in a good place to deal with multiple rate hikes.

MST Marquee senior analyst Craig Woolford kept his overweight rating on JB, and lifted his target price from $37.25 to $43.30 driven by higher earnings and a lower probability of a recessionary outcome in Australia.

He said the tapering off in sales and earnings following interest rate hikes was more than six months away, and he expected a good first half 2023 result from JB, and was more concerned about FY24.

P.E Nation has joined forces with ASICS for a global GEL-1130 footwear collaboration.

P.E. Nation founders Pip Edwards and Claire Tregoning said the partnership, which reimagines the heritage performance shoe, was a natural fit for the brand. 

“For us, this collaboration fits back with the P.E Nation ethos: a technical activewear brand built for the streets.

"It highlights the synergy between ASICS and P.E, too, in terms of aesthetic approach.

“The result is a 360-degree package of function, form, and future sensibility”.

The new range draws inspiration from the late 2000s runner aesthetic, while also retaining its layered design, resembling a tribute to the GEL-1000 series.

The first style, Cream/Black (pictured), features a black and off-white colour palette which is more directional, connecting with the composure of P.E Nation’s Edit collection. This design will be exclusively available through P.E Nation’s and ASICS’ direct channels.

The second GEL-1130 style is the Cream/Paperbag (pictured), with a colour palette that begins with a base of neutral cream, off-white and tan, layered with P.E Nation’s notable colours of fluoro yellow and pink.

“P.E Nation is an Australian success story that has established its mark in the street-meets-sportswear space,” ASICS Oceania MD Mark Brunton said.

“Their constant pursuit of quality design, construction and fashion-forward comfort, perfectly aligns with ASICS’ approach to being a consumer-conscious brand.

“We’re excited to partner with P.E as they genuinely practice the ASICS Sportstyle core values in relentless innovation, timeless legacy, and intrinsic positivity.

“We look forward to bringing energy to the market alongside P.E Nation in the future.”

The two new ASICS x P.E Nation GEL-1130™ shoes will be available online and in-store from July 26.

In 2020, P.E Nation became the first Australian brand to collaborate with global giant H&M.

Strandbags has announced the launch of its lifestyle travel brand Nere.

The venture follows the release of Evity, an accessories brand specialising in style-led designs using responsibly sourced leather. 

Designed in Australia, Nere offers a range of suitcases, travel bags and accessories, with fashion-inspired new releases two seasons per year. This will also include colour updates to ongoing collections.

Strandbags CEO Felicity McGahan said the launch of Nere is a key milestone in modernising its travel offering.

“We saw the opportunity to take our already successful Flylite travel brand and re-imagine it to become a travel lifestyle brand, suitable for today’s modern traveller.

“Following the pandemic, consumers have a pent-up desire to travel, yet at the same time travel has become more complex and less affordable.

“We spent the last two years creating a brand that will inspire travel near and far through the seamless combination of fashion and function, at an accessible price point.”

The current range comprises of five collections:

· Stori – an iconic suitcase in black and on-trend colours

· Wonda – a quiet gliding case

· Caype – a feminine case with rose gold accents

· Mono Floral – a contemporary take on traditional floral

· Canvas – everyday bags made from sturdy cotton canvas.

It also includes travel accessories, such as luggage tags, packing cubes, foldable totes, backpacks and duffles.

“As leaders, Strandbags was the first to offer handbags and travel side by side in retail, and it is this experience that informs our unique approach to building brands that marry fashion and function," McGahan said. “We are excited to help travellers explore the world again after a disruptive few years."

Consumer spending continued its strong trajectory in June, with apparel sales up 2.4% and jewellery surging ahead by 23.2% according to Mastercard SpendingPulse.

The data, which measures in-store and online retail sales across all forms of payment, showed that consumer sales across all sectors was up 11.1% compared on the same period last year. 

Compared to other retail sectors, apparel saw seen the least growth with fuel and convenience at 23.1%, lodging up 17.9%, home furnishings up 6.5% and electronics up 4.8%. 

Australian Retailers Association CEO Paul Zahra said while sales are increasing, it is not a full reflection of sector performance - with rising labour costs, rents, fuel and energy costs and supply chain constraints all adding to the cost crunch for business.

“The performance of the retail sector is not just marked on sale volumes. We are operating in an inflationary landscape, where consumer prices are increasing, which impacts overall retail trade numbers.

“This is creating a perception that the sector is thriving. However, many businesses are severely challenged by rising operating costs associated with labour, fuel, energy, supply chains and rents.

“While consumers are impacted by the rising cost of living, the rising cost of business is in many cases more severe. The economic outlook also has many business owners feeling nervous, as rising interest rates begin to take hold and some natural belt tightening occurs with mortgage holders.

“The household savings rate remains above pre-Covid levels, which will cushion some of the inflationary impacts consumers are experiencing. However, when people rein in spending, discretionary purchases are the first things they cut out.”

Zahra continued: “We remain optimistic the retail sector will be able to weather the current economic headwinds and the rising cost challenges. However, we need to acknowledge that just because overall sales are up, it does not necessarily mean that retailers are doing well.

“As they have through the pandemic, many retailers continue to reduce inflationary shocks for their customers by absorbing some costs, which of course affects their margins. And passing on cost increases has impacted their volumes.”

Appliances Online has been named Australia’s Online Retailer of the Year for 2022 – and two of the company’s rivals also took out major honours.

The Australia Post-sponsored Online Retail Industry Awards (Orias) announced last night in Sydney, recognise local and international brands for their innovation, exceptional achievements and hard work.

Appliances Online took out the supreme award, another for Customer Service Excellence, and a third for Best Pureplay Retailer.

Rival Kogan won the Australia Post People’s Choice Awards for Large Retailer Over $1 million in annual revenue, and another, Winning Appliances ,was named Best Multichannel Retailer.

Sexual wellness retailer Lovehoney was inducted into the Orias Hall of Fame.

Gary Starr, Australia Post’s executive GM of customer & commercial, acknowledged the remarkable efforts of online retailers and said it was wonderful to see the industry come together again to celebrate the event in person. Last year’s event was held virtually due to Covid movement restrictions, with the winners acknowledged at last night’s event.

Other 2022 Oria Awards winners were:

• Best B2B Online Retailer: Hero Packaging
• Best Community Initiative: i=Change
• Best Small Independent Retailer: Une Piece
• Best Social Commerce Initiative: Showpo
• Best Phygital Initiative: Cue Clothing Co
• International Conqueror: Quad Lock
• Technology Champion: Cotton On
• Best Online Retail Marketing: Salvos Stores
• Industry Recognition: Paul Waddy
• Australia Post People’s Choice Awards – Small Retailer Under $100k Annual Revenue: Ruby’s Home Store
• Australia Post People’s Choice Awards – Small Retailer Over $100k Annual Revenue: 4 Ingredients