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Outgoing Myer chief executive John King has stared down the threat of Solomon Lew marching up the department store’s share register and says it would be “very silly” to recast the company’s strategy “and start again”.

Mr King’s comments came as he outlined a 12.5 per cent rise in sales and jump in profit for the 12 months to July 29, and after Premier Investments, a vehicle controlled by Lew, increased its stake in Myer from 25.8 per cent to almost 29 per cent last month.

Mr Lew, a long-time activist for change at the department store, was widely expected to push for a second seat on the Myer board. On Thursday, however, a Premier spokeswoman said that the company had not nominated a director for the upcoming annual meeting on November 9.

At the same time, the billionaire has engaged UBS to work through a potential restructure of Premier, which could include splitting off its popular Smiggle and Peter Alexander brands. The restructure, and Premier’s growing stake in Myer, has led to heightened speculation that the businessman wants to bring the department store into the group and link it with its heritage fashion brands such as Jay Jays and Dotti.

Premier non-executive director Terry McCartney already sits on Myer’s board. In 2017, Mr Lew failed in his attempt to appoint Mr McCartney, former UBS banker Tim Antonie and former Federation Centres chief executive Steven Sewell to the Myer board.

On Thursday, Myer said it had met its full-year guidance for sales growth of 12.5 per cent to $3.36 billion, and comparable sales – which excludes periods when stores are closed for refurbishments – improved by 3.3 per cent. But earnings were flat at $400.5 million. Net profit before restructuring, site exit costs and impairments was up 18.2 per cent to $71.1 million, the best bottom line since 2015. Statutory net profit reached $60.4 million, up 23.3 per cent.

Sales were down 1.9 per cent in the first six weeks of the new year, while CBD stores remained in positive territory – up 2 per cent – Myer said.

Myer will pay a final dividend of 1¢ a share, down from 2.5¢, on November 16. Annual dividends were 9¢ a share.

Cultural differences

Asked if Australia had room for two department store chains – Myer and David Jones – Mr King told The Australian Financial Review: “It depends on the size of the space and how they operate. You know, we’re fine. We’re probably stronger than they [David Jones] are at the moment. We’re just focused on our game. It’s very different to theirs.”

Mr King added Premier was a supportive shareholder and Myer’s strategy, known as the customer first plan, was successful.

“It would be very silly if someone would come in and rip that out and try and start again. It’s embedded in the culture of the company,” he said.

In an investor call, businessman Michael Saba expressed concern over any changes in culture and staff under new ownership.

“Just want to thank you and the whole team for achieving awesomeness. We think you have provided some of the greatest stability in Myer’s history,” said Mr Saba, the founder of Swisse Vitamins. “What will make us ensure that our good friend Solomon Lew’s culture will not override what has been achieved, and what has been proven and tested since you’ve taken the helm?”

Mr Saba, who was against Mr McCartney joining the Myer board last year, said he appreciated Premier, but did not “necessarily agree with every aspect of the way they live”.

Mr King told investors that the company’s turnaround program – which involved reducing store sizes, store closures and cutting brands – had yielded significant improvements to the business over the past five years, and he was leaving Myer in good shape, with $120 million of cash.

Mr King is banking on the growing base of younger shoppers joining its Myer One loyalty scheme, and said he was confident introducing brands owned by The Country Road Group would drive sales this year to offset the consumer slowdown. Myer One added 120,000 members in 2023, up 21 per cent. It has 7.3 million digital members, including 4.2 million active members, meaning those who purchased in the past 12 months.

Mr King said a younger demographic was engaging with the Myer One program, and partnership programs with Virgin and Commonwealth Bank were another opportunity to improve loyalty.

But the company was unable to replicate its solid start to the 2023 financial year, as sales in the second half ground to a halt. Mr King said Myer would not chase unprofitable sales. “We will always protect the bottom line. We think that with the CBD stores there is an opportunity where there are more tourists. There’s a lot of people getting back into travelling again.”

Mr King said consumers started significantly pulling back on spending in the June quarter, but Myer’s range meant it was well-placed to meet any budget.

Myer is also beefing up security in store and using more technology to battle higher theft rates, which rose to 1.8 per cent of sales from 1.3 per cent a year ago. This equates to a further $16 million in lost stock, taking shrinkage to $47 million for the year. “It’s definitely way worse than it was before COVID,” Mr King said about theft. “We’re starting to see some improvement.”

The department store has hired Egon Zehnder to find a successor for Mr King, who plans to leave next year. A search for a new chief financial officer is also under way after Nigel Chadwick flagged his departure early next year.

You’ve seen them around town, the ugly shoes with their big fat soles. But from hard core runners to influencers and celebrities who love their wild colours and fit, people are buying up big, turning Hoka into one of the fastest growing running brands in the world.

That success has boosted the sales at its local distributor, ASX-listed Accent Group, which struck a licensing deal with Hoka’s California-headquartered parent, Deckers Brands, the owner of Ugg and Teva, last year.

While it’s having a surge in sales, Hoka has been building its presence over the past decade in Australia, which will now culminate in its first two stores: a DFO outlet will open Brisbane in late October followed by a concept store in Westfield Bondi Junction two weeks later.

Despite the shaky retail environment, Accent, the retailer backed by billionaire Brett Blundy, plans to open five Hoka stores in the next year.

Hamish Allison, the general manager of Accent’s performance division, says Hoka sales – in-store, online and wholesale – have grown 20 per cent in the past year across Australia and New Zealand.

“With the stores that we’re rolling out now the plan is to test and learn to understand how they try to see what opportunity there is and then assess from there,” Allison tells AFR Weekend. “Whether it has the reach of say as a Sketchers network, I’m not sure, but we see opening the stores as much as a brand building exercise as a revenue gaining exercise.”

Allison says the COVID-19 pandemic led to a surge in demand for performance footwear. Hoka – named after a Maori phrase that roughly translates “to fly or soar” – has quickly become one of the top sellers at Accent, the owner of The Athlete’s Foot, Hype DC and Stylerunner chains.

Accent sales reached $1.57 billion in the year to July 2, up 23.7 per cent and supported by same store sales growth of 10.2 per cent. Like-for-like sales fell 2 per cent in the first seven weeks of this new year, it recently reported. The company plans to open more than 50 stores this financial year.

Hoka is becoming “a meaningful contributor” to the company, Allison says, although he declines to break out sales or earnings figures.

Hoka has also been a standout for Deckers, with sales reaching $US1.4 billion ($2.19 billion) in the past financial year – adding more than $US500 million in 12 months alone. The brand was founded in 2009 and acquired in 2013 by Deckers, where Hoka now makes up about 38 per cent of its revenue.

Pace Athletic founder Will Hatton has six running shoe stores around Sydney, and sold Hoka since its early days. He says the brand is easily the top three seller over the past few years. He sells about 15,000 pairs every year.

“It has a low offset, or low heel-toe drop. Hoka is trying to give you all the modern advancements of technologies and materials, but is also trying to promote a more efficient way of running and walking,” he says, adding that it is threatening more established brands like Japan’s Asics.

“Asics has been a very conservative Japanese brand that has done things the way they’ve always done things because that’s the way they work,” he says. “When you’ve got brands as big as those guys turning around, and starting to compete directly in that marketplace, it’s a pretty good indication of how much market share they’re eating away.”

Hatton estimates that more 50 per cent of Hoka’s global sales are generated by The Clifton and The Bondi styles, and questions if it can keep up with giant brands such as Nike or Rebook without moving into other segments.

The brand, however, wants to launch outdoor hiking boots and sandals. Moving into the lifestyle shoe category would be a departure from Hoka’s roots. The brand was founded by French athletes Nico Mermoud and Jean-Luc Diard and originally designed for trail running in the mountains.

Reflex Sports founder Ian Thomas bought Hoka to Australia about a decade ago after he saw the brand at a trade show in Munich.

“I lived in the French Alps and I knew two of the guys that started the brand. Nico showed me these really ugly shoes and said: I would like you to be the distributor. I said I don’t think I can sell those because they are so ugly,” Thomas says.

“But my business partner said to me, ‘I think this is special.’ We bought 1200 shoes. We were shitting our pants thinking have we got to sell these.

“We finished being the distributor on December 31, 2021. By that stage, we were selling over a quarter of a million pairs.”

Cash-strapped shoppers are primed to enjoy an early wave of discounts as retailers aim to keep buyers spending through the festive season.

An annual report into holiday retail from consulting giant Deloitte that was made public this week shows 71 per cent of retailers surveyed by the group expect higher discounting this festive season than last year.

“Retailers tell us discounting and promotional activity will be the key to enticing customers,” the Deloitte report said.

Deloitte’s research included interviews with between 35 and 40 large businesses as well as consumer data from more than 20,000 shoppers worldwide. The report also said retailers would invest heavily in online, click-and-collect and delivery options, while boosting in-store experiences too.

While discounts may help to move products off shelves, few retailers are optimistic that their margins will hold up – 52 per cent expect a decline in margins for in-store shopping this year.

Recent retail sales figures suggest Aussie retailers face a tough fight for the consumer dollar over coming months, with shoppers cutting back on categories such as fashion and home goods to balance rising mortgage and fuel costs.

E-commerce retail giant Amazon is banking on consumers bringing their festive spending forward, with a survey for the company of more than 1000 Australian consumers showing just one in five plan to wait until December to start shopping for the season.

Seventy-one per cent of consumers said they would begin before December, and 40 per cent said they were waiting for a sale event before shopping for the holiday season.

Amazon, which is known for offering big Black Friday and Cyber Monday sales events in November, confirmed on Monday that it would be offering early holiday deals to its Prime members as part of a “Prime Big Deal Day”, on October 10 and 11.

The event, which will offer “deep discounts” across a range of brands, will “help Aussies get a head-start on holiday shopping”, given three-quarters of consumers are concerned about the cost of the holiday season, Amazon said.

Australians have been shifting towards earlier festive shopping for years, with big four bank NAB saying on Saturday that data from NAB economics showed “a subtle but important shift towards earlier shopping in 2022 as Australians seized on November sales”.

Several national retailers have expressed cautious optimism about trading in the coming months despite cost pressures. The boss of department store Myer said last week that the company was well placed for the Christmas season.

General manager of retail at cosmetics retailer Lush Australia and New Zealand, Brittany Gian, said the brand was expecting brisk trade over Christmas.

“We see Christmas as being an event that consumers prioritise, and while cost-of-living pressures are necessitating cutbacks in other areas, consumers will try and preserve their Christmas spend to celebrate their loved ones after a tough year,” Gian said.

However, Lush will buck any discounting trends this year, as the company doesn’t tend to run store-wide sales.

“We don’t hike the price of our products year-round to cover the cost of holding regular sales, and we don’t have special offers or two-for-one tempters,” Gian said.

“We sincerely believe proper product advice and a personalised service can bring greater savings to a customer than gimmicky offers.”

KMD Brands, which owns the Kathmandu outdoor clothing brand and surfwear business Rip Curl, says overall sales slipped by 6.4 per cent in August as households cut back on spending and warm weather reduced demand for puffer jackets.

Chief executive Michael Daly said that across the retail market there were more signs of discounting and aggressive price promotions by rivals in a tougher market.

“In those times, some consumers will look for deals,” he said.

The Kathmandu brand bore the brunt of the slowdown in August compared with the same month a year ago, but Rip Curl and United States boots brand Oboz both notched higher sales in August.

On Wednesday, KMD announced a 0.6 per cent decline in net profit after tax to $NZ36.6 million ($33.7 million) for the 12 months to July 31. Sales were up 12.6 per cent to a record $NZ1.1 billion and the company kept the final dividend steady at NZ3¢ per share.

Mr Daly said economic indicators in all the group’s major markets were pointing to a weaker economy, and that was playing out in consumer behaviour and a retail market where discounting was more prevalent.

“We’re definitely seeing a market that is quite aggressive on price,” he said. “There’s general softness in consumer sentiment across the board now.”

KMD Brands’ shares slipped by 2 per cent to 75.5¢ in early trading on the ASX on Wednesday. The stock was at $1.06 in late May.

Rip Curl sales were up 8.3 per cent to $NZ582 million for the yearto July 31. But earnings before interest and tax were down 9.2 per cent to $NZ44 million. Margins slipped to 7.6 per cent from 9 per cent.

KMD bought the Rip Curl surf brand in 2019 from founders Brian Singer and Douglas Warbrick for $350 million.

The hotter weather was a solid “tailwind” for Rip Curl, and airport locations and outlets in holiday destinations were trading strongly.

Kathmandu sales were up 10.6 per cent to $NZ422 million for the year to July 31. A warmer winter in Australia meant a sales slowdown happened in May, June and July, with lower demand for puffer jackets, raincoats and other outdoor clothing.

Kathmandu has stepped up its international expansion, setting up specific online websites targeted to consumers in France, Germany and Canada.

International sales for Kathmandu were $NZ2.6 million in the year to July 31, and the group aims to lift that to $NZ100 million. But Mr Daly said it would be a slow advance, particularly in softer economic conditions.

“Obviously the path to a hundred looks pretty steep from here,” he said. “Maybe achieving it in five years might be a little bit ambitious.”

Mr Daly said Kathmandu was stepping up expansion of its bricks-and-mortar stores in Australasia where store numbers were now 158. It wants to increase that to around 200. He aimed to open five to 10 stores annually. “We’ll be patient,” he said.

Kathmandu’s margins improved to 7.9 per cent from 4.7 per cent as the group backed off from consistent discounting and promotional sales as it slowly shifts away from a “high-low” pricing strategy.

But Mr Daly emphasised it would be a slow transition away from regular promotions and that the shift would be harder at a time of economic slowdown.

“That wasn’t something we were looking to do by a click of the fingers,” he said.

Kathmandu’s EBIT increased 85 per cent to $NZ33.3 million.

Former Crocs executive Megan Welch has been recruited to spearhead Kathmandu as it makes its international push and started in the role last month. She is the third woman to lead a brand within the KMD stable, with Brooke Farris running Rip Curl and Amy Beck taking the reins at Oboz.

Oboz lifted its sales by 62 per cent to $NZ99.3 million.

Mr Daly said retailers generally were cutting back on forward orders in the wholesale market as they looked to reduce inventory levels in response to softer economic conditions.

“No one wants to take a risk in this market,” Mr Daly said.

ANZ-Roy Morgan Consumer Confidence was up 2.2pts to 79.8 this week as inflation expectations continue on a downward trajectory.

ANZ economist Madeline Dunk said consumer confidence is now at its highest level since late April.

“While the series remains at very low levels, particularly for those paying off a mortgage, there are some early signs of tempered optimism amongst households,” Dunk said. “Confidence for mortgage holders rose 4.1pts to record its highest reading in more than seven months.

“Meanwhile confidence increased 4.7pts for renters, after a sharp fall the week beforehand, but declined 2.3pts among those who own their home outright.”

Alongside the lift in confidence, Dunk said inflation expectations fell to 4.9% in mid-September, calling it the lowest reading since February 2022 before Russia invaded Ukraine.

The drop to 4.9% in mid-September is down from 5.4% recorded in August 2023, and down from 5.6% recorded in July.

Expected inflation scores cover annually over the next two years.

Consumer Confidence is now 6.2pts below the same week a year ago and is 1.6 pts above the 2023 weekly average of 78.2.

ANZ and Roy Morgan claimed a lift in confidence about personal financial situations over the next year drove the increase this week.

Now a fifth of Australians (20% - down 1ppt) say their families are ‘better off’ financially than this time last year compared to 52% (down 3ppts) that say their families are ‘worse off’ financially.

Looking forward, 33% (up 3ppts) expect their family to be ‘better off’ financially this time next year while 33% (unchanged) expect to be ‘worse off’.

8% (up 1ppt) of Australians expect ‘good times’ for the Australian economy over the next twelve months compared to 34% (down 2ppts) that expect ‘bad times’.

There was also a 4 percentage point drop in Australians expecting ‘bad times’ for the economy over the next five years to 19% compared to now 10% (down 1ppt) of Australians expecting ‘good times’.

This comes as the RBA held interest rates in early September at 4.1% for the third straight month.

Roy Morgan noted the softening in inflation expectations in recent weeks suggest the RBA’s decision to leave interest rates unchanged during their last three meetings may be the correct decision, but added there are still significant pressures in the economy.

This includes the average petrol price in Australia increasing to $2.04 per litre.

Roy Morgan CEO Michele Levine said the RBA has taken stock of the evolving economic situation in Australia, leading to the drop in inflation expectations.

“Although the drop in Inflation Expectations during August and September is good news, there are signs that it may prove to be short-lived,” Levine said. “So far in September the Australian Dollar has hovered consistently below 65 US cents – including hitting a low of only 63.6 US cents.

“The immediate impact of the low Australian Dollar is being felt at the pump with average retail petrol prices averaging $2.04 per litre last week and above $2 per litre for the last five weeks.

“This is the first time since July 2022 petrol prices have been at a sustained high level above $2 per litre for more than a month.”

Levine said petrol prices are one of the most visible signs of inflation.

“If they continue to remain at an elevated level above $2 per litre, or even rise further in the weeks and months ahead, this will clearly increase the general inflationary pressures in the economy.”

Levine said that if these inflationary pressures in the economy continue to grow, there will be renewed pressure on the RBA to increase interest rates again.

“The next RBA meeting on interest rates will be new Governor Michele Bullock’s first in the top job,” Levine said.

“Although all the current signs are that the RBA is set to leave interest rates unchanged, as ANZ economists Adam Boyton and Blair Chapman noted in a research note today: the RBA opted for a ‘hawkish pause’ in September as they continued to ‘monitor incoming data and how these alter the economic outlook and assessment of risks.’”

JD Sports Fashion said it considers Australia a principal market in Asia Pacific on the back of the inauguration of the flagship store in Sydney, which the company says is its most successful new store opening globally.

The UK-headquartered sports fashion retailer opened the flagship store in Sydney in August and said it is on track to relocate its Sydney distribution centre to a new expanded site in FY24, as it anticipates the next stage of growth.

JD Sports opened four premium sports fashion stores in Asia Pacific during the first half of FY23 and ended the period with 84 stores in the region. Meanwhile, it closed eight stores in the region during the period as it withdrew from the South Korean market.

JD Sports noted it finalised the acquisition of non-controlling interests across Malaysia, Thailand, and Singapore after the period, a move that is expected to result in further growth for the brand in these markets.

Sports fashion in Asia Pacific during the 26 weeks to July 29 posted an organic growth of 25.6 per cent in revenue to £230.9 million ($441 million). Revenue from other retail fascias in the region surged 100 per cent organically to £1.4 million.

Globally, the company ended the period with 3347 stores. The group booked a 11.9 per cent organic growth in revenue to £4.78 billion while profit before tax jumped 25.8 per cent to £375.2 million, reflecting performance of sports fashion and outdoor stores.

Gross profit margin declined to 48.0 per cent.

“We have made good progress delivering on our strategic pillars, focusing on expanding the JD brand and we will open more than 200 JD stores worldwide in this financial period,” said Régis Schultz, CEO at JD Sports Fashion.

Schultz said that the company aims to accelerate its brand growth in Europe through purchasing non-controlling interest in ISRG and MIG and the acquisition of GAP stores in France.

“This is alongside the proposed acquisition of Courir in the region, which will, when completed, enhance the Group’s existing portfolio of complementary concepts, bringing into the company its market-leading focus on the female customer,” said Schultz.

Billionaire retailer Solomon Lew’s fashion conglomerate, Premier Investments, has warned of a challenging trading environment after cost of living pressures slugged shoppers through the fourth quarter.

And conditions might not improve into Christmas as higher food, petrol and mortgages continue to constrict clothing and apparel spending.

This pressure on consumers was evident in the company’s stable of clothing and fashion brands – including Smiggle, Peter Alexander, Just Jeans and Portmans – which suffered a 2 per cent sales decline over August and September, reflecting the increasingly tough trading landscape for ­retailers.

The lurch into negative sales growth was a switch from sales expansion of 7.7 per cent over February and March.

“You have got to put a roof over your head, that is mortgage and rent. You have got to put food on the table and supermarket prices are outgrowing what everyone expected,” said John Bryce, the interim chief executive of Premier Retail, the company’s flagship fashion arm.

“It is tough on the consumer, and we are a consumer discretionary business. You need to do those things first before you come shopping with us.

“I think in the climate we are in we are happy and doing the best we can, but we are going to maximise our performance if the consumer can get better.”

Premier Investments, the $3.9bn fashion and investment conglomerate con­trolled and chaired by billionaire Mr Lew, ended 2023 with a slight dip in its statutory profit, although pre-tax earnings were stronger and the company also lifted its dividend strongly.

The group – whose investments include fashion brands, equity stakes in Myer and kitchen appliances company Breville as well as a Melbourne office tower – is continuing a strategic review to assess the optimal future structure of the company, which could eventually lead to a demerger of the various parts.

Revenue for the year ended on July 29 was up 10.7 per cent to $1.7bn.

Premier reported record sales led by its better-performing chains, Peter Alexander and Smiggle.

The company posted a statutory net profit of $271.1m for the period, down 4.9 per cent, which reflects a change to its accounting treatment of its large investment in Myer.

Adjusted net profit of $278.6m was up 6.4 per cent on 2022.

For its Premier Retail arm, which houses its fashion and apparel brands, earnings were up 1.5 per cent to $357.9m. Among its key chains, Peter Alexander recorded sales of $478.9m, up 11.8 per cent, Smiggle had record global sales of$319.8m, up 22.4 per cent. There were record apparel brands sales of $844.8m, up 4.6 per cent.

Some of its fashion chains that usually exhibit lower growth than Smiggle or Peter Alexander had a bumper year in 2023. Portmans delivered record sales of $165.6m, Jacqui E delivered its best sales result in over a decade and the strongest growth of all the group’s apparel brands, up 17.5 per cent, and Just Jeans delivered its second best sales result in history with sales of $307.1m, up 4.6 per cent.

Outside of its fashion chains, Premier Investments’ stake in Breville had a market value of $829.3m and the investment in Myer had a market value of $137.7m. At the end of fiscal 2023, it had closing cash on hand of $417.6m.

Premier Investments declared a final dividend of 60c per share, up from the 54c per share final dividend paid in 2022 – although that was topped up with a special dividend of 25c per share. The final dividend will be paid on January 24.

“Premier has once again delivered for shareholders,” Mr Lew said.

“Premier Retail delivered record results for the year.

“The operating results and continued strength of our balance sheet have allowed the directors to approve a record final dividend of 60c per share, taking full year dividends to 130c per share, up 4 per cent, underscoring our confidence in the strength of the business and its future prospects.”

Last month Premier Investments issued a trading update with guidance for the full year as well as the shock news of the departure of the chief executive of only two years, ex-JB Hi-Fi boss Richard Murray, and revelations that Mr Lew was considering a demerger of the group he founded as a cashbox after the 1987 sharemarket crash.

If a demerger proceeds, some of the best performing retail brands in the country – nightwear chain Peter Alexander and stationery store Smiggle – could be separated from the lower-growth chains such as Just Jeans, Jay Jays and Dotti.

Mr Lew said on Thursday the strategic review was under way and would assist in assessing the optimal future structure for the group, to ensure it is best positioned to maximise growth opportunities for the portfolio of brands.

He said it an update or conclusion on that strategic review was not likely until early 2024, with the company very much focused on the crucial upcoming Christmas trading period.

“The group is focused on the key Christmas trading quarter ahead, noting that results for the first half are always driven by this critical period,” Mr Bryce said.

Shares in Premier Investments ended down 13c, or 0.5 per cent, at $24.58.

E-commerce giant Amazon is catching up to supermarket giants Coles and Woolworths in the online grocery market, as cash-strapped Australian households put the brakes on spending.

The latest quarterly consumer survey from investment bank UBS, which tracks the habits of more than 1000 Australian adults, reveals online spending intentions for the next 12 months have weakened and shoppers’ motivation to buy online is fading, particularly when a brand also has bricks-and-mortar stores.

The number of shoppers who said they planned to buy from the online stores of Kmart, Big W, JB Hi-Fi, Target and Myer fell compared with the previous quarter. Online spending intentions overall have also weakened, with the average consumer expecting their spending will fall over the next 12 months.

Despite this, e-commerce giant Amazon appears to have increased its influence in the online grocery market compared with pre-pandemic. The number of shoppers who said Amazon was their primary retailer for buying groceries online increased to 9.4 per cent from 8.9 per cent pre-COVID. The number of shoppers intending to buy from Amazon in the next year also increased compared with the second quarter of 2023.

The number of shoppers saying they primarily shop online at IGA also increased to 3.3 per cent from 2.4 per cent pre-pandemic. Wesfarmers’ troubled e-commerce platform Catch had gains too, with 4.1 per cent of consumers saying the brand was their primary e-commerce grocery retailer, compared with 3.6 per cent before COVID.

Coles and Woolworths continue to dominate the grocery market online and in-store, but the number of shoppers who say they primarily shop online with either of the two major supermarkets has decreased since before COVID-19.

44.7 per cent of consumers said they mainly shop online with Woolies, compared with 45.4 per cent before the pandemic, while at Coles this figure was 28.8 per cent, down from 30.8 per cent.

The numbers come as competition for budget groceries continues to intensify, and Amazon has said it’s seen good traction in its non-perishable grocery categories and for the company’s “subscribe and save” offer for repeat purchases of home and beauty items.

UBS retail analyst Shaun Cousins said in a note to clients on the survey that spending expectations were continuing to moderate thanks to cost pressures.

“Savings expectations have plateaued, with an increase led by high-income earners and stabilisation for middle-income earners, with low-income earners expecting to continue to draw on savings to fund spending,” he said.

Other recent spending data provides more evidence that retailers face a tougher fight for a smaller pool of shoppers’ dollars, with online-only brands facing a potentially tougher battle as households spend less overall.

National household spending data from the Australian Bureau of Statistics (ABS) released last week for July showed a 0.7 per cent fall compared with July last year, while discretionary spending dropped for the fourth straight month to land 3.3 per cent lower for the year.

Home goods and clothing spending had some of the biggest drops, down more than 7 per cent over the year.

ABS data also shows overall online retail turnover dropped by 7.4 per cent for July in seasonally adjusted terms.

The tough conditions have already forced some online-only brands to make tough decisions, such as fashion retailer The Iconic announcing at the end of last month   it was making 72 roles redundant. The business reported softer-than-expected sales last quarter.

Global ratings agency S&P has warned that the cautious consumer presents a challenge for companies’ margins in the near future.

“We expect that companies’ ability to pass through higher wages and other costs, thus preserving earnings margins, will diminish in the next 12 to 18 months,” analyst Richard Timbs said in a note to clients.

Premier Investments achieved record sales for the full financial year as its businesses recovered from the impacts of the Covid-19 pandemic.

The company booked retail sales of $1.64 billion in FY23, up 9.7 per cent from the previous year. Earnings before interest and tax rose 1.5 per cent to $357.9 million.

Premier Investments said that its Peter Alexander brand witnessed an 11.8 per cent sales increase to $478.9 million, inclusive of a record sales in the week before Christmas and ahead of Mother’s Day during the second half. The brand opened six new stores during the year.

Smiggle’s sales jumped 22.4 per cent to $319.8 million as children returned to schools after closures during the pandemic. Smiggles also signed an agreement with a wholesale partner to open 60 freestanding stores in the UAE, Qatar, Kuwait, Oman, and Bahrain over the next decade.

The company also saw growth in all five of its mainstream apparel brands – Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui E – which collectively generated sales of $844.8 million, up 4.6 per cent.

“Peter Alexander, Smiggle and our apparel brands have all delivered record sales, through the commitment of our global teams and culture of excellence,” said John Bryce, interim CEO at Premier Retail. “Notwithstanding the challenging macroeconomic environment and the cost-of-living pressures faced by the community, our brands are focused on delivering wanted products and value for our customers.

“We maintain a relentless focus on product and channel optimisation whilst working with the board to maximise growth opportunities for each of our brands,” he concluded.

Meanwhile, Premier Investments’ statutory net profit after tax fell 4.9 per cent to $271.1 million, which includes income from its investments in Breville and Myer. Gross profit grew 5.4 per cent to $1.02 billion, while gross margin fell to 62. 2 per cent.

Australian fast-fashion brand Princess Polly has expanded in the US opening a flagship store in Los Angeles.

Established in 2005 by husband-and-wife team Wez and Eirin Bryett, the Gold Coast brand sells on-trend women’s clothing for predominantly Gen Z consumers. Since its entry online in 2019, the company says US sales have made up the majority of its revenue.

The new LA store spans 3370sqm and is located at the Westfield Century City shopping centre stocking 200 ‘on-trend styles’.

Alexandria Collis, the brand’s senior director of operations, said: “We decided on Los Angeles because it is a major city and a trend-driven city.”

The company says physical retail expansion is its new business strategy and follows its decision earlier this year when it signed a deal with PacSun to stock its merchandise in-store and online.

“PacSun is our first wholesale partner, and we are thrilled to be working with them,” said Collis. He added the brand is going to “listen” to its customers and scale operations accordingly.

Australian retail sales were up only 1.5 per cent year over year to $35.4 billion in August, according to data from the Australian Bureau of Statistics.

The growth was largely driven by sales from the cafes, restaurants, and takeaway industry, which rose 8 per cent, followed by food with a 3.5 per cent increase.

Clothing, footwear and accessories rebounded from a decline in July, up 1.4 per cent in August.

Household goods recorded the biggest decline (down 6.6 per cent), while department stores dropped slightly by 0.6 per cent. Other retailing remained flat with only 0.1 per cent growth.

Most states and territories recorded growth, namely ACT (5.5 per cent), WA (4.0 per cent), NT (2.8 per cent), SA (2.6 per cent), and Victoria (1.9 per cent).

NSW and Queensland were flat, up 0.6 and 0.3 per cent respectively, while Tasmania saw a 1 per cent decrease.

Australian Retailers Association (ARA) CEO Paul Zahra said consistent spending on essentials made retail’s performance in August look more favourable than reality.

“As food sales continue to grow off the back of unavoidable price increases, most other categories are suffering consistent spending declines,” Zahra said.

Retailers, who are also struggling with rising operating costs, will concentrate on offering the best value for budget-driven shoppers as they lead into the Christmas trading period, he added.

National Retail Association deputy CEO Lindsay Carroll said a slowdown in consumer spending before retail season was expected.

“Consumers have experienced a few months of relief with the Reserve Bank’s rates pause but will continue to hold on to every Aussie dollar until the sales hit, in case the honeymoon period ends,” Carroll commented.

Krispy Kreme ANZ has appointed Nicola Steele, who has been with the company since she was 19, as its new CEO, effective immediately.

Steele has worked with Krispy Kreme since 2006, rising through the ranks from crew member to store manager and area manager. She left university in 2011 and returned to Krispy Kreme as a state manager before progressing to senior leadership positions including national operations manager and head of retail & development, where she was instrumental in the brand’s expansion into Western Australia and New Zealand. 

Steele increased Krispy Kreme’s ANZ retail footprint over the next eight years before being appointed to COO in March last year.

“My focus is to broaden the horizons of career pathways for our employees,” she said. 

“I want to be able to offer all team members development and career opportunities that were afforded to me.” 

With the new role, Steele is in charge of the brand’s expansion, including concentrating on regional growth, establishing convenience partnerships, as well as investing in e-commerce and digital platforms.

Sending Megan Gale, Miranda Kerr, Jesinta Franklin and supermodels such as Linda Evangelista and Karlie Kloss down the runway was how David Jones once celebrated the arrival of new season collections.

This spring, instead of a champagne-fuelled event featuring the latest collections from Zimmermann, Aje and Alemais, the department store has reached the end of the runway, shelving plans for its traditional season launch.

“A lot of our designers are travelling and most have spent August in Europe,” says Bridget Veals, David Jones general manager of womenswear. “Everyone’s in Europe.”

“This time last year our customer was in party mode, now she’s travelling. With our top customers away we had to think of new ways to share our stories.”

Loyal customers can relax the grip on their pearl necklaces– the annual spring flower show, running since 1985, will proceed. “That’s sacred,” Veals says.

The once-sacred runway show will be replaced by an event in October, focusing on the store’s work with Indigenous Fashion Projects through the Pathways program, mentoring emerging First Nations labels.

“Designers, many of whom have been mentors, will be invited to that event,” Veals says. “We are trying to adapt to what’s going on in Australia currently and this seemed more important.”

The David Jones season launch was once one of the most important events on social calendars.

“The salon would be full of customers on the day of the David Jones launch and the invitations were coveted,” says Double Bay salon owner and blow dry maestro Joh Bailey, who was a regular guest.

“In the late eighties and nineties the front row was full of customers and they were there to shop. There was champagne and glamour but it was business. This was before Dior and other international labels became available directly in Australia. You could only get it at David Jones.”

“Later on the season launch morphed into something else, with designers sitting in the front row instead of putting the looks together backstage, which was bizarre. Then came the influencers and reality stars who have probably never bought anything from David Jones.”

“Now it’s completely off the radar.”

The fashion landscape has changed since David Jones flew Linda Evangelista to Australia to walk the runway in 2004, and spent an estimated $1.5 million on Karlie Kloss’s participation for the 2017 show and campaign.

These shows competed with equally extravagant productions from department store rival Myer starring former Miss Universe Jennifer Hawkins, when the stores competed for labels such as Toni Maticevski, Kym Ellery and Alex Perry. Myer’s last runway season launch was in March 2018.

Fashion brands now prefer to communicate directly to their customers through social media, exclusive trunk shows and private masterclasses. David Jones is planning smaller events to engage with their premium customers in the coming months.

“There are other ways than a runway show that brands can communicate their values,” says Carla Zampatti chief executive Alex Schuman, just back from Europe. “We host private events for our clients but also tell our story through the Carla Zampatti Foundation working in the areas of culture and multiculturalism.”

Rebecca Vallance, which is stocked in David Jones, also takes the direct approach.

“For our latest store at Melbourne’s Emporium we will be focusing on our customers by letting them know directly when new stock is delivered and by organising personalised styling sessions, as well as after hours appointments for our VIP clients,” Vallance says.

It’s more effective than the single runway look Vallance scored in last season’s dour autumn launch by David Jones, held beneath the unforgiving lights of Melbourne’s Bourke St store, enlivened only by the return of former store ambassador Megan Gale to the runway.

Last year’s spring launch was another low-key affair held in an intimate space on level eight of the Sydney flagship, above the once grand banquet area where Christian Dior held a couture show in the 1960s and Jesinta Franklin walked over tables for the lavish 2017 spring launch.

“The David Jones customer is changing,” Veals says. “She’s even changed since last year and we need to be nimble.”

Despite breaking the long-running tradition this season, Veals won’t rule out a return to the runway, should it return to relevance.

“I’m not saying that we won’t do another runway launch again. It’s not off the cards. I just think that if we do one again, it should probably be a good one.”

Retail giant Wesfarmers is unfazed by the softening consumer outlook, and is confident its stable of home-grown consumer brands, including Kmart and Bunnings, can keep shoppers interested in parting with their cash.

The ASX-listed $56 billion operator of Kmart, Target and Bunnings on Friday posted an 18.2 per cent jump in revenues for the year to $43.6 billion. Profits for the period were up 4.8 per cent to $2.47 billion, with Kmart and Officeworks delivering strong returns for the year.

Growth at DIY powerhouse Bunnings was slower for the 2023 full year, recording a 1.2 per cent jump in earnings to $2.2 billion for the year, with consumers more cautious about big-ticket purchases and renovations.

However, Wesfarmers chief executive Rob Scott was unconcerned about Bunnings’ trajectory, and told media the group had delivered a strong result after growing sales and earnings by about 40 per cent during the pandemic.

“The fact that they continue to move sales forward is a real credit to the team,” he said.

“Hopefully, it really demonstrates that the core of the Bunnings proposition is a lot of that repeatable, regular, essential spend.”

The performance of discount department store Kmart delivered the strongest evidence that Wesfarmers is meeting the demands of cash-strapped shoppers. Scott and Kmart Group boss Ian Bailey both said consumers were shopping across a broader range of categories within Kmart stores.

“As the quality of products improves, we’re attracting a lot of new shoppers,” Scott said.

Kmart has attracted a cult following on social media thanks to its low-cost lines of homewares, but Scott said customers had been branching out to spend in other areas at the retailer.

The products with solid growth include activewear, exercise equipment and health and beauty products, he said.

Bailey told analysts that shoppers in high, middle and lower income earning groups were all flocking to the brand.

“We are seeing all three groups growing with us – in terms of absolute numbers and average spend,” he said.

Kmart Group, which includes the Kmart and Target brands, recorded revenues up 16.5 per cent to $10.6 billion and earnings up 52.3 per cent for the year, to $769 million. Kmart Group had continued to benefit from “strong trading results” in the first weeks of the 2024 financial year, though this has moderated from the momentum during the six months to June.

The optimistic outlook for Kmart comes after other discount department store retailers flagged tougher conditions this week. Woolworths boss Brad Banducci said the company’s Big W brand faced challenging trading conditions as families cut back their spending on discretionary goods such as small appliances.

Wesfarmers’ technology and school supplies business Officeworks had revenues rise 5.9 per cent to $3.3 billion, while earnings were up 10.5 per cent to $200 million. Improved back-to-school sales results helped drive the growth amid an increased demand for stationery, art and office supplies, the retailer said.

Wesfarmers told investors that the group’s strong full-year result meant it was raising its dividend, with the final, fully franked payout coming in at $1.03 per share. This brings the full-year dividend payment to $1.91 per share, a 6.1 per cent increase on 2022.

Wesfarmers said cost pressures would continue to be elevated in the face of inflation and wage cost increases, but said its brands were able to leverage their scale and sourcing capabilities to offset some of this.

UBS, which has a buy on Wesfarmers, has kept its target price for the stock at $55 after the full-year numbers, noting that earnings at Bunnings, Kmart and Officeworks exceeded expectations, while its health and WesCEF divisions were just below market consensus.

Over more than a century, three generations of Bucherers built one of the most exclusive watch and jewellery retailers in the world, selling expensive time pieces and glittering gems to the global rich and famous.

Now, the secretive 87-year-old Swiss billionaire behind the eponymous luxury boutiques — Chairman Jöerg G. Bucherer — has agreed to sell Bucherer to Rolex in a move that has stunned the world of high-end watch retailing.

The companies didn’t disclose the terms of their deal and arriving at an estimate isn’t easy since neither Switzerland-based firm publishes financial results.

Jean-Philippe Bertschy, an analyst with Vontobel Holding AG, put annual sales at Bucherer’s more than 100 stores at about 2 billion Swiss francs ($4.1 billion), giving the firm an enterprise value of as much as 4 billion Swiss francs. He estimated Bucherer accounts for about 5 per cent of Rolex’s sales.

The octogenarian Bucherer’s decision to dispose of the closely held family business took the industry by surprise partly because of the intense secrecy surrounding himself and the two watchmakers, whose histories have been closely entwined for decades. In a statement about the agreement, Rolex said his choice was made “in the absence of direct descendants.”

By buying Bucherer, Rolex is giving itself a major presence in consumer sales for the first time, a strategic shift from reliance on external distributors. The only store in the world currently owned and operated by Rolex is in its home city of Geneva.

The deal, which still requires approval from authorities, comes amid what UBS has dubbed the greatest transfer of wealth in history over the next two decades as business founders and investors grow older. Yet it’s unclear where Bucherer plans to direct the proceeds from the sale. A spokesperson for the firm declined to provide any details beyond the Rolex statement, adding that Bucherer “has always been a very discreet company.”

What’s clear is that the move will put an end to dynastic control over the purveyor of pricey jewellery and watch brands including Rolex, its own Carl F. Bucherer, Chopard and Blancpain. The business traces its roots to 1888 when entrepreneur Carl-Friedrich Bucherer and his wife Luise opened a shop in Lucerne, according to the company’s website.

Their sons Ernst and Carl Eduard joined the business in the early 1920s, with Ernst reaching an agreement with Rolex founder Hans Wilsdorf in 1924 to add the brand to its product line. Third-generation Jöerg took over management in 1977, expanding into Austria in the 1980s and then Germany a decade later. Bucherer opened a flagship store in Paris in 2013 and has also moved into London, Copenhagen and the US.

Jöerg Bucherer has never been known to give a media interview and is mentioned only briefly on the company’s website. A French corporate filing lists him as a Swiss national.

German-born Rolex founder Wilsdorf created a Geneva-based foundation in his name in 1945 that took over the firm’s ownership, according to the company’s website. He died in 1960 and also didn’t have any direct descendants.

“Jöerg Bucherer is the last person still in activity to have known and worked with Hans Wilsdorf,” Rolex said in its statement announcing the deal, adding that Bucherer will remain the retailer’s honorary president.

Pureplay retailer Booktopia says a challenging economic climate coupled with the impacts of its transition to its new customer fulfilment centre (CFC) resulted in a loss of $29 million in FY23.

Sales for the year to June 30, fell 18 per cent to $197.6 million while underlying EBITDA declined 173 per cent to $4.6 million.

The average order value grew 4.9 per cent to $79.29 while the average units shipped fell 19.6 per cent to 6.83 million.

Earlier this year, the company implemented a number of cost rationalisation and margin optimisation measures to help manage economic headwinds in its cost base.

Meanwhile, the group’s new CFC – which is operational now – is expected to improve efficiencies, reduce operational costs and support growth.

Booktopia CEO David Nenke said in the next financial year, the business will focus on excelling in key areas that enable the group to stand out in the market.

“Our recent equity raise of $10.9 million, has provided further working capital, helping to increase available inventory for the important Christmas period as well as contribute to the successful transition to our new CFC.

“We are looking forward to launching a series of additional strategic initiatives in the coming months, which will expand the unique selection we offer to readers across ANZ, and improve personalisation and the user experience.”

The creep is back on at Myer!

Street Talk understands Solomon Lew’s Premier Investments was the buyer behind a line of 24.6 million shares in Myer traded shortly after market open on Wednesday. It represents 3 per cent of Myer and was worth about $16 million.

Premier used Brent Potts at Blue Ocean Equities, who has been at Lew’s service for his Myer shopping trips for at least the past six years. It follows a similar trade on February 27, which took Premier to 25.79 per cent ownership of Myer. Wednesday’s trade should put it just under 29 per cent.

Earlier this month, Myer shares dived after the department store told shareholders that second-half sales had ground to a halt as customers faced repeated interest rate rises. But it also tipped significantly higher profits for the year to the end of July, after preliminary sales figures showed growth despite deteriorating trade conditions as shoppers become more cautious.

Premier’s purchase comes shortly after it engaged UBS deal makers Kelvin Barry and Jon Mant to work through a potential split of the company into four ASX-listed groups, a move which would leave it holding the stake in the department store. That would create separate vehicles for Peter Alexander, which sells luxury sleepwear, and Smiggle in a deal that some brokers say could unlock more than $1 billion in value for shareholders.

The size of Premier’s holdings in Myer means it cannot buy more than 3 per cent of the company every six months without making a takeover bid for the company. Lew engaged in a long battle with the Myer board and management, a situation that has since stabilised when Premier’s representative, Terry McCartney, was finally appointed to the board.

Myer shares closed up 5.6 per cent yesterday at 66¢.

Australian-born plus-size retailer City Chic has continued to “aggressively” clear winter inventory in Australia and New Zealand and summer inventory in the USA for the first eight weeks of FY24 in a bid to rightsize business operations.

The omni-channel retailer noted its stock clearing initiative was done to ensure City Chic has new seasonal product for the upcoming holiday period.

This has impacted revenue and margins with sales down by 33% on the prior corresponding period (PCP). In AU/NZ, sales were down 34% year-on-year (YoY) as the majority of Europe, Middle East and Asia (EMEA) stock was relocated to Australia.

In the USA, sales were down 31% with online performing better than partners.

City Chic added it is seeing strong sell-through of its new seasonal product in both markets as it transitions to “better end ranges”, with demand expected to continue improving into the Christmas season.

“The team has worked extremely hard to get our inventory back in shape and restore our balance sheet,” City Chic CEO and MD Phil Ryan said. “As part of our review process, we had the opportunity to sell the Evans business and exit EMEA which now gives us a clear run at the highly lucrative USA market while we consolidate our leading position in Australia.

Ryan said it has exited FY23 with a materially improved inventory position, alongside renewed focuses in a bid to return the company to profitability. This includes creating emotional connection with its female customers, shifting product assortments and focusing on higher value product, and simplifying the business and driving down costs.

In FY23, City Chic right-sized its inventory position with a balance of $53.8 million on July 2, 2023, delivering a closing net cash balance of $10.9 million.

City Chic cited the heavy promotional discounting alongside stock write-downs of aged and fragmented lines. As a result, its gross margin per cent of revenue was down 18.7% points with nearly half of that related to inventory provisions and write-downs.

City Chic also reduced its debt facility limit to $20 million and adjusted its covenants in line with the changing business requirements. This will reportedly reduce a further $5 million post the end of FY24, further lowering its funding costs.

“The cost reduction program will continue through H1 [first half] FY24 and City Chic expects to have new seasonal inventory in market ready for Q2 with a strong inventory position into H2 FY24.

“City Chic is targeting 60% gross margin and fulfilment cost of below 19% of revenue. It is also targeting three inventory stock turns and maintaining positive net cash at year-end.

“While City Chic is forecast to be loss-making in 1H FY24, it expects to be trading profitably in H2 FY24 as the benefits of these strategic actions are realised.”

For FY23, City Chic reported a group revenue decline of 15.8% to $268.4 million with demand remaining volatile across each of its markets, requiring heavy promotional activity to drive sales.

Compared to FY21, revenue was up by 7%.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was a loss of $24 million, driven by lower consumer demand in all regions and the group’s focus on clearing inventory.

David Jones is “very profitable” under the ownership of private equity firm Anchorage Capital and is preparing for what could be the largest Spring Racing carnivals period post Covid-19, boss Scott Fyfe said.

“We think particularly men will buy into Spring Racing this year more than they have in the past,” he said

Mr Fyfe said David Jones had rebounded strongly from a sales dive over June to enter July with the wind in its sails from a highly effective seasonal sale, good cost control and a “good profit number” as shoppers continue to buy luxury fashion and apparel despite elevated interest rates.

“We are really optimistic about the consumer,” Mr Fyfe told The Australian as David Jones’ former owner, South Africa’s Woolworths Holdings, on Wednesday issued its latest financial results that included ownership of the retailer.

“I can tell you that investment (consumers buying) into luxury and premium continues to be really strong.”

He said he was ‘optimistic’ about the next few months of major events including Father’s Day, Spring Racing coming and the run into Christmas.

The boss of the 185-year old department store said he believed the Reserve Bank would now pause its interest rate tightening.

He said raised hopes that the central bank would actual lower rates would give the retail sector and consumers the perfect run into Christmas.

“We would be optimistic that interest rates have hit the ceiling,” he said.

“We very would like to see them come down, because that will increase consumer confidence and allow people to invest and spend money as we go into the key Christmas peak.”

The accounts from Woolworths Holdings revealed David Jones sales for the nine months of its ownership fell 11.3 per cent relative to the statutory twelve-months reported in the prior year. Turnover and concession sales on a comparable nine-month basis increased by 23.6 per cent, and by 21 per cent in comparable stores.

The adjusted operating profit for David Jones over those nine months was $140.8m, according to the Woolworths Holdings accounts.

The documents also reveal, for the first time, the actual sale price of David Jones when it was sold by Woolworths Holdings to Anchorage, with the department store sold for $95m and Woolworths Holdings recognising a profit on that disposal of $35m.

“We have had a continued strong performance from stores, a good performance from online,” Mr Fyfe said, although he declined to disclose the actual sales and profit performance of David Jones for the last three months under Anchorage ownership.

“David Jones is very profitable,” he said.

David Jones was sold earlier this year to private equity with the department store’s boss Mr Fyfe kept on by the new owners to lead the retailer.

In June, The Australian revealed leaked David Jones sales data that underlined the rising danger to the retail sector as consumers reined in spending, with David Jones stores experiencing double-digit sales collapses – some as much as 30 per cent.

Those leaked sales spreadsheets showed widespread falling sales across its flagship stores as well as suburban and regional centres between June 4 and June 10. It included sales for David Jones’ Warringah Mall store in Sydney (down 20.54 per cent year on year), and in Melbourne’s Highpoint shopping centre (down 20.16 per cent), while at Eastland David Jones, on the fringes of eastern Melbourne, sales were down 38.96 per cent compared with the same period last year.

But on Wednesday Mr Fyfe said since its mid-season slide, sales had recovered and it was investing in stores and customer service.

“Our investment into stores has driven our progress in stores, particularly in Elizabeth Street (Sydney CBD) and Bourke Street (Melbourne CBD) which has been outstanding.

“(I am) really pleased where we have got to on a sales-profit perspective there.”

Mr Fyfe said under the ownership of Anchorage, David Jones had now also negotiated all ‘change of control’ leases with all its landlords.

Earlier there were reports that one of its most important landlords, the ASX-listed Scentre, had raised some concerns about the change of control which, unless resolved, could have triggered a breach of lease agreements and seen David Jones potentially locked out of its stores.

He said David Jones was investing in almost a dozen of its biggest stores, which was part of the change of control negotiations with some of its landlords.

Woolworths Holdings still owns Country Road Group, which has a stable of brands including Country Road, Mimco, Politix, Trenery and Witchery.

For fiscal 2023 Country Road Group sales grew by 12.4 per cent in comparable stores. Adjusted operating profit increased by 25.6 per cent to $151m.

Over eight in ten Australians say they “need to find a way to make their next holiday more affordable” according to research commissioned by Melbourne-born luggage brand July.

In collaboration with Ground Truth Research, July’s Travel Report: Unpacking Australia uncovered various aspects of Australian travel, including cost-of-living impacts and the personal sacrifices made to fund holidays.

It found that 73% of people cite cost-related factors as the biggest impediment to realising their personal travel goals, with 35% of Australians having postponed a trip due to cost of living pressures. A further 23% have altered their trip significantly to make it more affordable, while 12% have cancelled a trip altogether.

1 in 5 Australians have extended a work trip to enjoy some leisure time over the past 12 months.

Over two-thirds (68%) of Australians say it’s important they travel for leisure within the next six months, however ‘general cost-of-living pressures’ (54%), a lack of available funds (43%) and the price of air travel (31%) are the biggest obstacles. This outweighs time-related factors, including getting time off (17%) and rising mortgage and rental payments (12%).

Personal sacrifices include forgoing food delivery and eating out (77%), cutting down on date nights (68%), cancelling streaming subscribtions like Netflix (52%) and giving up alcohol (67%) - for 18-24’s, this latter number rises to 76%.

According to the research, women are more likely to engage in these abstentions than men.

When it comes to altering holiday plans, 54% of Australians will consider travelling out of season to take advantage of lower accommodation and flight costs; 40% will consider low-cost airlines and budget accommodation; 30% will reduce the length of their stay, self-cater meals or choose a ‘cheap’ destination; and only 10% will take an indirect flight to their chosen destination.

“At July, we wanted to better understand the state of the nation,” July co-founder Athan Didaskalou said. “How Australians were feeling about travel and how they were committing to exploring with increasing pressures on daily life.

“These insights show that Aussies are willing to sacrifice daily life luxuries in order to make sure they see the world. Travel has never been more important and on the agenda for us.”

Ground Truth Research founder Helen Osborne said the findings show how integral travel is to Australian lifestyle.

“Despite growing cost of living pressures, Australians remain very committed to getting away over the next six months. But how people travel – where people go, how long they stay etc. – will change.”

The report also uncovered packing habits, finding that - on average - Australians will pack five pairs of underwear for a 3-day weekend trip.