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Peter Alexander is finalising a cross border eCommerce partnership, which will grow the sleepwear brand internationally across 35 countries.

Peter Alexander has more than doubled its sales over the past four years, with another record result in the first half of the 2023 financial year. The brand delivered $261.7 million in sales for the period, up 15.1% on 1H22 and up 80.7% on 1H20.

Parent company Premier Retail is now finalising the cross-border agreement to allow fast and simple online shopping for international customers. The launch in 1H24 will be supported by digital marketing programs in select countries.

Peter Alexander has also identified 20 - 30 opportunities for both new or larger format stores in the near term to showcase an expanded product offering. 

"Today, Premier Retail is uniquely positioned to continue to deliver with our brands identifying key growth paths for the future, whilst leveraging synergies within the Group’s global operations.”

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.

For Solomon Lew it’s all about timing. And this time around the multibillionaire is about to embark on another of his trademark counter-cyclical plays.

Faced with a very likely slowdown in consumer spending as central banks drive up interest rates, Lew isn’t about to retreat – he is attacking. It follows Lew’s habit of picking up stakes in names from Breville to Myer when no one else would touch them. It also comes from seeing the potential in low profile brands to turn them into global names.

The retailing boss and his chief executive Richard Murray are pivoting. They are now embarking on a push to open dozens of new stores for his two powerhouse franchises Smiggle and Peter Alexander. The openings extend to here and offshore, consolidating both brands as longer term drivers of growth for retailing empire Premier Investments. The expansion flies right against the trend across retail that had set in even before Covid to cut store numbers and use online to drive distribution.

Between the two brands as many as 60 new stores are planned and for pyjama king brand Peter Alexander there is also a push to open big box stores as well as rolling out the online offering into 35 countries, giving a huge footprint.

The brand, which is turning over more than $520m in sales on an annualised measure has positioned itself at the top of the gifting market and so this puts it on the radar during events periods: Black Friday. Christmas, Easter, and Mothers and Fathers Day, so the settings need to be just right in meeting the surge in demand.

Meanwhile, kids stationery retailer Smiggle which counts stores in the UK and Singapore is expanding again after shutting down Smiggle stores that were hit hard through the Covid pandemic lockdowns.

The store openings are about longer term moves for Premier, which counts Just Jeans, Jay Jays and Dotti as more mature brands in its portfolio.

“We’re seeing opportunities that suit the market,” Lew says. “Unfortunately I think there are some difficult times coming for a lot of companies that are just not capitalised enough or have the management to execute”.

“We’ve got great leadership in our businesses from our perspective and from our board’s perspective, we see real opportunity,” he adds.

For Lew and Premier the expansion is also partly to bolster his position in the never-ending battle against shopping mall landlords over high-priced rents. Lew has a history of playing hardball with his store network and here seizing the chance to pick up prime outlets left vacant by other brands on the cheap. Indeed landlords will be ready to strike a long term deal on rental costs while momentum is moving against them. At some point the cycle will turn, which means Lew will be positioned several steps ahead of rivals.

Lew finally found a use for the cash that was building up on Premier’s balance sheet – sending it back to shareholders as Lew declared a first half dividend of a full 70 cents a share, including a 16 cent per share special dividend. It came after Premier delivered a first half profit of $174.3 million, up 6.5 per cent. While sales momentum is likely to slow following the burst of catch-up consumer spending after Covid, the company is on track to top $2bn in annual sales within the next two years.

Murray, the former boss of JB Hi-Fi, says as a retailer the aim is to focus on the things you can control. This includes working with suppliers to make sure there is new stock and trends to keep consumers coming back. “There’s a lot of things in our control to make sure we juggle all the complexities of whatever sales momentum is thrown at us,” he says.

Online push

The investment in stores comes at the same time as Premier’s online offering is also being built out. Premier has just switched on a multibrand offering across its Australian websites which means someone buying jeans can also buy some Peter Alexander pyjamas on the same website using the same checkout and the items will be shipped in a single delivery.

Here Lew is leveraging the benefits of the massive distribution centre that was opened in 2015 for a cost of almost $30m. At the time Premier purchased the site in the city’s west and built its own warehouse, helping to lower costs and cutting out a long term rent cost which would have gone to a commercial landlord. Crucially the move to a single site gave Premier better control over its supply chain allowing Premier to better manage surge periods. Online sales represent 19 per cent of Premier’s total sales, and each item gets a better profit margin. Indeed online is Premier’s most profitable channel.

Meanwhile, Lew wouldn’t be drawn on his intentions for his 25.8 per cent stake in Myer but the department store operator can expect the billionaire to tighten its grip by up to 3 per cent every six months under the creep acquisition rule.

BOQ’s holding pattern

By the time 2025 rolls around, regional lender Bank of Queensland would have had five chief executives and three chairman over a decade. Each one has brought with them their own strategy.

If – and a big if – reinvigorated Victorian regional Bendigo Bank hasn’t yet made its buyout approach as The Australian’s Bridget Carter has written then BoQ faces a market in two years time where ANZ-owned Suncorp will be doing everything to retain customers in the state.

That’s going to be a bloody banking battle in Queensland as others also look to disrupt ANZ’s momentum.

Digital competition will be fierce. Banks from Bendigo, Macquarie to the big four all having their fast online loan approvals in place. Higher interest rates around the world, for longer, means funding will carry a premium while rising costs will force a hard rethink around the role of branches in supporting a bank.

This is the reality of the world BOQ faces, but rather than tackle the issues now with a permanent management team, executive chairman Patrick Allaway is looking backwards by installing himself as CEO for the next two years. There’s been a reshuffle on the BoQ board, with former Colonial boss Warwick Negus stepping up as chairman.

Allaway has awarded himself the role of CEO until December 2024 to provide “stability and continuity” for the regional bank. But his actions do just the opposite. It puts BOQ in a strategic holding pattern, leaving it ripe for a takeover.

Allaway brutally moved on his previous CEO George Frazis last November when he saw alleged governance slippages. At the time, they gave the market nine months to get a new CEO in place. We are not even through month four.

But the message is Allaway and his international executive search have clearly come up short – even with internal candidates.

Instead, Allaway has made the wrong decision to install himself to lead a short term management team. In any race, this leaves BOQ two years behind and facing a stopgap strategy until a yet another CEO and another strategy can be found. It also sends the wrong message to the market around internal contenders including BOQ’s retail banking boss and former head of ME Bank, Martine Jager.

Allaway’s executive experience extends to UBS frontrunner and Citigroup, although this was a lifetime ago in banking. More recently he has been a non-executive director on boards from Fairfax Media, Nine Entertainment, Woolworths South Africa and Metcash. He is not an experienced retail banker of the likes of Suncorp’s current CEO Clive van Horen.

All this leaves BOQ in a weakened state just as funding markets are turning against smaller lenders given the global stresses caused by Silicon Valley Bank.

Bendigo CEO Marnie Baker meanwhile is fully focused on the slither of opportunity of moving on Suncorp bank if ANZ’s $4.2bn friendly buyout is knocked back by regulators. A decision on this is expected by the end of June.

Bendigo has publicly played its card of saying it has ambitions of a bigger balance sheet and growing in Queensland. As an investment banker, Allaway should know better – he has just strengthened Baker’s hand – if she does come knocking.

Higher interest rates and cost-of-living pressures are forcing households to ease up on non-essential spending, with new data showing retail sales have not grown at all in five months, despite modest gains in February.

Retail sales increased 0.2 per cent last month, according to data released by the Australian Bureau of Statistics on Tuesday.

But at $35.1 billion, the value of monthly sales was the same in February as it was in September, showing the pandemic-era period of rapid growth in retail spending has come to an end.

Given both the population and the price of retail products increased between February and September, the fact that the total value of sales has not grown implies households are buying fewer things.

ABS head of retail statistics Ben Dorber said sales had levelled out after a period of heightened volatility, caused by shifting seasonal spending patterns, including the emergence of Black Friday sales in November.

“On average, retail spending has been flat through the end of 2022 and to begin the new year,” Mr Dorber said.

“Spending in food-related industries continued to grow steadily in February, with cafes, restaurants and takeaway food services up 0.5 per cent, while food retailing rose 0.2 per cent.

“Non-food industry results were mixed as consumers continue to pull back on discretionary spending in response to high cost of living pressures.”

Hospitality still strong

Commonwealth Bank chief executive Matt Comyn said internal bank data showed spending remained strong in areas such as hospitality, while parts of the retail sector were experiencing weaker conditions.

“We don’t see a rapid deterioration in conditions coming,” he told The Australian Financial Review Banking Summit on Tuesday.

The retail trade figures were one of four major data points that RBA governor Philip Lowe said would be pivotal to next month’s rates decision.

The first two data points were stronger than expected: the unemployment rate fell back to a near 50-year low of 3.5 per cent in February and surveyed business conditions remained close to historic highs.

While markets expect the RBA board to keep the cash rate on hold at its April 4 meeting, most economists expect the central bank to deliver an 11th consecutive rate rise, amid persistent inflationary pressures.

BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said the slowdown in retail spending had been expected for some time, due in part to consumers shifting spending towards services, which are not fully captured in the retail trade figures.

“Moreover, higher interest rates are working to dampen consumer spending,” he said.

Mr Langcake said future RBA interest rate decisions were “lineball”, meaning each data point was being increasingly scrutinised for signs that higher interest rates were having their intended effect.

“There is nothing too surprising in these data about how the anticipated slowdown in consumer spending is unfolding,” he said.

“There are signs that goods price inflation is cooling, as is consumer spending more broadly. But the ongoing pickup in hospitality spending is a sign of persistence in services demand and inflation.”

JPMorgan economist Tom Kennedy said the pullback in retail spending was pronounced, and was reflective of the broader slowdown in economic activity caused by higher interest rates.

“Today’s outcome is particularly underwhelming relative to the prior inflation backdrop which has offered nominal supports to the retail sector,” Mr Kennedy said.

Commonwealth Bank economist Belinda Allen said she expected consumer spending to moderate further over coming months.

“The impact of higher interest rates will continue to intensify. Together with negative real wages growth, this will impact households’ available cash flows,” she said.

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.

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).”

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.  

Footwear conglomerate Accent Group has reported a 160% increase in its digital sales in the first half of FY23 compared to the same time in FY20. This is despite a drop from the first half of FY22.

The drop in online sales has been noted in other recent trading updates, including Universal Store and Best & Less, matched with a rise in bricks-and-mortar sales.

In the first half of FY22, the Group accrued a record online sales of $159.9 million, triple the size of 1H FY20 results of $51.6 million. In 1H FY23, the Group’s online sales dropped to $134 million, which is still above the results in both the first half of FY21 and FY20.

Its digital sales contributed to 18.9% of the Group’s total sales in 1H FY23, with total sales up 39% on the same period last year to $825 million.

Compared to pre-pandemic (1H FY20), Accent Group’s fulfilled 106.4% more online orders in 1H FY23, with a conversion rate increase of 8.7% in the same period, and an average order value increase of 21.5%.

The Group also added 300,000 new contactable customers to its base, which now sits at 9.6 million, with a goal to reach 10 million in the year ahead. The total contactable customer base has more than doubled since FY19.

Accent Group said Platypus, Skechers and Hype in particular have continued to grow their customer base and drive repeat customer behavior, alongside the launch of a new customer data platform.

Its loyalty program now has a total membership of 7.4 million across The Athlete’s Foot, Hype DC, Platypus, Merrell and Skechers.

Accent Group CEO Daniel Agostinelli welcomed the results, citing the continued focus on customer, new product, full margin sales, and return on investment as the key drivers.

“What is most pleasing is the strength and consistency of performance across our large core banners, including Skechers, Platypus, Hype DC, The Athlete’s Foot (TAF), Vans and Dr Martens, along with the progress that we have made in our new banners now that trading conditions have normalised,” Agostinelli said.

“One of the key initiatives for H1 was driving the profitability of the Accent Group digital business. Whilst sales were down on last year due to the lockdowns in 2021, we have improved our digital business and online EBIT was ahead of last year.”

Meanwhile, the group opened 53 new stores across its markets, transitioned 13 stores from discontinued to continuing and closed 10 stores where the required rent outcomes could not be achieved. The group now holds 805 stores, with an estimated total of 825 to be achieved by FY23 end.

In the start of the second half of FY23, like-for-like (LFL) sales for the first seven weeks were up 16% on the prior year. Compared with FY20, LFL sales were up 16.1%, a compound annual growth of 5.1%.

“Whilst we recognise that there is some uncertainty in the economic outlook, to this point we have not yet seen any significant change to consumer spending in our categories,” Agostinelli said. “Many of our brands target a younger customer demographic who tend to be less impacted by interest rates and cost of living pressures.

“In conclusion, I am pleased with the ongoing progress that has been made on our key growth strategies as we continue to build a strong, defensible business in Australia and New Zealand.

“Our portfolio of global distributed brands, owned vertical brands, integrated digital capability and large store network are core assets of the group and position the company well for growth into the future.”

Bedding and homewares retailer Adairs has reported strong first-half sales across its two largest brands as customers resumed shopping in stores rather than online after pandemic restrictions eased.

The company owns and operates the Adairs, Focus on Furniture and Mocka brands.

For the 26 weeks to December 25, sales increased 34.1 per cent to $324.2 million while statutory tax-paid profit reached $21.8 million, up 23.9 per cent.

Adairs’ sales were up 13.1 per cent to $220.4 million with store sales growing 22.9 per cent however, online sales fell 7.4 per cent to $58.5 million.

Focus on Furniture achieved $78.6 million, up 20.1 per cent, with online sales down to $5 million after all stores remained open during the half.

Mocka sales fell 26.18 per cent to $25.1 million as the brand cleared excess stock and resolved operational issues from the second half of the last financial year.

Mark Ronan, MD and CEO of Adairs Limited, said the continued sales growth highlights the “strength of our brands, the critical role of our exclusive product, and the resilience” of the Australian consumer.

“Across the brands, we are focussed on our operational execution, continued development of exclusive on-trend products and growing our membership bases, putting us in a good position to manage what is likely to be a challenging trading environment in the second half.”

In the first seven weeks of the second half, group sales grew 1.8 per cent as cost-out programs were implemented to manage the “potential impact” of a weaker economic environment.

Hate the chore of your weekly grocery shop? Picture this.

It’s Saturday morning and, between the rush of weekend errands, you open the app of your go-to supermarket. The retailer has been waiting for you to log on and is ready with a shopping list, having predicted what you’ll need for the week, and added it to your virtual trolley.

You hit one button to check out, and after being reminded of any coming special occasions (need a birthday cake this week?), you’re done. Later that day, you tell the store you’re about to swing by with one more click in the app and your bags are in your car boot the minute you pull up.

Prefer to go in store? Minimise the time you’ll spend playing trolley dodgem cars with other shoppers by planning your run first, logging on to work out what the best value ingredients are for each recipe you’re planning that week. If you’d like, pick the most nutritionally sound foods by tracking the exact health value of each item.

If you’ve interacted with a grocery store lately, you’ll know the scenes described above fall short of reality – but they may not be far away.

It’s been five years since Amazon first launched its cashierless grocery outlet, Amazon Go, to the public, opening our imagination to the idea of the grocery store of the future, where you never have to interact with a soul.

And despite the rise of the self-serve checkout, the idea that the grocery store of the future boils down to robot stores without staff, or purely online delivery, is holding less and less weight.

“There is no doubt Australian people still like shopping in supermarkets,” Coles boss Steven Cain said this week.

Instead, the investments that major grocery operators are making in Australia and overseas point to a future where data and delivery tech blur the lines between in-store and online shopping, making it easier for your food to get to you without you having to think about it.

After three years of supersized e-commerce growth thanks to the pandemic, online grocery sales are stabilising. At Woolworths, e-commerce food sales declined by 7.5 per cent in the six months to December, while at Coles they were down 6.6 per cent.

Nobody believes the digital rush is over yet, though. The return to regular trading conditions has instead given stores the breathing room to roll out their longer-term investments in the digital space.

Asked what the most significant change to grocery shopping will be in the next five to 10 years, Woolworths boss Brad Banducci has two words: “extreme convenience”.

The current focus is on making sure customers receive identical service whether they’re in the shop, getting groceries placed in their car or on their doorstep. A world where grocery apps play a bigger role in guiding your shopping, and predicting what you need, might not be too far off, he says.

“[Where] it’s all on the app and your list is just downloaded, dynamic to you with the predictive ability to know what [products] you’ve used – that future is not far away.”

Here come the bots

Robots are moving into the warehouse at Coles, and boss Steven Cain is upbeat about how they will improve the group’s home delivery service.

“I’m hoping it’s good,” he said of the customer experience that’s expected from the retailer’s new automated home delivery fulfilment centres in Sydney and Melbourne, “because I’m going to be one of [the customers].”

It’s been four years since Coles first announced a deal with British online grocery business Ocado to establish warehouses, run mostly by robots, to service the home-delivery market. Those plans are now inching towards completion.

The company said this week that the Victorian centre was set to ramp up from the middle of the 2024 financial year, with NSW not far behind.

Once up and running, the idea is these sites will help to erase the lingering annoyances of grocery delivery.

“It cures the biggest pain point in home shopping today, which is, ‘Did I get everything I ordered, and was it on time?’ It’s supposed to be a convenience offering, but it’s not very convenient, say, if a key product doesn’t turn up,” Cain said.

The model is also designed to address the pain that comes from not knowing exactly how fresh produce will be when it lands on your doorstep, and how long until it expires.

“The idea over time is [there is] an extended range versus what you can get in a normal supermarket, delivered in full, on time with a guaranteed ‘fresh life’ on some of the key products, like meat,” Cain said.

The past year has marked the demise of grocery shopping apps which, during the COVID era, promised to bring you food in as little as a quarter of an hour.

The major supermarkets aren’t buying into the idea that delivery can happen that quickly, but they do appreciate that immediacy and reliability is what shoppers want.

“It’s more ‘same day’ – people want it and want it now,” Banducci said, noting that fast turnaround for grocery pick-up and delivery must become even easier for customers.

Despite an overall decline in online grocery delivery sales last half, some Woolies initiatives are growing, such as its Delivery Unlimited subscription, which offers deliveries on same or next-day orders for a monthly fee.

The company’s paid subscribers grew 48.2 per cent in the six months to December.

And while instant deliveries might be a stretch, Woolies is promising it can do some jobs in less than 60 minutes – its Metro60 offer has expanded over the past year with a promise of being able to deliver to customers in metro Melbourne, Sydney and Brisbane certain items within the hour.

Knowing the product, knowing the customer

Shoppers of the future are set to know more about their food than ever before, while retailers hope to know more about their customers in a bid to more accurately meet their needs.

“In five years’ time, there won’t be anything you won’t be able to find out about what you’re eating, where it came from, and how green it is, what the health components are,” Cain said.

Chinese retail giant Alibaba has been a pioneer in this space, building supermarkets designed to be used with an app. Shoppers can scan fresh produce, such as lobsters, to find out where it came from or direct them to other products such as a bottle of wine that would complement a purchase.

In Australian supermarkets, Banducci says there’s room for retailers to offer more solutions for shoppers, anticipating what they’ll need for recipes and making it easier for them to pick up ingredients in-store.

“That classic, old Australian dish, the spaghetti bol’ – you still have to walk up and down to find the pasta here, the sauce there. That will become much, much easier,” he said.

Meanwhile, the rise of grocery loyalty programs is giving retailers a greater window into how you shop, and what deals you might be interested in.

Coles and Wesfarmers’ Flybuys program and Woolworths’ Everyday Rewards memberships now cover millions of households across Australia, and operators are increasingly using past shopping data to work out individual promotions for customers.

Both programs now send personalised specials and deals to their members regularly, using shopping data to anticipate a customer’s needs and interests.

“We combine information about how, when and where you like to shop, the products you buy, whether you prefer in-store or online shopping, and more,” Everyday Rewards tells its users, highlighting that it can send offers based on a member’s favourite or most frequently bought items.

“We may recommend items related to what you or others with similar interests would usually buy, and if you engage, we may send you similar offers again.”

Steven Cain told analysts at an earnings briefing this week that the personalised approach was a winner. He said Coles had introduced Flybuys member pricing on some items recently, as well as putting a focus on individually tailored offers, which in turn was driving greater use of the loyalty program.

“It’s never been more important from a customer perspective,” he said.

Sales and profit through the David Jones department store chain and Country Road Group surged in the half year to December 25, according to a filing by South African parent Woolworths Holdings. 

The company said its Australian and New Zealand subsidiaries “continued their positive momentum” despite the increased inflationary pressures during the period. 

In the David Jones business, Woolworths said a successful turnaround strategy had resulted in a “notable improvement” in underlying operational and financial health.

Adjusted operating profit was up 245.8 per cent to $106.5 million with overall turnover up by 31.8 per cent and concession sales by 27.6 per cent. 

Online sales contributed 17.2 per cent of total sales, compared to 28.1 per cent for the prior period. Flagship and CBD stores performed ahead of expectations, the company said. 

Woolworths announced in December that it was to sell the David Jones business to Anchorage Capital and the division’s results will now be included in the interim results as a discontinued operation. Settlement is expected by the end of this month.  

At Country Road Group – where the Politix and Witchery chains were the star performers – strong full-price sales and reduced promotional activity saw gross profit margin increase by 400 basis points to 63.5 per cent, despite higher supply-chain costs which contributed to a 22 per cent increase in expenses against the previous comparable period, where lockdowns were in place for part of the time.

Adjusted operating profit increased by 94.2 per cent to $93.2 million.

The group’s comp-store sales rose by 26.6 per cent and overall sales by 25.5 per cent during the half. Online sales contributed 26.1 per cent of total sales, compared to 33.8 per cent a year earlier.

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.”