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Scotch & Soda has been acquired by New York-based brand management firm Bluestar Alliance after filing for bankruptcy for its Dutch operations last week. 

The value of the deal has not yet been disclosed, but the closing of the transaction is expected to take place within weeks. 

Despite recording €342.5 million (US$369.42 million) in revenue last year, the fashion brand was unable to keep its operations afloat due to “severe cash flow issues” caused by the pandemic, along with the impact of the war in Ukraine and inflation.

Bluestar Alliance said the acquisition will allow Scotch & Soda to continue its operations and products across key markets, including the Netherlands. The brand’s products are distributed by 7000 retailers globally and it operates 252 of its own stores outside its home market.

“Bluestar continues to strategically build its portfolio and we see Scotch & Soda as a unique fit,” said Joseph Gabbay, CEO of Bluestar Alliance. 

Founded by Gabbay and Ralph Gindi in 2006, Bluestar Alliance’s portfolio of brands includes Hurley, Bebe, and Tahari. The company manages a current portfolio of more than 300 licensees.

“Our goal is to continue Scotch & Soda’s luxury retail distribution strategy, while also introducing the brand to more trendsetters, especially those looking to express their personality through their clothing,” said Gindi, who is also the COO of Bluestar Alliance. 

The retailer group representing Coles and Woolworths has called for a 3.8 per cent increase in minimum and award wages, the highest of all the employer groups.

A submission by the Australian Retailers’ Association (ARA) to the annual wage review argues a 3.8 per cent increase would account for a forecast drop in inflation by June 2024, as well as the 0.5 per cent rise in superannuation.

The wage increase would flow on to 2.6 million award workers as well as hundreds of thousands under retail and fast-food agreements, which tie their annual wage rises to the minimum wage decision.

But the Shop Distributive and Allied Employees Association is supporting the ACTU’s call for 7 per cent, arguing its members are experiencing hardship that has surpassed the global financial crisis, and retail profits mean they can afford a real wage rise.

The ARA submission, spearheaded by chief executive Paul Zahra based on membership consultation, said it supported a “sustainable increase” that helped retail workers keep pace with rising cost of living and that it should be “based on the underlying inflation rate”.

“The ARA therefore recommends an increase of 3.8 per cent in the minimum wage to take effect from July 1, 2023 based on the current rate of trimmed mean inflation at 6.9 per cent less the 0.5 per cent increase in superannuation and less the projected 3.1 per cent decline in inflation through 2023-24,” it said.

“We believe an increase of this magnitude strikes the balance between an employer’s ability to keep pace with the rising costs of doing business, against an employee’s expectation that wages grow in line with prices.”

It follows Australian Chamber of Commerce and Industry calling for a 3.5 per cent increase – its highest in decades – and the Australian Council of Trade Union pushing for a record 7 per cent increase.

The Consumer Price Index as of the December quarter was 7.8 per cent, with underlying inflation at 6.9 per cent. But monthly CPI indicators suggest headline inflation fell to 6.8 per cent in February.

The ARA said it would update its claim when the March figures are released but it argues the Fair Work Commission should not base its decision just on past inflation rates but also the year ahead.

It cited Reserve Bank forecasts that underlying inflation will fall to 4.3 per cent by the end of the year and 3.3 per cent by June 2024.

Worker ‘despair’ worse than GFC

However, the SDA said that a study by University of Wollongong Associate Professor Martin O’Brien found the proportion of retail employee households assessing themselves as “just getting along” and “poor” had increased from 26 per cent to 30 per cent in 2022.

“The SDA has not seen in any recent past decades, this level of hardship among its members,” the union’s submission said.

“Not even the GFC caused such significant distress or despair from members.”

A female assistant department manager described herself to the union as “working poor” and said mortgage, car and phone bills took up her entire pay.

Another 55-year-old female retail worker quoted in the submission said she was now paying bills in instalments and her situation was “desperate”.

The SDA points out that the top 10 retailers’ earnings before interest and taxes grew by 51 per cent since 2019 and sales grew for eight of them last year.

However, the ARA warns anything higher than 3.8 per cent should be offset by productivity gains to reduce inflation risks and avoid “over-stretching smaller retailers who have limited reserves to incur higher labour costs, in addition to higher costs of doing business”.

The ARA said there were early indications that economic growth was slowing, with retail reporting the first month-on-month declines in trade for more than a year in December 2022.

“Analysts report that retail sales volumes are flat and that growth in retail trade is being driven by increases in prices, not volumes,” it said.

According to an ARA survey of 141 members, nearly 75 per cent had passed on higher costs to consumers as higher prices but more than 50 per cent said they had suffered higher prices by reducing margins.

When Tania Austin walked away from Cotton On, a company she grew from just a handful of stores to a retail powerhouse alongside former husband Nigel Austin, she had three children under the age of four. She could be forgiven for taking time out to regroup.

Instead, she bought five women’s fashion stores under the Decjuba (pronounced De-Cuba) banner, throwing herself into the business that 15 years later is one of the country’s most successful retailers.

Boasting 140 stores across Australia and New Zealand, it’s turning over more than $170 million a year. Her success has made her a fixture on the Financial Review Rich List.

Austin, who’s held a job ever since she was 12 years old when she’d lick stamps and send envelopes with concert tickets at Perth’s former Entertainment Centre, tells The Australian Financial Review’s Female Founders podcast that she was given a rare moment to figure out what she wanted to do with her life. And working was critical.

“I thought, ‘what sort of role model do I want to be for my children?’ And what are the role models I’ve had around me, and particularly female ones? I’m going to be a single mum for the foreseeable future. What do I want that to look like?” she says on the podcast.

“And I think that, for me, working was really a big part of that puzzle. I wanted my children to know that I am many things, a mother being one of them, and that it’s important that they could see that I had other aspects to me and that they know growing up that that’s the life they can choose as well. They can bring to the surface whatever they want to be as well.”

She jokes that at first she thought she could get away with working one day a week, a Monday, after buying Decjuba. Afterall, it was just five stores and when she’d left Cotton On it had 400.

But in reality, it was never a one-day a week gig. “It became all consuming because the passion is no different regardless of if there’s one store or 400 stores. The passion, the energy, the ideas and what you want to do is still the same.”

Austin grew up in the working-class Perth suburb, Warwick. She studied psychology at The University of Western Australia, before moving to Melbourne to build Cotton On. In the early days, it was all hands on deck – she was sweeping floors, buying and unpacking stock and driving it to stores.

These days, Austin is pushing the limits, challenging her 165-strong head office team (plus more than 2,000 people employed across the store network) in the pursuit of growth. Businesses need clarity of vision, she says.

For her, it took four to five years to nail down a simple strategy. “Make our customers look and feel amazing.”

“Once we had settled on that everything else became so much easier. I want our customer to look and feel amazing, so now how do we do that? So, how do you stay focused, how do you make sure Plan A is right? It is having something like that, that is so crystal clear, that you can continually come back to it.”

Growth has come with a razor sharp focus on the company’s bottom-line and operating with a small business mindset.

“We have never grown at a rate faster than we can finance,” she says.

“There’s been a huge discipline about that. But what it has meant is that when we’re doing those leasing deals, there is not an extra cent to give, there just isn’t.

“In many ways, we have quite a small business mindset in the way we operate. We don’t look for the flashy option. We’ve never spent on marketing along the way. I’m a big believer in that the brand, and the product need to stand on its own two feet. We’ve never spent money that we’ve never had.”

‘Do you. You’re going to be judged anyway’

That doesn’t mean the 51-year-old isn’t a risk-taker. During the depths of the pandemic, when her fellow retailers were riddled with fear and pulling back, she doubled-down.

“Lots of retailers were closing down and I saw that as an opportunity to go and open stores and double the footprint of our stores. The team were really nervous about that. I had to push them on that and challenge them and explain the ‘why’ behind it.

“I often consider the business as a three P business. We’ve got product, which is obviously what we produce, we’ve got our people, which is incredibly important. And then we have our property. There was just a huge opportunity through that time, while everyone was sort of thinking they needed to shut stores. It was going to go one of two ways. The world was imploding, or there was going to be a recovery at some point. And life was going to emerge in a different way, but it was going to happen.”

A retail career spanning three decades has given Austin plenty of perspective. She tells the Female Founders podcast if she could go back 15 years to when she started she would tell herself, “do you”.

“You’re going to be judged anyway, whether you’re divorced or single, have three children or no children, have a business or not have a business,” she says.

“Who I am, how I show up, what I do and what’s important to me, is what I would tell myself to focus on because you’re going to be judged whatever you do.”

The other thing she’d tell herself is something she thinks gets easier to do as you get older, so it would have be good to hear it when she was younger: “Embrace change.

“I see it time and time again that people just get caught in doing things because they’ve done them and not challenging it.

“Some of the greatest things that have happened in my life wouldn’t have happened if I kept doing things the same way.“

Scentre Group has reported 125 million customer visits in the first 13 weeks to April 2, 2023.

This is 17 million more visits compared to the same period last year, according to the shopping centre operator. 

Scentre Group CEO Elliott Rusanow credited the result to a strategy of driving customer visitations through activating Westfield destinations. This includes a recent collaboration with Disney, celebrating its 100th anniversary through special events across its portfolio.

“Our Westfield destinations continue to be the most efficient platform for our business partners to connect with customers," Rusanow said. "Seven of our Westfield destinations generate more than $1 billion in annual sales including Chermside, Bondi Junction, Fountain Gate, Sydney, Miranda, Carindale and most recently Doncaster.

“We remain focused on activating our destinations and creating reasons for customers to visit us. So far this year, we have hosted more than 2,500 events and improved the experience for our customers."

Total business partner sales for January and February 2023 are 17% higher compared to the same period in 2022 and 10% higher than 2019, according to Scentre Group. 

“Progress continues to be made on the Group’s strategic customer initiatives including our membership program which now has 3.4 million members, an increase of 1.2 million since the start of 2022," Rusanow said. 

In a separate update, Scentre Group also announced the impending retirement of chair Brian Schwartz on September 30. Schwartz has been the Group’s chair since 2016.

The Board has endorsed Ilana Atlas AO as chair-elect. Atlas was appointed to the Scentre Group Board in 2021.

Schwartz said it was the right time to step down.

“I am delighted Ilana will succeed me as chair. Her leadership will add greatly to the future success and growth of our company. I look forward to working closely with Ilana, board directors, and our CEO Elliott Rusanow over the coming months to complete a seamless transition.”

Atlas said Schwartz had guided the business through a critical time. 

“I would like to thank Brian on behalf of the directors and securityholders for his outstanding contribution to the Group since its inception nine years ago and his leadership of the board for the past seven years.

"In particular, I would like to acknowledge his leadership of the board through the successful CEO and CFO succession." 

It would be unwise to suggest that the business of flouncing feminine dresses, floral prints and itsy-bitsy bikinis is anything other than awfully serious.

Sisters Nicky and Simone Zimmermann, co-founders and, respectively, creative director and chief operating officer of arguably Australia’s most successful fashion brand, have made it so.

Making their debut on The List – Australia’s Richest 250 this year, some 32 years and 53 boutiques – from Paddington to Paris – after starting out, the sisters have successfully sold a breezily elegant take on Australian style to the world.

It is enough for their wealth to be estimated at $600m.

The Zimmermann brand, which according to recent reporting turned over a consolidated revenue of almost $400m remains a family business. Nicky runs the creative and design side, Simone handles the logistics as COO, and Nicky’s husband Chris Olliver is chief executive.

“We have never had anyone to follow, so we have always had to forge our own path, and that has been good for us,” Nicky Zimmermann told WISH magazine in a December 2020 interview commemorating the brand’s 30th anniversary. That same year, the Milan-based company Style Capital bought a 70 per cent stake in the business, reported to be worth around $446m at the time.

“We have always relied on our gut decisions, what feels right for us and for our families, because this is a family business,” Zimmermann continued. “We also never strayed from what we wanted to do as a brand, and we haven’t been distracted by this or that, or moved in another direction.”

The label’s feminine aesthetic – prints and ruffles abound – has found favour with everyone from Catherine, Princess of Wales, to Beyoncé. CEO Chris Olliver told the UK-based Financial Times last year that top-line sales have increased by 30 per cent each year for five years. The brand has 21 stores in Australia and one in China, 19 boutiques across America and 12 in Europe, including London, France and Italy, with the most recent door opening in Florence.

In 2022, after years of showing their collections during New York Fashion Week, Zimmermann joined the official Paris Fashion Week schedule. “I think what they understand is our freshness, our sense of fun and optimism,” Nicky Zimmermann told The Australian in 2022, speaking about the European market.

Bridget Veals, David Jones general manager of womenswear, footwear and accessories, says that in the past Australia’s unique take on fashion had not had a presence on the global stage, thanks to plain old geography. In a changed, technologically connected world, this obstacle has proved to be easily surmountable, and also an advantage.

“I think the Australian fashion industry simply lacked visibility due to our distance from the world’s fashion capitals – Paris, New York, London and Milan,” she says. “The seasonal divide now plays into the buy now, wear now mindset of customers, and with our enviable climate we master the art of the trans-seasonal wardrobe.

“Being a little bit further removed from the influences of the major fashion scenes has now given a competitive edge for us to realise true creativity, design and manufacturing skill. We’ve become an incubator for cutting-edge brands with a fresh design perspective who also know and understand our customers.” Veals singles out Zimmermann’s success, saying the brand’s prominence “not only internationally, but as a key player in the luxury sector, deserves high praise”.

Zimmermann isn’t the only female-led fashion business debuting on The List this year. Decjuba, founded in 2008 by Tania Austin, which has now grown to more than 140 stores across Australia and New Zealand, also makes the cut. According to its most recent round of reporting, the business turned over a consolidated revenue of about $180m.

Meanwhile, Mecca Brands, founded in Melbourne by Jo Horgan in 1997, makes a return to The List after debuting in 2022. Later this year, it will open its largest ever store, taking over the former David Jones menswear building in Melbourne’s Bourke Street Mall.

Sprawling across 3000sq m and over two levels, the Melbourne store is more than 1000sq m bigger than the Sydney flagship on George Street that opened in November 2020. Mecca has said that it will be an “unprecedented” beauty and retail experience.

Another example of the appetite for Australian fashion is the investment by Tattarang, the private investment group of Andrew and Nicola Forrest, in Camilla Franks’ resort wear brand Camilla. (An aside: the brand is a favourite of Jennifer Coolidge’s character in the much-discussed TV series The White Lotus.)

Tattarang director Nicola Forrest said of the investment in January: “We are delighted to back Camilla Franks, an extraordinary entrepreneur leading a cutting-edge fashion brand doing amazing things in the creative space.”

Paul Zahra, CEO of the Australian Retail Association, says following the devastation wreaked on the retail industry during the worst of the pandemic and lockdowns, there has been a reimagining of “omnichannel” retail, some of it led by female-founded companies.

“Many of the best-performing brands this year offered the best of both worlds – an omnichannel shopping experience, leaning heavily on in-store shopping but also complementing it with online, social and other channels,” he says. “The most successful brands have embraced both – using technology to bridge the digital world and the physical world with the purpose of providing a unique interactive experience for the consumer.”

Zahra isn’t surprised to see female-led brands, catering to a female-heavy customer profile, performing well.

“It is estimated that up to 75 per cent of discretionary shopping is done by women, so it’s no surprise that female-led businesses have excelled this year, which is a welcome barometer of societal change,” he says.

Roy Morgan Business Confidence was 95.8 across Australian businesses in February 2023 (down 10.6pts since January), with the retail sector among the bottom five.

Retail business confidence was at 94.0 in February, joining construction (87.9), agriculture (86.9), electricity, gas and water (83.3), and finance and insurance (71.5).

In comparison, the top five sectors are education and training (122.1), public admin and defence (121.1), accommodation and food services (119.0), manufacturing (117.4), and recreation and personal (117.1).

Roy Morgan cited the RBA’s ongoing interest rate hikes as a major factor in the decline of business confidence.

The research firm said the RBA’s decision to increase interest rates in February and March followed the highest Australian inflation figures for 32 years for the December quarter 2022 at an annual rate of 7.8%. Official interest rates are now at their highest for over a decade since early June 2012 (3.75%).

The fall in business confidence in February reversed the increase of 10.4pts in January 2023, and was reportedly driven by rising pessimism about prospects for the next 12 months both for the performance of the Australian economy and the personal prospects of the business.

Looking forward, businesses’ views on the performance of the Australian economy over the next year worsened with 59.3% (up 11.1ppts) of businesses expecting ‘bad times’, while only 39.1% (down 10.2ppts) expect ‘good times’.

Businesses are also less confident about their own circumstances over the next 12 months with 41.2% (down 5.5ppts) expecting to be ‘better off’ financially this time next year compared to 28.1% (up 7.3ppts) expecting to be ‘worse off’.

Business confidence is now 16.8pts below the long-term average of 112.6 but still 15.9pts higher than the latest ANZ-Roy Morgan Consumer Confidence of 77.0 for March 6 March 12, 2023.

The decline in confidence is more noted in micro and small businesses with under 20 employees, with medium and large businesses above the neutral level of 100 in comparison.

Large businesses now have a business confidence of 117.3, down 15pts, and medium businesses with between 20-199 employees have dropped 22.2pts to 112.2.

Small businesses of 5-19 employees saw the largest drop of 32pts to 98.4, while micro businesses of under five employees dropped 24pts to 95.1.

“The vastly different levels of confidence for businesses of a variety of sizes shows that the current economic conditions, including high inflation and rapid interest rate increases, are having a considerably different impact on businesses depending on several factors – including size,” Roy Morgan CEO Michele Levine said.

Levine added that there was negative movement across the index, but the largest contribution was a lack of confidence about the performance of the Australian economy.

“On a state level, business confidence is soaring in Western Australia at 134.2 and marginally in positive territory in Tasmania at 101.1 – but below the neutral level of 100 in all other States.

“Business Confidence is just below neutral at 98.1 in New South Wales and well below neutral in Queensland (92.0), South Australia (90.1) and lowest of all in Victoria (81.2).”

Australia's economy is still holding up on the back of household spending, but there are warning signs that a severe downturn may be nigh, with business confidence falling and consumer confidence at sustained lows not seen since the 1990s recession.

Melbourne butcher Madina Halal Meats has already seen a shift in behaviour.

Customers are trading in prime steaks and poultry in favour of "mince, cheaper cuts of steak [and] casserole dishes".

"That's mainly due to the higher cost of living," manager Amoon Dennaoui said.

She said the shop's customers were spending about 10 per cent less per order, and she had noticed the downturn take hold since the middle of last year when the Reserve Bank of Australia started raising interest rates to tackle soaring inflation.

It is an early manifestation of the plunge in consumer confidence since rates started rising in May last year.

The widely watched Westpac-Melbourne Institute survey of sentiment came in below 80 for the second month in a row — 100 is the level where optimists equal pessimists.

"Runs of sub-80 reads have only been seen during the late 1980s/early 1990s recession and in the 'banana republic' period of concern in 1986, when the Australian dollar was in freefall after the federal government lost its triple-A rating," noted Westpac's veteran chief economist Bill Evans.

Delaying major purchases

Things are shaping up to be even tougher for businesses that sell big-ticket items.

Tony Dagher works in a furniture and home appliance shop on Sydney Road, the same street as Ms Dennaoui's butchery, and has sold fewer beds, couches and electrical goods than this time last year.

"Last year, I was working full-time hours. Now I'm working far less," Mr Dagher said.

But it is not just in Melbourne's north where consumers are holding off on big purchases, according to Westpac's survey, which found most people thought now was a bad time to buy a major household item.

"Apart from two brief tumbles during the global financial crisis — both monthly falls that were quickly reversed — this is the lowest read on this component in the history of the survey going back to 1974 — weaker than the poorest reads during the recessions of the mid-1970s, the early 1980s and the early 1990s," Mr Evans said.

Data released by the Commonwealth Bank also saw a marginal decline in the spending intentions of households by 0.1 per cent, led by a drop in spending on entertainment, retail and travel — categories that saw a major increase post-pandemic.

CBA noted, however, that while people were spending about the same amount of money, there were telltale signs "consumption is beginning to slow" due to higher prices and interest rates.

This emerging change in spending habits also helps explains results from NAB's business survey, which found business confidence entered negative territory in February, falling to -4 index points despite "solid" business conditions for retail and personal service businesses.

"Confidence has been volatile over recent months," NAB chief economist Alan Oster said.

"Confidence fell late in 2022 as concerns about the global economic outlook increased. There was a respite in January as those concerns appeared to ease, but the decline in February suggests the outlook remains clouded."

Even in the current economic climate, people are still looking to enjoy themselves — but many are turning towards cheaper alternatives.

Centrestage Costumes owner Mary Gurry has seen several recessions during her 40 years of running the shop. She remembers the downturn in the 1990s as the worst for her business.

"I have weathered every storm since 1980," she said.

While she believes costume shops are somewhat recession-proof because "people love to party" especially when times are gloomy, she expects another downturn to hit her business later this year.

"We will see a downturn in the next 18 months … there's no doubt because there's mortgage stress out there already," she said.

But Ms Gurry's suspicions of a business downturn are not just a hunch. Mr Oster said they were likely to become a reality.

"We continue to expect a more material slowdown in demand later in the year when the full effect of rate rises has passed through," he warned.

Signs of tougher times ahead

ANZ senior economist Adelaide Timbrell, who has been tracking consumer confidence and spending, said Australians had weathered the RBA's interest rate hikes well so far.

But she warned tougher times were ahead, with mortgages set to come off ultra-low fixed rates onto much higher variable ones later this year.

She said initial signs of a downturn had been patchy until now, and people with savings had been spending on things they were unable to enjoy during years of rolling lockdowns and closed borders.

"If people want to shop on a luxury right now, they're making it travel post-pandemic, rather than an expensive dress or TV," Ms Timbrell said.

The data backs this up. ANZ figures show people are spending 87 per cent more at travel agents than a year ago. This suggests forward spending too, as people book these trips in advance.

But Ms Timbrell said the downturn hitting specific sectors, such as furniture, could also be linked to the housing-market decline, which was seeing fewer people buy new homes and therefore fewer new products for them.

ANZ data suggests people are switching to buying second-hand items to reduce the amount of money they are spending.

"We're seeing a bigger focus on the part of consumers to the cheapest products, and that generally means larger businesses," she said.

"Small businesses are going to be a little bit more impacted by an economic downturn because they don't have the scale to fall back on."

Consumer finance provider Latitude Financial has been forced to stop adding new customers from clients such as Apple, Harvey Norman and JB Hi-Fi as it tries to contain the damage from hackers that are still active in its computer systems.

The attack is now the subject of an Australian Federal Police investigation.

In an update to the ASX on Monday, Latitude confirmed the hackers had stolen the personal details of at least 330,000 finance customers, with 96 per cent of the theft relating to copies of driver’s licences or licence numbers, and 4 per cent relating to passports. The company expected the number of victims to grow.

Latitude said the AFP was now investigating the attack. The company said it was working to contain the attackers and take some of its systems offline, which meant it would be unable to add new customers.

Latitude’s finance services include the no-deposit, interest-free payment option offered by Harvey Norman stores.

“I sincerely apologise to our customers and partners for the distress and inconvenience this criminal act has caused. I understand fully the wider concern that this cyberattack has created within the community,” said Latitude chief executive Ahmed Fahour, who retires at the end of this month.

He said the company’s focus was on protecting the ongoing security of its customers, partners and employees’ information, and supporting those who had their data stolen. He also acknowledged the disruption to its new customer business.

“While we continue to deliver transaction services, some functionality has been affected resulting in disruption. We are working extremely hard to restore full services to our customers and merchant partners and thank them for their patience and support. We understand the frustration,” Fahour said.

Latitude said it would begin contacting affected customers on Monday, and has engaged services to help them, including a dedicated contact centre.

Last Thursday, Latitude revealed it had been the victim of a hacking incident and that 328,000 customers had identification documents stolen.

The company said the details were stolen from its service providers. The company did not clarify further, but this is believed to refer to companies that provide corporate services to Latitude.

Latitude said described the hack as “a malicious and sophisticated cyberattack” and said it had removed access to some customer-facing and internal systems.

Unusual activity was noticed on its network earlier last week, originating from a major vendor it uses, it said.

“While Latitude took immediate action, the attacker was able to obtain Latitude employee login credentials before the incident was isolated,” the company said last week.

Latitude is working with the Australian Cyber Security Centre and said it had alerted relevant law enforcement agencies.

Latitude provides consumer finance services to Harvey Norman, JB Hi-Fi, The Good Guys, Apple and recently signed David Jones.

“No David Jones customer data have been compromised in the course of this incident because we have not yet transitioned our card program to Latitude. That will happen in 2024,” a spokesman for David Jones said.

Latitude was placed into a trading halt last Thursday and will remain suspended until Wednesday while further updates are made about the hack. Its stock last traded at $1.20. Investors paid $2.60 for shares when it listed on the ASX less than two years ago.

The attack follows recent major cyberattacks at Optus and Medibank.

Optus was the victim of a major breach in September, when hackers obtained the data of 10 million of its customers.

The Medibank attack in October was more serious, as criminals accessed basic account details of 9.7 million current and former customers as well as health claims data for about 160,000 Medibank customers, 300,000 customers of its budget arm, ahm, and 20,000 international customers.

The hackers began leaking some stolen data onto the dark web. Medibank still faces lawsuits and an investigation by the Office of the Australian Information Commissioner over its handling of the incident.

The days of lockdown-induced drinking at home are firmly in the rearview mirror, and Dan Murphy’s is back in the events game.

From champagne and rosé tastings to extravagant celebrations for Lunar New Year, the drinks giant is mingling with its consumers again. Over the past six months, the business has been involved with about 500 interactive experiences across the country.

“I’ve come to realise more and more that drinks is not just a product for a lot of people, it’s actually a hobby. It’s this element of really wanting to engage, wanting to learn and find out more,” Dan Murphy’s managing director Agi Pfeiffer-Smith said.

Pfeiffer-Smith had a bird’s-eye view of Australians’ relationship with alcohol during the pandemic. Having previously held senior roles at retail giants, including Wesfarmers and David Jones, she joined Dan Murphy’s parent company, the ASX-list Endeavour Group in May 2020, just as the country was coming to terms with COVID-19. She was promoted to managing director last July, giving her oversight of the more than 260 stores and the group’s growing e-commerce business, right at the time of an anticipated consumer slowdown.

The country is now facing a cost of living crunch brought on by inflationary pressures and rate rises, but Pfeiffer-Smith is unfazed by the tough economic climate and continued slowdown in discretionary spending.

When asked how shoppers are changing their buying habits in response to ten consecutive interest rate rises and soaring inflation, she says the only really noticeable trend is that people are taking fewer risks with their drinks purchases, and instead sticking to tipples they already know and like.

“This is one of life’s small luxuries still, and I think the business continues to benefit from that,” she said.

Founded in 1952 by winemaker (and former Age columnist) Daniel Francis Murphy, Dan Murphy’s has seen more than a few changes since its first store opened on Prahran’s Chapel Street.

This year marks two decades since the company opened stores outside Victoria, starting with Strathfield and Hurstville in New South Wales. Over the past 20 years the business has grown from a network of 15 stores to more than 260, plus a pumping online business and 5 million active members in its membership program.

After a $12 billion spin-out from Woolworths in 2021, Dan Murphy’s and its sibling brand BWS form the retail arm of Endeavour Group, which also owns the ALH pubs business. In the first half of 2023, Endeavour’s drinks retail sales hit $5.4 billion - a slight decline on the previous year when COVID restrictions drove demand. Still, it remains 14 per cent higher than three years ago.

The scale and ownership of Dan’s may have changed over the decades, but Pfeiffer-Smith remains focused on building the basic pillars of the stores: price, service, and a wide range of products.

“It’s that breadth of range, the breadth of discovery of something new, something exciting. It’s been compared to like, either a library you wander through, or like a lolly shop for adults,” she said.

As she discusses the brand’s future, it’s clear she sees the company as more than just a drinks operator. It’s a data cruncher, an events operator and a content maker that wants insights and conversations with its customers.

Many of those consumer insights are garnered from the company’s loyalty program, My Dan’s, which has notched up 5 million members over the past few years. The draw card for these members is price.

Each day, a group of staff log on to track the cost of hundreds of popular beverages and beat the market.

As its millions of consumers interact with the business, Dan Murphy’s learns more and more about what they like. The anonymised pool of data helps the business see the interests and shopping behaviours across a range of demographics. “We can see what premium customers are doing, and younger versus older, and how that plays out across different customers,” Pfeiffer-Smith said.

It helps shape the group’s content business, including its digital platform Dan’s Daily, where lists of the top Margaret River cellar doors sit alongside tutorials on how to start drinking mezcal.

Kogan.com founder Ruslan Kogan says the company is ready to capture consumers who want better prices than what’s on offer in traditional bricks-and-mortar retailers as the business looks to move past a $23.8 million loss in the first half.

The e-commerce marketplace revealed to investors on Monday that it had been forced to make steep price cuts and sell some products as a loss, as it worked hard to clear excess stock after the company over-invested in products during the COVID rush.

Kogan’s inventory was sitting at $98.3 million at the end of December, down from $159.9 million at June 30 of last year.

Ruslan Kogan said the business had taken the pain of selling products at a loss to boost the sustainability of the company, and was optimistic it could now capitalise on value-focused shoppers.

“It’s pretty tough on the consumer at the moment. We sit at the value end of the equation... there is always going to be someone at that part of the market.”

“[Shoppers are thinking] ‘maybe I won’t just buy the big brand item from one of the big stores. Maybe I’ll have a look at this Kogan dishwasher’.”

The company had returned to profitability in January, with adjusted earnings of $1.5 million for the month as conditions stabilised.

But Kogan acknowledged that inflationary pressures were impacting operations, forcing a coming price increase for the group’s membership program, Kogan First, from $79 a year to $99.

Kogan is not the only pure-play e-commerce retailer to face challenging conditions as trading returns to normal more than a year on from the lifting of pandemic restrictions.

Wesfarmers-owned marketplace Catch posted a $108 million loss this month, with management also saying it had over-invested during the COVID period.

Online beauty marketplace Adore Beauty also cited “subdued consumer sentiment” on Monday when it told investors it no longer expected double-digit revenue growth in the second half of this year.

“[The second half] is likely to be flat on the prior corresponding period, as the company focuses on margins and remaining profitable,” it said.

Adore posted a loss of $90,000 for the six months to December, down from a $2 million profit at the same time last year.

Chief executive Tamalin Morton called out increased discounting and inflationary pressures as reasons for the result.

“While many of our customers consider beauty products part of their daily routine, revenue and margins inthe first half of financial year 2023 were impacted by increased promotional activity and inflationary cost pressures,” she said.

The retail sector produced a mixed bag of corporate results on Monday, with inventory levels and discounting providing a drag on results.

Plus-size clothing brand City Chic saw shares decline by more than 11 per cent in the first hours of Monday’s session after the company reported a half-year loss of $27.2 million.

Boss Phil Ryan told investors that consumer demand “contracted” during the six months to December, while margins were impacted by promotional activity as discounts were used across the sector to drive demand.

The group also introduced an additional $19.6 million provision for inventories in Europe, the Middle East and Asia partly because of “slow moving categories” in those regions.

Jewellery retailer Michael Hill had better news to share, delivering net profits up 1.2 per cent to $37.5 million and the company confirming that at this stage, it expects full-year earnings to be ahead of last year. Shares advanced by 2 per cent to $1.05 in early afternoon trade.

Kogan shares also advanced by more than 4 per cent by early Monday afternoon, while Adore was 1.5 per cent stronger. By contrast, City Chic was more than 10 per cent weaker.

Stockland, which is the country’s biggest residential developer of master-planned communities, has seen a dramatic drop in sales and a deferral in settlements in the past six months due to bad weather, rising interest rates and a cautious consumer.

But the ASX-listed $9.28 billion company is confident its diversified business will help it offset the residential weakness with a focus on its large-scale industrial, logistics and workplace developments, including the M_Park Stage 1 project in Sydney and the improving sales at its retail malls, known as town centres.

Stockland chief executive Tarun Gupta said due to timing issues in building, bad weather along the eastern seaboard and interest rate rises, the group has reduced its target for residential lot settlements from 6000 to 5500 for the full year.

In the master-planned communities net sales for the half totalled 1804 lots, which was below the 3815 net sales in the corresponding period. The group has 5840 contracts on hand, and in the next 18 months is looking to launch eight new communities that will activate about 80 per cent of the land bank.

“As expected, successive interest rate rises since May 2022 have driven a moderation of demand, with inquiry rates returning to pre-COVID-19 levels and sales volumes slowing,” Gupta said.

“We deferred 500 lots into the 2024 financial year. That’s related to double the rain compared to normal we’ve had on the eastern seaboard, so that’s impacted production programs. But obviously, we’re a diversified business and our commercial property business has picked up that downside.”

For the half Stockland reported a statutory profit of $301 million, down from $850 million in the same period last year. The funds from operation – a more accurate measure for trusts as its takes out lumpy valuations – was $353 million, a rise of 0.7 per cent on the previous corresponding period.

Sequoia Asset Management’s Winston Sammut said the Stockland result came in below market expectations, notwithstanding good support from its commercial operations, driven by solid contributions from logistics and growth in funds from town centres operations of 13 per cent.

“Going forward, the market will likely focus on Stockland’s residential business to assess any further negative impact on lot sales/settlements in a rising interest rate environment.”

Gupta said the partnership with Mitsubishi Estate Asia will be extended out from the land lease business to invest in master-planned communities. He said there were opportunities to replenish the pipeline across the country.

Moody’s Investors Service vice president Saranga Ranasinghe, said the communities segment, which is more volatile than the commercial property segment, will likely continue to face headwinds from rising interest rates.

“Still, Stockland’s communities business continues to maintain strong development margins and default rates that are in line with historical averages,” Ranasinghe said.

“While consecutive interest rate rises have moderated sales volumes, we expect Stockland’s master planned communities to benefit from supportive long-term fundamentals for residential property, including relatively low unemployment, population growth and a rebound in net overseas migration, combined with continued constrained land supply.”

Stockland reported an interim distribution of 11.8¢ payable on February 28.

Australian retail sales rebounded in January as household spending defied inflation and higher borrowing costs, fortifying the case for the Reserve Bank to keep raising interest rates.

Interbank futures are indicating at least three more cash rate increases, taking the Reserve Bank to a top of 4.3 per cent by August, compared with 3.35 per cent now.

Importantly, they expect the policy rate to stay above 4 per cent well into 2024. Bond traders have sharply ramped up bets the central bank will raise the cash rate higher and keep it there longer, mirroring a trend in the US and Europe.

Retail sales rose 1.9 per cent in January after an unexpected drop in December, in seasonally adjusted terms. The figure beat forecasts for a 1.5 per cent gain.

The RBA has lifted the cash rate by more than 3 percentage points since May last year in the fastest tightening cycle in modern history to tame stubbornly high inflation.

Writing on the wall

On a real basis, meaning adjusted for inflation, sales are sharply weaker and losing momentum as interest rate rises continue to bite into discretionary spending, said Charlie Jamieson, co-founder and chief investment officer of Jamieson Coote Bonds.

“The biggest factor for the cash rate outlook remains the inflation outlook, but with weaker-than-expected wages last week, plus a rising unemployment rate and now weaker trends in retail sales, the rubber is meeting the road,” he said.

He believes the terminal cash rate is already in sight as the economy continues to cool, expecting a top between 3.85 per cent and 4.1 per cent. This would mean one or two more increases, a more dovish outcome than futures predict.

He argues that the lag effect of monetary policy is pronounced, and the rate increases that have been priced in for the early part of this year will not affect the economy until later this year or early 2024. “These long lags make it very likely that the RBA will over-tighten,” he said.

Financial markets ascribe a 92 per cent chance to the probability the RBA will lift the cash rate by 0.25 percentage points at its policy meeting on March 7.

Nomura concurs that the consumer is under pressure and that trend will become clearer in the coming months. In fact, he disagrees with market pricing suggesting the RBA will raise rates to 4.3 per cent: “That’s a little aggressive,” said Andrew Ticehurst, rate strategist at Nomura. In fact, he predicts the central bank will stop at 3.85 per cent.

He cautioned, however, that there is a risk it could be higher after Nomura last week upgraded its US Federal Reserve rate outlook. It is now tipping the Fed funds rate to rise to a 5.50 per cent to 5.75 per cent range, a full percentage point higher than where it currently stands.

Too soon

Analysts say it is too early to declare victory in bringing the Australian economy back into balance. Warren Hogan, an economic adviser to Judo Bank, argued that retail sales are dominated by goods retailing and after an extended period of strength through the pandemic, a period of weakness should be expected.

“It is way too early to be calling for a slump in consumer spending, particularly in light of the still strong labour market,” he noted.

“The reality is that Australians haven’t even started to substantially eat into their savings buffers yet, unlike the US and NZ,” said Mr Hogan.

He predicts the RBA will once again debate a 0.25 percentage point or a half a percentage point increase in April, with the cash rate topping 4.1 per cent by the time of the federal budget in May.

Key to consumption is services demand which is included in the national accounts data to be released on Wednesday.

The resilience in household spending is a reason analysts polled by Reuters forecast the economy grew a healthy 0.7 per cent in the December quarter, and 2.7 per cent for the year.

“A 1 per cent gain for the quarter would be a solid result and suggests the economy ended the year with quite a bit of momentum despite aggressive monetary tightening,” said Felicity Emmett, a senior economist at ANZ. She predicts a gain of 1 per cent in the December quarter, taking gross domestic product growth to 3 per cent annually.

The RBA projects the economy expanded 2.7 per cent last year, slowing to 1.6 per cent this year and next.

The Australian dollar bounced from a two-month low to US67.40¢. It has been hammered this month by a stronger greenback on speculation the Federal Reserve will have to do more to tame inflation.

The chief executive of Silk Laser Clinics says customers place a higher priority on regular Botox injections and beauty treatments than they do buying the latest jumper or dress, and that should enable robust trading to continue even in tougher economic times.

Martin Perelman said price rises of injectable treatments of 8 per cent since June last year and a new round of price rises in laser treatments of 8 per cent last month had had little effect in dampening demand.

“Our business is quite resilient to inflationary pressures,” he said. “They’re holding quite well.”

The nine consecutive rises in interest rates by the Reserve Bank of Australia had not altered the behaviour of the group’s 1.6 million customers.

“I think our customers will give up other things first,” Mr Perelman said, suggesting they would forgo a new jumper or a new dress rather than their regular four-monthly appointment.

“We aren’t seeing anything yet.”

Shares in Silk Laser jumped 13 per cent to $2.05 by noon on the ASX.

The group delivered a 20.3 per cent rise in net profit to $4.9 million for the six months ended December, with revenue up 21 per cent to $49 million. The average customer spend in calendar 2022 was $679, compared with $661 in 2021-22 and $667 in 2020-21.

Silk Laser raised $83.5 million in an initial public offer that was priced at $3.45 a share when it listed on the ASX in late 2020. But the stock is still a long way off that mark, even after the one-day rebound after the strong December-half results.

The network will expand by 10 outlets to 142 when Eden Laser Clinics comes into the stable in early March. Eden Laser operates in NSW and the ACT and was acquired for $10 million.

Mr Perelman said for the first seven weeks of the June half, like-for-like sales were up 10 per cent, which was a good sign. February was traditionally the quietest month of the year after January sales events, but on a historical basis, there had been no discernable drop-off in momentum even in the past fortnight.

He attributed that in part to the strong growth across the category as more people became first-time customers, and regulars quarantined their treatments from any household budget cutbacks.

“Our categories are growing more and more, and there are more and more people who make it part of their normal consumer spending,” he said.

Phones, furniture and fine wine. These are some of the products the country’s biggest retailers expect to restock, even as sales slow this year amid cost of living pressures – but they’re also likely to become cheaper as companies fight to capture consumers.

Patrick Coghlan, chief executive of CreditorWatch, said company announcements indicated softening sales in the first quarter of this year, but that it would likely drag out across the year.

“We’re seeing green shoots of consumers tightening their belts,” he said. “JB Hi-Fi, which is the pin-up child of retail, flagged that their sales were down in January, suggesting the downturn is in small-ticket as well as big-ticket items. The consensus is that there’ll be at least 12 months of pain.”

But in good news for consumers, CreditorWatch chief economist Anneke Thompson said price pressures would likely ease this year.

“We should see further drops in the rate of price growth as data is now being measured off 2022 figures, when price rises had already kicked in,” she said.

Last week, the country’s largest electronics and whitegoods retailer said it anticipated sales to slow this year, despite posting a record double-digit jump in half-year profits.

JB Hi-Fi boss Terry Smart said that there would likely be a ramp-up in discounting as retailers raced to capture consumers amid rising interest rate pressures.

“Customers are still spending more than they were at the same time last year, but are starting to become more cautious with their spending,” he said. “We’re seeing some on-floor discounting start to build, and we expect some of those elevated margins, especially in JB Hi-Fi, return to more historical levels.”

But phones and computers will remain in demand, Smart said, as they have become staples in day-to-day life. “People will continue to spend, upgrade and replace them,” he said.

Sales growth in JB Hi-Fi’s Australian business dropped to 2.5 per cent in January, compared with 4.3 per cent at the same time last year, and 9.1 per cent in the first half.

Online furniture retailer Temple & Webster is also looking towards smaller price tags, after it revealed a 7 per cent slowdown in sales in the first five weeks of the year and a 46.7 per cent drop in first-half net profits.

Boss Mark Coulter said furniture was a “less discretionary” area of spending, but that as the cost of living increases, Temple & Webster will tailor to its core customer base of Millennials, who will be hunting fiercely for the best deals.

“We don’t think there is going to be a mass migration to entry-level products... but definitely we are looking to import and promote products which customers can afford,” Coulter said last week.

Meanwhile, the boss of drinks retailer Endeavour Group said inflation wasn’t putting a cork on people’s drinking habits.

Last month, the company snapped up iconic Margaret River winery Cape Mentelle from luxury goods behemoth Moet Hennessy, as it expects consumer demand to hold up.

Relative to other indulgences, the company’s chief executive, Steve Donohue said, a bottle of gin or higher-end wine “still remains affordable.”

Alcohol prices, up 4.2 per cent in November, remained lower than food prices (up 9.4 per cent) and the broader consumer price index which put inflation at 7.3 per cent.

But Donohue acknowledged that the sales outlook remained uncertain, and that Dan Murphy’s would lean on the lowest price guarantee to give it a competitive edge.

Two businesses benefitting from consumers’ penny-pinching are low-cost retailers Bunnings and Kmart, owned by retail giant Wesfarmers.

The conglomerate’s chief executive, Rob Scott, said customers were chasing value as interest rates took a toll.

“We are starting to see some changes in behaviour – we are starting to see a greater orientation by customers to value,” he said. “We have retained the trust of customers by keeping our prices low – that seems to be resonating with customers.”

Wesfarmers reported a 14.1 per cent jump in first-half net profits last Wednesday, and said that results through the first five weeks of the year had been “broadly in line” with growth reported for the first half.

The slew of retail earnings last week also served as a clear reminder that shoppers still open their wallets for everyday essentials, even when the cost pressures are reaching boiling point.

After negotiating years of COVID-induced retail closures, discount department store Kmart emerged this week ready to welcome budget-conscious shoppers with open arms. Parent company Wesfarmers confirmed Kmart Group’s revenue jumped 24.1 per cent to $5.7 billion in the six months to December.

Kmart boss Ian Bailey said the company has seen customer growth across low, middle and high-income earner demographics.

“We’re seeing strong growth in home goods, strong growth in toys, as well as strong growth across clothing – which is probably different to the [broader] market,” he said.

Record sales figures at Rebel and Macpac operator Super Retail group also showed there’s certain spending that shoppers won’t cut back on. Trends including the return to organised sport and Australia’s wet summer helped drive demand for sporting apparel and rain gear, while Supercheap Auto’s results showed nobody was scrimping on car maintenance.

“If the light bulb is broken in a brake light, I’ll get a new brake light,” chief executive Anthony Heraghty said. “We have characteristics of the business that makes it quite defensive.”

The South African owner of David Jones will hit the exit aglow this month, after reporting revenue growth in the luxury department store for the six months to December that was more than quadruple its annual sales in 2019, and ahead of an expected softening in consumer demand.

Roy Bagattini, chief executive of Woolworths Holdings, said its Australian holdings including David Jones and middle-market clothing retailer Country Road were thriving despite a challenging backdrop.

“What you’re seeing is a level of resilience in these businesses that is somewhat counterintuitive to a lot of the macro contextual indicators and news you see out there,” he said.

“Whether it’s house prices, record high-interest rates or the level of inflation, you would expect those effects to play through into a softening of consumer demand, but we haven’t seen it in the first period of this second half.”

While David Jones’ turnover and concession sales in the half year to December increased by 18.5 per cent compared with the previous year’s corresponding period, the company said it was not comparable because of government-imposed lockdowns in 2021. Instead, it pointed to an 8.8 per cent year-on-year increase in sales in the last six weeks of the half.

The results come after Sydney-based private equity firm Anchorage Capital Partners bought David Jones in December. Anchorage is set to take over the operating business of David Jones by the end of this month.

Woolworths Holdings – distinct from Australian supermarket group Woolworths – purchased David Jones in 2014 for $2 billion. After a challenging period that included write-downs worth more than $1 billion across 2018 and 2019, Bagattini said David Jones was now the most profitable it had been since the company acquired it.

David Jones’ generated more than 9.3 billion rand ($750 million) in revenue in the six months to December, which is more than four times the $170 million it generated over the course of 12 months in 2019. David Jones grew by 13.6 per cent in the first eight weeks of the year.

Meanwhile, sales in Country Road Group grew 8.5 per cent year-on-year in the last six weeks of trade.

Bagattini said that while online sales growth had moderated, customers were increasingly returning to its brick-and-mortar stores, particularly in business districts.

“Online businesses remained strong, but the growth there has come off as customers have gone back into stores,” he said. “We’ve seen a good uplift in foot traffic, especially in our CBD stores.”

But the Woolworths Holdings boss said he expected the trading environment in the second half of the financial year to prove more challenging.

“We do expect a softening overall in terms of demand and some of the lag effect of interest rates and high mortgage payments,” he said.

Bagattini said Woolworths Holdings would maintain the coveted Bourke Street store in Melbourne, but that the company would look to offload it eventually.

“There’s been an extensive amount of interest in the building, and we will float it, but we’re in no rush to sell it anytime soon,” he said.

The chief of Betty’s Burgers’ parent company believes the premium burger chain will outcompete pricier rivals such as Grill’d as it seeks to open 20 to 25 new stores a year in Australia, despite a weakening economy, and kickstart environmental initiatives under new private equity owners.

Nishad Alani, the boss of Retail Zoo, which operates food chains Betty’s Burgers, Boost Juice, Cibo Espresso and Salsas, said consumers sought “affordable indulgence” in times of uncertainty.

“You go to some of the fast-food players – they’ve kind of given up on the whole eating experience, they’ve completely gone takeout, delivery and drive-thru, that’s all they want to do. But that’s not what the core consumer wants to do,” Alani said.

Australia is approaching a spending cliff as festivities of the Christmas and New Year period wear off. With the cost of living hitting 20-year highs, Australians are expected to spend less on luxuries and non-essential goods.

Despite this, Alani said people would remain hungry for establishments more upscale than fast food and believes Betty’s Burgers is poised to do better than other premium burger chain competitors such as Grill’d. Grill’d’s cheapest burger is $12.50, 60¢ more expensive than Betty’s at $11.90, a small sum that Alani said would make a difference to discerning diners.

“We think we provide a better service, a better guest experience, better value, and again, this is up for debate – a better product,” said the Retail Zoo boss, who has taken a swipe at competitors before.

Betty’s Burgers was founded in 2014 in Queensland’s Noosa and has grown to 54 stores. It was one of the few beneficiaries of the pandemic lockdowns, increasing sales through high takeaway volumes.

This month, Sydney-based private equity firm Adamantem Capital signed the papers to acquire a 70 per cent stake in Retail Zoo, making it the company’s third private equity owner in a decade. Retail Zoo has been owned by Boston-based Bain Capital, which also owns Virgin Australia, for nearly a decade after buying it from The Riverside Company in 2014. Adamantem has valued the business at $350 million.

Retail Zoo will focus on aggressive store rollouts around the world and sustainability initiatives such as packaging and waste reduction.

“We plan to open 40 to 50 stores every year as we have for the last couple of years, and we expect half of those will be in the domestic market and half of them will be in the international market,” said Alani.

Adamantem Capital managing director Georgina Varley said it would otherwise be “business as usual” for Betty’s Burgers and Boost Juice staff and customers and expressed confidence the brands would perform well in tighter economic conditions.

“They’ve gone from eight stores to 54 stores over the past five years, and we’re keen to continue the store rollout, particularly as the brand grows,” Varley said about Betty’s Burgers.

“What we’ve seen is that Boost is a very resilient brand. It’s been around for 20 years and has weathered lots of different changes over time, and it’s continued to grow through COVID, it rebounded very well.”

“Similarly, Betty’s is a fast, casual brand which is well-positioned to be resilient through potentially tougher economic times.”

Electronics and furniture retailer Harvey Norman Holdings has reported a 15 per cent fall in profits in its December half.

The company owns and operates Harvey Norman, Domayne and Joyce Mayne brands.

Total system sales revenue for the year was $4.98 billion while company-operated revenue reached $1.47 billion.

EBITDA fell 8 per cent to $694 million while tax-paid profit slumped 15.1 per cent to $365.9 million.

The group’s overseas retail profitability declined 22.5 per cent to $28.9 million primarily due to difficult trading conditions in New Zealand while its total assets increased to $7.81 billion, up 7.8 per cent during the half.

Harvey Norman chairman Gerry Harvey said the business will continue to assist each franchisee with the necessary tools and digital structure to invest in their customers.

“Amid the macroeconomic headwinds of the past year, we have grown our integrated retail, franchise, property and digital business across eight countries to nearly $5 billion in system sales for the current half-year period.”

The company plans to recommence its offshore expansion plans, growing its store footprint in Malaysia to 80 stores by the end of 2028.

Listed property group Mirvac has taken a stake in online discount fashion retailer The DOM as a part of a strategic partnership.

The DOM, which pitches itself as an Australian version of The Outnet, inked the partnership earlier in the year.

It would allow Mirvac centres to offer their retail partners the ability to list their stock on The DOM, in a bid to expand their customer reach and add a new revenue stream via the digital extension.

In turn, new brands that are listed on The DOM but don’t have a physical presence yet could be introduced via Mirvac centres.

The investment and strategic partnership for The DOM comes less than three years into its life. The business’s co-founders include Hilton and Justin Seskin, who were investors in Rebel Sport and later brought Topshop to Australia.

The DOM kicked off with 150 brands, and has grown to more than 250 brands since. It stocks brands like Alice McCall, Manning Cartell and Superdry.

The boss of pizza giant Domino’s has admitted the company failed to get the balance right when it upped delivery prices to counter inflation after the business reported first-half profits dropped by more than 20 per cent.

The company said its plans to fight inflation “had not been optimal” in the first half, with decisions to increase product prices and delivery and surcharge fees impacting how often customers ordered, particularly in overseas markets such as Japan and Germany.

“First and foremost, we actually got delivery pricing wrong, not carry-out pricing,” chief executive Don Meij said.

He said while shoppers had increasingly returned in-store to pick up their takeaway orders, price increases for delivery had hurt how often customers ordered pizza.

In Europe, the company put in place price increases for “bundled menu” items, some which represented a jump in price of more than 10 per cent, while in Australia and New Zealand Domino’s introduced a 7 per cent delivery service fee on orders.

The ASX-listed fast food business revealed on Wednesday that its sales had slipped by 4 per cent for the six months to December, and net profits had declined by $19.6 million to $71.7 million.

But Meij said the business had plans to help steady the ship, including a move to “flexible vouchers” that give customers more choice in what is included in a meal deal.

“Consumer sentiment is lower, but the fast food industry is buoyant,” he said.

Domino’s has been contending with rising costs for ingredients and business operations over the past several months, but Meij said he believed conditions were moderating.

“We still see inflation but it is nowhere near what we saw [last year],” he said.

Despite these assurances, investors sold the stock off heavily on Wednesday morning, sending it plummeting 20 per cent to $57 by 11.20am.

Analysts were wary after the business confirmed sales growth across the second half had been less than anticipated, and growth would be below its medium-term outlook of between 3 and 6 per cent.

The company confirmed that operations in Europe had been hit particularly hard during the half, with inflation impacting consumers and Domino’s delivery price increases resulting in fewer customer orders in France and Germany.

“Domino’s has a challenging six months ahead. Any franchising system needs to balance the health of franchisees and shareholders. In the near-term, franchisees will need more support,” MST Marquee analyst Craig Woolford said in a note to clients.

UBS analysts said there were risks ahead.

“Given [second half] sales headwinds and weaker [first half] net profit after tax, we see downside risk to FY23 net profit guidance,” Shaun Cousins said on Wednesday morning.

The company declared an interim dividend of 67.4 cents, down from 88.4 cents during the same time last year.

Australian retail sales in January surged 7.5 per cent year on year – and 1.9 per cent over December, reflecting a strong post-Christmas sale season. 

Ben Dorber, head of retail statistics with the Australian Bureau of Statistics (ABS), said January’s rise followed a 4 per cent month-on-month fall in December and 1.7 per cent rise in November. 

“Looking through this volatility shows that turnover is at a similar level to September 2022, and on average, growth has been flat over the past few months,” he said.

“November, December and January are the most seasonal months of the year, with retail activity heavily affected by the Christmas period and January holidays. This has been heightened by an increase in the popularity of Black Friday sales and growing cost of living pressures combining to drive a change in usual consumer spending patterns.”

Australian Retailers Association CEO Paul Zahra described the figures as “a strong result” – especially for apparel retailers and department stores, who had worked hard to clear their summer inventory.  

“There’s no doubt that an impressive Boxing Day trade certainly bolstered these sales, with the shoppathon a fixture on the January calendar.”

However, he cautioned that while the results were impressive, the cost of doing business and gross margins for many retailers remains a serious concern.  

Significant year-on-year sales increases were recorded by cafes, restaurants and takeaway businesses – up by 26.3 per cent – clothing and footwear – up by 17.5 per cent – and department stores (up 16.6 per cent).  

“The sales recorded by restaurants and cafes are particularly strong,” said Zahra. “It is clear the appetite for dining out has been boosted after the challenges of the pandemic.” 

The only retail category to show a decline in year-on-year sales was household goods, down by 1.1 per cent, reflecting record sales during the pandemic when all things at home were in hot demand, said Dorber.