News

Premier Investments has delivered $174.3 million in first half profit, with Jacqui E securing its highest ever sales result in over a decade.

Premier Retail reported global sales of $905.2 million for the first half of the 2023 financial year, up 17.6% on the same period last year. Earnings before interest and tax (EBIT) grew 12.2% to $221.8 million.

Premier Retail is the parent company to Australian fashion retailers Peter Alexander, Jay Jays, Dotti, Jacqui E, Just Jeans and Portmans.

Premier Retail CEO Mr Richard Murray confirmed a strong start to the second half, with total sales for the first six weeks through February and into March up 7.7% on 2H22. 

“We have opened the second half strongly and are well-positioned to drive growth from our powerful retail model. We remain focused on continuing to deliver relevant and quality products, enhancing our digital offering, optimising our store portfolio and identifying new store opportunities to support growth."

Across its portfolio, Peter Alexander reported the largest percentage growth in sales for the half against pre-pandemic, up 80.7% to $261.7 million. Against 1H FY22, its overall sales increased 15.1%.

Peter Alexander has identified 20 - 30 opportunities for both new or larger format stores in the near term to better showcase a wider product offering that has been developed in recent years.

The brand is also planning for future offshore market opportunities, including a partnership agreement with a global cross border e-Commerce platform provider to grow Peter Alexander internationally across 35 countries.

The launch in 1H24 will be supported by digital marketing programs in select countries.

Premier Investments' other apparel brands collectively delivered $452.8 million in sales for 1H FY23, up 14.3% on 1H FY22 and up 15.1% on 1H FY20.

Just Jeans, Portmans and Dotti all delivered record sales in the first half of $162.6 million, $87.6 million, and $59.5 million respectively.

Jacqui E delivered its highest first half sales result in over a decade of $43.5 million, while Jay Jays delivered its second best first half sales result in the past decade of $99.6 million.

Online sales across the group hit $170.9 million, down 12.5% on 1H22 but up 75.8% on ‘pre-COVID’ 1H20.

Sydney specialty coffee roaster Single O has never stayed still for very long.

Set up in 2003 by co-founders Emma and Dion Cohen in the heart of Surry Hills, at a time when coffee beans came in generic, scantly marked bags imported from Italy, Single O has been a pioneer in raising appreciation of bean flavour profiles from a particular region and driving the harbour city’s sophisticated coffee culture.

But before they made a name for themselves, many of their first customers were Surry Hills locals – as well as some of the biggest names in the dining industry, including Kylie Kwong, Matt Moran and Peter Gilmore. Many of these early patrons are still customers.

“They could see what we were doing,” says Emma of the industry chefs. “It’s like trying to explain that the piece of meat they put on a plate was similar to the coffee you’re serving in a cup,” interjects Dion.

“We worked really hard, with a lot of grassroots talking, to build up a community within a year. They may be into wine, or they may have understood craft – just quality lovers [who] understood,” Emma finishes.

Over the past 20 years, they’ve helped popularise different forms coffee (the pair estimate black coffee consumption has risen from 2 per cent to about 30 per cent) and now supply coffee beans to hundreds of cafes around the country (they were hesitant to provide an exact number but said one in every four venues named in last year’s Good Food Guide was a customer).

Single O – a shortened version of “Single Origin” given by customers and then formally adopted by the Cohens – has won a loyal following thanks to their penchant for breaking the rules, often their own. In the early days they prided themselves on their deliberately plain coffee bags that didn’t feature their logo or branding (“it was about what was in the bag”).

Then they changed their mind, and didn’t look back. The coffee bags have become a canvas for local artists, many of whom approach Single O themselves. Other innovations have also set them apart: the duo pioneered The Juggler, the hot milk dispenser installed by some cafes, which reduces waste by about 80 per cent.

Then there is the world-first self-serve batch brew bar, inspired by beer taps, designed to help filter coffee lovers skip the queue. Coffee is also integrated into the menu in creative ways; Single O’s banana bread is served with warm coffee-infused butter. Then in the middle of the pandemic, Single O set up its first international cafe in Tokyo and now supplies its beans to over 100 cafes in Japan, a difficult market for Western businesses to crack.

“Take something that people are familiar with … and go, well, surely there must be a better way,” says Dion. “We’re not very good at cookie-cutter,” Emma adds.

The roaster’s mercurial nature is why the Cohens are largely unconcerned about sales volumes amid economic storm clouds and tightening household budgets that have already begun to hurt consumer spending. After all, Single O practically sailed through the 2007/08 global financial crisis.

“We did not see a dip. If anything, we grew,” they said. “People stuck to quality, they appreciate something that’s important to them. It’s not $50, it’s three or four or five bucks.”

Like every other retailer, Single O has seen prices of everything increase across the board; Dion rattles off a laundry list, from the price of beans to the price of freight, energy, wages, and rent. Across the country, countless cafes have lifted coffee prices to offset the higher costs.

Single O was no exception – in fact, they were one of the earliest to move. But rather than being apologetic about it, they got loud.

“We took a stance to be quite vocal about that on our channels,” said Emma. “We stand to make sure the cafes we support survive. You gotta put the price up. We can’t control inflation,” added Dion.

Guided in large part by “grassroots insights” and “gut instinct”, the pair’s commitment to maintaining coffee quality and being very picky about the cafes they supply to (among a dozen enquiries a week, they might pick one) has seen them earn loyalty among customers and staff alike and provided a buffer during the COVID lockdowns.

The duo has attracted a strong management team of “black sheep” from the corporate sector, former employees of coffee behemoths Nespresso and JDE Peet’s. Overseeing operations is general manager Michael Brabant, a former brand manager at ASICS and Bacardi, who has just notched six years with the specialty coffee roaster.

As the business celebrates its 20th anniversary, the Single O co-founders aren’t quite sure which way the wind will blow or where that will take them. But they are sticking to their guns.

“It pays to be different. In more ways than one,” the Cohens say in the same breath.

“You don’t always have to act like a business to attract more business.”

Woolworths has axed 51 local jobs in its exports business which is expected to be closed by June 30 after difficulties regaining momentum following the COVID-19 pandemic and the Russian invasion of Ukraine.

The nation’s largest supermarket retailer was shipping own-brand products, some fresh food items and small volumes of meat to wholesale partners in key markets of Hong Kong, Singapore, Malaysia and the Philippines. It also sells in other countries.

Woolworths International is part of B2B Food, a division of Woolworths’ Australian B2B business. A Woolworths spokesman confirmed the closure and said it was flagged internally to the team in February.

The closure is expected to be complete by June 30. “While we have built a business partnering with major retailers and distributors in overseas markets, ongoing geopolitical issues, COVID-19 and supply chain disruptions materially impacted [the business],” he said.

The closure of Woolworths International means 51 staff will go, predominantly in Australia, and staff have already been offered jobs in other areas or redundancies.

Woolworths’ stand-alone red meat wholesale business, known as GreenStock, remains in place and still operates within the B2B Food unit.

The export business is challenged in the wider grocery sector. After a decade, British retailer Tesco abandoned its own-brand exports in 2021 due to poor performance, lack of stock availability and compromised supply chain. Sainsbury’s followed last year.

While the war in Ukraine and COVID-19 played havoc with global supply chains, that situation has since eased. Average food prices paid by consumers Coles and Woolworths have started to fall slightly in February, with prices of fresh produce falling faster than packaged goods, according to the latest grocery price tracker published by analysts at UBS.

Coles will bring processing of its private label milk in-house in a move described as a significant shift in Australia’s dairy landscape as major supermarkets seek to carve out secure supplies of milk from a pool of producers that has been dwindling for decades.

The supermarket giant said on Monday it has asked for formal approval from the competition watchdog to buy two milk-processing facilities from Canadian-owned Saputo Dairy Australia for $105 million.

The two facilities, one in Victoria’s Laverton North and the other in NSW’s Erskine Park, process about 225 million litres a year, 80 per cent of which is bottled as Coles’ two- and three-litre private-label milk.

The move will strengthen resilience in Coles’ milk supply chain and improve security of milk supply, said Coles chief executive Steven Cain, who described the facilities as state of the art and delivering exceptional production efficiency.

“These facilities also have sufficient capacity to facilitate further growth opportunities through new product innovation,” said Cain.

Saputo, which produces dairy products including Devondale, Cheer, Mersey Valley and Cracker Barrell, is Australia’s largest dairy processor. As part of the agreement, Saputo will continue processing its milk products at the two manufacturing facilities.

The announcement is expected to have little impact on customers. However, Rabobank senior dairy analyst Michael Harvey said the supermarket’s move to own the milk processing facilities was significant.

“Change of ownership of assets is a significant event, and a retailer going direct to buy milk and now process it themselves is transformational for Australia,” Harvey said.

The acquisition will give Coles more control over its milk supply, room to innovate and potentially reduce overhead costs, he said.

Australian milk production has declined from over 11,000 million litres in 2001 to just over 8000 million litres a year and is forecast to keep falling amid high farmgate prices, costs of production, long hours, and prices that were kept low for a long time.

The smaller milk pool puts pressure on major dairy processing facilities like Saputo, Harvey said. “All the companies are looking at their network and making adjustments to new reality of not having as much milk for manufacturing.”

ANZ head of agribusiness insights Michael Whitehead said the acquisition is well-placed to benefit the supermarket giant. “The [milk production facilities] are some of the most modern processing plants in Australia, so that means they require less labour, which is very good in this day and age,” he said.

It complements a trend of retailers and supermarkets around the world bringing more pieces of their supply chain into the fold, such as meat processing and wine, Whitehead said.

“In this reasonably rapidly shrinking national pool of milk, supermarkets are looking to do what they can to tie up as much as they can.”

The two sites’ 48 employees will receive offers to transfer their employment to Coles. Existing relationships with farmers will not be affected by the acquisition.

Saputo Dairy put the two processing facilities up for sale in order to “further optimise its operating model”, the company said in a statement.

“As the Australian dairy industry landscape continues to evolve, this proactive measure aims to further adapt [Saputo’s] manufacturing network and is designed to strengthen our market competitiveness,” said Saputo international chief operating officer Leanne Cutts.

Saputo founder, president and chief executive Lino Saputo said the company wanted to strengthen its position as a high quality, low-cost processor.

“This marks an important step in executing our long-term vision for success in Australia as we maintain a sharp focus on efficiency to ensure we maximise the return on every litre of milk,” Saputo said in a statement.

The acquisition is subject to approval from competition watchdog, the Australian Competition and Consumer Commission (ACCC), and is expected to be completed later this year.

In 2018, the ACCC expressed concerns about Saputo’s attempt to purchase Murray Goulburn, which produces Devondale, that ended up going ahead in $1.3 billion deal. Saputo then offered to divest the Koroit plant, which allayed the commission’s competition concerns.

Both Coles and Woolworths raised prices of its private label milk products last year to cover rising farmgate prices and mounting supply chain costs.

While food inflation rose by 9.2 per cent over 2022, dairy prices rose the most, exceeding 14 per cent.

Wellness and beauty retailer BWX’s Australian operations have been placed in voluntary administration as the company struggles to combat inventory and working capital issues.
 

This afternoon, David Hardy, Gayle Dickerson, James Stewart and James Dampney of KPMG were appointed as receivers. They will take over the day-to-day operations of the company, which will continue to trade normally while its future viability is assessed.

That followed the appointment of Kate Warwick, Joe Hansell and Kelly Trenfield of management consulting firm FTI Consulting as administrators, earlier in the day. They intend to continue the directors’ search for a buyer for BWX’s stake in skincare brand Go-To which is a separate business and not under administration.In an ASX statement, the company said a “range of issues have continued to impact the Australian operations of BWX – including customer destocking and inventory and working capital issues” – necessitating the appointment of administrators.

“The directors believe entering voluntary administration will help progress the restructuring process already underway with new management at BWX and give the company the best chance of future profitability.

The company’s operations outside Australia and the Go-To business – in which BWX has a stake – will not be affected by this decision.

Last week, the company sought an “immediate suspension” from the trading of its shares on the ASX to focus on refinancing the business and continue to function.

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.

Dairy company Fonterra has reported a 50 per cent lift in tax-paid profit to NZ$546 million in its half-year results.

For the six months to January 31, revenue increased 23 per cent to $13.2 billion while normalised EBIT reached $940 million, up 55 per cent.

Operating expenditure was up by $1.4 billion due to inflationary pressures, unfavourable foreign exchange translations and impairments in the New Zealand consumer business and Asia brands respectively.

Milk supply from key exporting regions – Europe, Australia, New Zealand and the US – was down 0.4 per cent while imports were down 1 per cent.

The business says challenging wet weather conditions in North Island coupled with a reduction in the number of cows has affected peak production. 

Despite ongoing market volatility, Fonterra CEO, Miles Hurrell, says the co-op is “performing well”.

“Our scale and diversification across channels and markets have enabled us to navigate through disruption and make the most of favourable market conditions in a number of areas,” he said.  

The company has made favourable margins in its cheese and protein portfolios and has moved more into skim milk powders and cream products to optimise its Farmgate Milk price.

“While milk powder prices have softened recently, impacting our forecast Farmgate Milk Price range, protein prices have been high, which is reflected in the lift in earnings,” he said.

“The outlook for dairy remains positive with high demand for New Zealand’s quality, sustainable dairy nutrition, and global milk supply likely to continue to be constrained.”

Hotel and liquor retailer Endeavour Group has delivered strong first-half sales of $6.5 billion, 2.5 per cent higher than last year.

EBIT increased by 15.8 per cent to $461 million, which the company attributes to the hotel operations’ return to full swing after the pandemic. On a three-year comparative basis, hotel and retail sales are trading at 4.7 per cent and 4.5 per cent cumulative annual growth rates, respectively.

Steve Donohue, CEO and MD of Endeavour Group, said that with domestic travel returning, December saw customers return to more normal holiday activities and a full social calendar. Stores and hotels in regional and coastal towns also performed strongly.

He also acknowledged the company’s physical and online network and digital capabilities, allowing it to deliver “true omnichannel experiences”.

New services include gifting, click and collect, electronic shelf labels, and image-search functionality in apps.

“We continue to focus on meeting customer demand for drinks discovery: a strong new product pipeline and our extensive selection of premium and craft options have contributed to our overall earnings,” Donohue added.

“Our results this half are a credit to the hardworking and passionate team members right across our operations.”

Meanwhile, the company also named its new CFO Kate Beattie as current CFO Shane Gannon steps back from executive roles.

Beattie has held finance leadership roles within Woolworths and Endeavour Group for the past five years – from working as finance director for the retail drinks division of Woolworths to becoming interim CFO of Endeavour, leading preparations for the demerger and deputy CFO after the demerger.

She has also led the BWS retail business as interim MD.

Before joining Endeavour, Beatty spent 20 years in roles across retail, technology, banking, and professional services in international companies such as Commonwealth Bank, Macquarie, and Oracle.

“Today’s announcement is a testament to both Kate and Shane and their executive leadership in establishing Endeavour Group as a standalone company,” said Donohue.

“I would like to pay special tribute to Shane for his enormous contribution to the company, bringing his wealth of experience during such a formative period, embedding best-in-class strategy and governance and fostering an exceptional culture.”

“Productivity isn’t everything, but in the long run, it’s almost everything” – Paul Krugman, American economist. 

This quote sums it up well, if you want to be successful in the long run, you must be productive to be competitive. To be productive you must be focused and have a culture of continuous improvement.

This year presents us with some interesting challenges. In the face of a tight labour market, inflationary cost pressures, the desire for digital transformation and the importance of tangible ESG commitments many organisations are grappling with how to drive sustainable productivity in their operations. 

The last few years have proven that businesses that have focused on their people, strategically invested in technology advancements, and targeted sustainable operations have been more competitive and won market share.

There are some common themes or strategies that are being deployed by these successful organisations. Let’s explore the Top three we are seeing drive sustainable productivity in FMCG operations.

Operational excellence

As mentioned above, to be productive you must be focused and have a culture of continuous improvement. This culture is all about your people and your leadership. Driving sustainable operational productivity requires an understanding of the support and training your leaders and your team need to get to best practice levels of performance. You then need to take them with you, coach, train and develop the required standards to remove waste and embed sustained practices that consistently deliver performance efficiencies. Top performing organisations use lean methodologies to unlock and sustain operational excellence.

Automation of tasks

Technology is both a disruptor and an enabler. Digital transformation done well creates significant advantages, done poorly and you can go backwards.  It is important to recognise that it is not easy to understand and identify what technologies to invest in and when to do so – spending time upfront on a digital roadmap for operations is critical to ensure alignment and engagement for the journey ahead. Again, taking your people with you is fundamental, adoption of new ways of working is the foundation to sustained change. Automation of tasks – process, data, systems, or robotics will boost your productivity, build resilience, and focus your people on more value-add customer facing activity.  

The pursuit of sustainable success 

Operations is where the rubber hits the road for an organisation’s sustainability agenda. Being more productive means more efficient use of resources and results in less waste – this is a positive impact on sustainability that must be managed, measured, celebrated and continuously improved. But it is more than this: operations is where goods and services are transformed and moved through physical networks and infrastructure from suppliers to customers. To make real change, you need to ‘operationalise’ sustainability. Deciding where to start requires deep operational expertise to identify how to make effective interventions, measure performance, set targets and deliver improvements through your supply chain from supplier to customer. To truly drive sustainable success, you need to measure the whole picture and prioritise levers and recognise that reducing impact is all about operations.

The best time to start the journey is now, the gains can be significant and in the face of sustained challenges, driving sustainable productivity is fundamental to remaining competitive.   

Woolworths has reported a lift in its December half profits, however inflationary pressures continue to loom over the business in the months ahead.

For the 27 weeks to January 1, sales reached $33.2 billion, up 4 per cent, while tax-paid profit grew 14 per cent to $907 million.

Group earnings before income and taxes achieved $1.6 billion, up 18.4 per cent while online sales fell 9.5 per cent as customers across all businesses returned to in-store shopping.

Across its Australian food division, sales increased 2.5 per cent to $24.4 billion driven by an increase in-store shopping while WooliesX sales (including e-commerce) fell 6.3 per cent to $2.5 billion.

Australian B2B sales improved by 23 per cent to $2.43 billion driven by then PFD division’s strong sales growth and market recovery in the half as well as an increase in supply chain provisions.

In New Zealand, sales grew marginally by 1.3 per cent to $4.1 billion, against elevated sales during the same period in the previous financial year.

Comparable sales improved by 0.3 per cent reflecting shelf price inflation during the half while e-commerce sales growth fell 0.5 per cent.

Big W sales increased 15.3 per cent to $2.7 billion “buoyed” by a strong performance in seasonal shopping including Halloween, Black Friday and Christmas in the second quarter.

Comparable sales increased 15.1 per cent during the half although online sales slumped 31.4 per cent.

Woolworths Group CEO, Brad Banducci, said sales momentum was solid in the half as the “operating rhythm” continues to improve.

“We are pleased to report a very balanced group result after an extended period of significant operational challenges and trading volatility.

“The economic environment is likely to become more challenging over the next six to 12 months as cost-of-living pressures persist and we continue to be focused on working hard on behalf of our customers to deliver value for money.”

For the first seven weeks of the second half, the business says operating conditions have continued to “stabilise” with robust sales growth.