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Pact Group executive chairman Raphael Geminder, who made his $1.4 billion fortune from packaging, has made his first foray into retailing, lobbing a $78 million takeover offer for struggling discount variety retailer The Reject Shop.

In a surprise announcement on Wednesday, Allensford, a bidding vehicle created by the Geminder family's $1.5 billion investment company Kin Group, launched an unconditional on-market offer of $2.70 a share cash, 11 per cent above The Reject Shop's share close of $2.43 on Tuesday.

Allensford said the offer – pitched at a 19 per cent premium to the one-month volume weighted average price of $2.27 a share – was an opportunity for shareholders to get out before Reject Shop's sales and earnings deteriorated.

However, Reject Shop directors said the offer was "opportunistic" and told shareholders to take no action. They continue to believe in the long-term growth prospects of the business, which sells deeply discounted goods ranging from groceries and health and beauty to homewares, stationery, toys and pet care products.

Reject Shop shares, which have fallen 70 per cent in two years, jumped more than 15 per cent to as high as $2.86 – exceeding the Allensford offer price – suggesting investors are anticipating a bidding war.

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"It's hard to see what the game plan is," said one source close to the Reject Shop board.

The offer follows a tough few months for The Reject Shop, which is losing market share to mass market retailers such as Kmart and Big W and online rivals such as Catch Group and Amazon.

Reject Shop shares plunged 40 per cent last month after chief executive Ross Sudano slashed December-half net profit guidance from $17.7 million to between $10 million and $11 million after same-store sales slumped 3.9 per cent in September and October, dragging same-store sales for the year to date down 2.4 per cent.

Challenges

Mr Sudano's previous guidance was based on a return to modest positive same-store sales growth in the first half, when Reject Shop makes all its annual profit. The retailer's net profit rose 34 per cent to $16.6 million last year.

Major shareholders such as Celeste Funds Management and Commonwealth Bank have been selling shares before and after the profit downgrade.

Allensford said its offer represented immediate and certain cash for Reject Shop shareholders in the wake of the profit downgrade and following years of underperformance.

"Comparable year-on-year sales have declined or remained flat in four out of the five most recent financial years," Allensford said.

"Since the beginning of 2011, whilst headline sales have grown at a compound annual growth rate of 6.9 per cent, comparable sales growth has been, on average, only 0.1 per cent per annum," it said.

"In addition, there are a number of potential challenges facing the discretionary retail sector in which The Reject Shop operates, including increased competition for consumer discretionary spend following the emergence of online discount retailers and continued high levels of competition in bricks and mortar discount department stores.

"Accepting this offer delivers certain and immediate cash value and removes shareholder exposure to the deteriorating financial performance of The Reject Shop and risks associated with continuing to hold the shares," it said.

If Allensford acquires more than 90 per cent of the shares it plans to compulsorily buy the rest and delist the company.

Allensford has accumulated a 2.7 per cent stake in Reject Shop in recent months and has instructed Bell Potter Securities to stand in the market and buy shares at the offer price until January 7.

Long-term view

The Kin Group is a diversified investment company controlled by the Geminder family with offices in Melbourne, Australia and New York. It focuses on long-term, strategic investments in a variety of industries, including packaging, food and beverages, including Greens Foods, and property.

Sources said that while Reject Shop was under pressure, the Kin Group was taking a long-term view of its future.

The offer comes at an interesting time for Mr Geminder. who owns 40 per cent of packaging company Pact Group and 45 per cent of Pro-Pac Packaging. He is the brother-in-law of Australia's richest person, Anthony Pratt.

Pact Group, which was floated five years ago at $3.80 a share, has shed 34 per cent of its value since August following a disappointing full-year result and a profit downgrade a week ago, reducing the value of Mr Geminder's stake by more than $300 million.

Pro-Pac shares have fallen by 48 per cent since May after a weak full-year result dragged down by rising raw material costs, higher energy costs and the knock-on impact of the drought on parts of its business exposed to agricultural products.

Allensford is being advised by Flagstaff Partners and Gilbert + Tobin, while Reject Shop has hired Macquarie Capital and Lander & Rogers.

Last week the NRA unveiled our sales projections for the Christmas trade period.

For the first time ever, we can forecast that Australians are set to splurge over $50 billion on retail sales between now and Christmas.

The festive season is not only the busiest time of the year for retail, but it is also the most vital. Smaller businesses in particular rely on holiday sales to navigate the quieter parts of the year and 2018 has certainly been a relatively slow year for retail.

Overall it is projected to be a Merry Christmas for retail across the nation, with increased sales forecast in all states and territories. It is predicted the biggest increase on 2017 sales will occur in Victoria (rise of 7 per cent) while New South Wales will again record the highest raw spend.

We expect that personalization will continue to be a major feature during the 2018 Christmas period, with shoppers now placing a far higher premium on experiential shopping rather than simply the physical items they purchase. So, if you haven’t already, start thinking outside the box for ways you can entice shoppers into your store over the coming weeks!

In less fortunate news, last Thursday administrators announced that they had been unsuccessful in finding a buyer for clothing retailer Roger David.

Roger David was a much-loved brand and it is sad to see them go, as it is when any retailer (big or small) is forced to close their doors. Our thoughts are particularly with the 500 employees around Australia who have lost their jobs.

This has again led some to suggest that online retail, particularly via digital goliaths such as Amazon, will spell the end of bricks and mortar retailers.

However, a bit of perspective is needed by those offering doom and gloom predictions.

It should be noted that although online sales continue to experience strong growth, it still only makes up a fraction of all retail spend. Moreover, the bulk of online sales are done via retailers who primarily operate bricks and mortar stores, and not outlets such as Amazon who sell exclusively online.

Furthermore, a Deloitte Report shows that 83% of retailers do not think that Amazon will have any impact on their Christmas sales.

Having said that, depending on what type of retail environment you operate in, careful consideration should be given to adding an online channel (if you haven’t already) in addition to your physical store.

With the Christmas trade period having now officially kicked off, we wish you all the best and welcome any feedback you have throughout the festive season.

Myer's second-largest shareholder says worse than expected first-quarter sales show the retailer's new focus on profits over sales is playing out and it will back directors and management despite Solomon Lew's renewed push to spill the board.

As Myer chairman Garry Hounsell hit back at Mr Lew, his largest shareholder, denouncing his latest campaign to spill the board as hostile and "grossly misleading", Investors Mutual, which owns 9.8 per cent, said it would support the board at the annual meeting next week.

Investors Mutual managing director Anton Tagliaferro and portfolio manager Simon Conn said Myer's board and management were doing a good job in the current environment and the fall in sales in the October quarter reflected its strategy to exit unprofitable products such as furniture and bedding and focus on higher-margin products including apparel, beauty and private label goods.

"We are supporters of the board, supporters of the strategy and we're very supportive of [chief executive] John King and Garry Hounsell," Mr Tagliaferro told the ABC.

"We're not going to hand control of the company over to Mr Lew – if Mr Lew wants control of the company then he should pay a premium like everyone else does when they take over a company."

Mr Conn said Mr Lew's latest comments about Myer's performance were causing further damage to the company and suppliers, including Mr Lew's companies.

"That's the bizarre thing – I don't know what his game plan is," Mr Conn toldThe Australian Financial Review on Monday.

"The focus on sales is a complete misnomer at this point in time. We all know there needs to be a refocus on profitable sales and that's what John King and the management team are doing – reducing unprofitable sales and unprofitable lines and getting gross margins up."

Proxy adviser CGI Glass Lewis is recommending shareholders vote in favour of all the board's recommendations, while Ownership Matters supports all the resolutions except for the re-election of recent appointee Lyndsey Cattermole. In the event of a second strike against Myer's remuneration report, Ownership Matters has recommended investors vote against a board spill.

Myer's fifth largest shareholder, Wilson Asset Management founder Geoff Wilson, who bought into the company around 40¢ a share in July, plans to cast his votes just before the annual meeting on November 30.

"Our focus is on stability for the new management team to deliver for all shareholders," Mr Wilson told the Financial Review.

Shares plunge

Myer shares plunged as much as 16 per cent to a six-month low of 37.5¢ on Monday before closing down 9 per cent at 41¢ after emerging from an ASX-enforced trading halt on Friday, when the retailer finally confirmed a report in The Australian Financial Review's Rear Window column that first-quarter sales had tanked.

In a trading update released at 5.40pm AEDT on Friday, Myer said sales for the three months ending October had fallen 4.8 per cent and same-store sales were down 4.3 per cent – more than twice the rate of decline in the July quarter – while online sales growth slowed to just 3.6 per cent as Myer relaunched its website and removed unprofitable products from its online store.

In comparison, David Jones' total sales rose 2.9 per cent and same-store sales rose 2.4 per cent in the 20 weeks ended November 11, despite disruptions from major renovations, while online sales rose 48.4 per cent.

Myer also revealed it had posted losses in the October quarter for the past five years, but underlying losses (excluding restructuring and one-off costs) had narrowed in the latest period as the retailer moved away from chasing unprofitable sales.

Mr Lew used the trading update to step up his attack on Myer, saying "the failed Myer board must go" and "their time at the trough is coming to an end."

In response, Mr Hounsell, who has appointed five new directors and cut board fees since taking the chair a year ago, urged shareholders to reject Mr Lew's "misleading" campaign and his latest attempt to destabilise the company.

"Don't let a conflicted shareholder and competitor take control of Myer," Mr Hounsell said.

Uncertain outlook

Citigroup analyst Bryan Raymond said the reduction in losses suggested Myer's gross margins rose about 100 basis points in the quarter as it boosted sales of private label products and moved away from discounting.

However, he said Myer's 2019 earnings outlook was "highly uncertain".

JPMorgan analyst Shaun Cousins cut his 2019 and 2020 profit forecasts by 9 per cent, saying the fall in first-quarter sales was worse than expected and, despite Myer's focus on profitable growth, it would become harder to offset operating deleverage.

Deutsche Bank analyst Michael Simotas said Myer's focus on profitability was sensible. "However, it is clearly difficult for a retailer to be successful if sales continue to decline."

Australia’s first ever Victoria’s Secret lingerie store will officially open on November 29 at Chadstone, The Fashion Capital in Melbourne.

The launch will take place only weeks after the filming of the world famous Victoria’s Secret Fashion Show in New York City.

The store will feature a full assortment of the iconic Victoria’s Secret lingerie collections, including Body by Victoria, Very Sexy, Dream Angels, Bombshell, Cotton lingerie, as well as the brand’s athletic line Victoria Sport. 

Alongside the brand’s best-selling lingerie will be Victoria’s Secret signature scents, body care collections and Victoria’s Secret PINK, a collection of bras, panties, loungewear and beauty inspired by and focused on the university-aged women.

The first shoppers to experience the new store will be treated to the brand's famous Angel Kits:

First 50 in line will receive an Angel Kit to the value of $180.

Next 200 in line will receive an Angel Kit to the value of $110.

Baby Bunting CEO Matt Spencer expects earnings to rise at least 34 per cent and as much as 45 per cent in 2019. Wayne Taylor

The rebound in earnings follows a tough year in 2018, when the collapse of Toys 'R' Us and Babies 'R' Us, Bubs, Baby Savings and Baby Bounce led to massive industry-wide discounting and dented the retailer's gross margins, leading to a 19 per cent fall in EBITDA to $18.6 million.

Mr Spencer expects gross margins to recover to more than 34 per cent in 2019, compared with 33.3 per cent in 2018 and 34.3 per cent in 2017.

NEW YORK, United States —  J.Crew chief executive Jim Brett is exiting the company, the retailer said Saturday. A committee of four executives will step in to manage operations until a replacement is found.

The statement said the decision had been mutual between Brett and the board of directors.

"Returning J.Crew to its iconic status required reinventing the brand to reflect the America of today with a more expansive, more inclusive fashion concept," Brett said. "However, despite the recent brand relaunch already showing positive results, the board and I were unable to bridge our beliefs on how to continue to evolve all aspects of the company."

Brett will be replaced by four executives: chief operating officer Michael Nicholson, chief experience officer Adam Brotman, chief administrative officer Lynda Markoe and Libby Wadle, president of the Madewell brand.

Brett joined the specialty retailer in July 2017, at a time when the company was struggling with looming debt payments and declining consumer sentiment toward the brand. Over the next year and a half, he overhauled the executive team, bringing in former colleagues from West Elm — where he was president — and URBN — where he worked at both Anthropologie and Urban Outfitters — to revamp the brand identity and restructure the business. In 2017, the company was able to bide a bit more time to implement a turnaround, negotiating with creditors to push back the maturity of $566.5 million in debt from 2019 to 2021.

He lowered prices, launched new brands and tried to reposition J.Crew as an inclusivity-driven, one-for-all label not so tied down by its preppy heritage, especially as it had most recently been interpreted by agenda-setting designer Jenna Lyons.

In a sharply worded email sent to senior staffers in July 2018, he dismissed Lyons’ work, which turned polarising near the end of her tenure, while laying out his own priorities.

“PRETTY always sells. A glen plaid jacket with a graphic tee and camouflage pants is anything BUT pretty,” he said. “The new feminist fashion movement is enjoying the POWER of femininity (see latest Dior shows) vs. the last feminist movement which was about women finding power in dressing like men. Femininity is critical — pretty is critical — femininity is powerful. These things are in starch [sic] contrast to Jenna’s masculine, sexual and overtly aggressive J. Crew.”

While Lyons’ vision had stopped resonating with consumers, Brett’s fix was viewed by some analysts as a watering down of the product. There were too many changes at once — from the introduction of a bare-bones loyalty programme to changes in fabric suppliers to the implementation of a marketplace  — all with varying impact. He also continued to discount heavily, something many of J.Crew’s competitors are trying to move away from.

Talk of a decline in morale also permeated Brett’s run, with multiple corporate-level employees leaving, including one of Brett’s own hires, chief marketing officer Vanessa Holden, who recently announced her departure.

In the second quarter of 2018, the group — which also includes Madewell — reported that same-store sales rose 1 percent from a year earlier after 15 straight quarters of decline. Star performer Madewell, which drives about a fifth of sales, saw comps jump 28 percent. Total sales at the company were $588 million, up 3 percent from the same quarter in 2017. The company still experienced a net loss of $6 million, compared to a $19 million loss during the same period last year.

Whether the company has managed to keep up the momentum will be revealed imminently, as third-quarter earnings are expected to be released this month. The period was marked by J.Crew’s official September relaunch, including the rollout of its #meetmycrew marketing campaign. Just this past week, J. Crew launched another brand, Nevereven, which is also being sold at multi-brand retailers such as Fred Segal in Los Angeles.

But talk of the company giving up more of its corporate office space to Facebook and Instagram — which occupies the same building — and news of a "for rent" sign in the window its popular men's concept shop, the Liquor Store, indicates that the J.Crew is still in cost-cutting mode.

Australian consumer confidence is bouncing back according to the latest research by ANZ-Roy Morgan.

The research group reported this week a 2.6 per cent rise, indicating recovery from the dive seen during the Wentworth by-election.

ANZ-Roy Morgan said that performance is positive in financial and economic conditions.

“Consumer confidence registered its third consecutive gain after the sharp fall recorded during the Wentworth by-election weekend. In fact, confidence has more than regained that fall and is at its highest level since late July,” ANZ’s head of Australian Economics, David Plank, commented.

“Last week’s RBA Statement on Monetary Policy was quite upbeat on the Australian economy. At the same time, the Bank’s message of no near-term hikes in the interest rate was reassuring for households. Sentiment might have received boosts from the recent easing in petrol prices and the rebound in equity markets.

“There is some important data this week that may impact household sentiment, not least Q3 wage data. We think this will be boosted by the rise in the minimum wage and the finalising of some enterprise agreements.”

ANZ-Roy Morgan further reported that Australian households’ perceptions of current financial conditions and future financial situation rose by 3.9 per cent and 2.2 per cent. It is close to the highest level seen since the GFC. Also, current and future economic conditions leaped by 7 per cent and 4.5 per cent respectively.

Meanwhile, the ‘time to buy a household item’ sub-index declined by 3.1 per cent, only partial reversing the prior week’s sharp gain of more than 9 per cent. Four-week moving average inflation fell by 0.1 ppt to 4.4 per cent.

Spending by Australian consumers rose just 0.2 per cent in September, the weakest monthly increase in 16 months.

But spending on retail increased by 1 per cent, the biggest increase in the previous six months and the second biggest increase in the month, after entertainment at 1.1 per cent, according to the Commonwealth Bank Business Sales Indicator.

“Our data shows a positive theme around discretionary spending continuing, with consumers still willing to spend their money on experiences, “ CommSec senior economist Ryan Felsman said.

“Better job security, and confident gains in the job market, has translated into people feeling more upbeat and therefore more comfortable to spend money at places like cafes and restaurants, and going on holidays.

“Cheaper clothing prices and inclement weather also encouraged shoppers to head to department stores.”

While spending on the clothing sector has fallen by 2.5 per cent annually, spending across retail stores grew by 16 per cent, with all states and territories seeing an increased level of sales.

Western Australia saw the largest growth, up 11.2 per cent annually, followed by Victoria and Queensland with increases of 11.1 per cent. South Australia grew by 9.9 per cent, while the ACT saw a 8.5 per cent improvement, with NSW trailing at 7 per cent, Tasmania at 6 per cent and the Northern Territory seeing the slowest growth at 0.8 per cent.

However, the increase in spending has not necessarily translated to increased business confidence, according to the NAB Quarterly Business Survey, which found that confidence dropped by 4 points in Q3 – a little below its historical average.

NAB Group’s chief economist Alan Oster said the fall in confidence was of some concern, but that the latest survey results suggest improvement is just around the corner. However, that may not be the case for retail.

“Conditions have eased across most industries, though generally most industries continue to report above average conditions,” Oster said. “Retail however, remains weak, as it has been for some time.”

The survey found that the impact of a recent minimum wage decision, an interest of 3.5 per cent in 2018, has hit the retail sector hard, reflecting the high proportion of employees on the minimum wage in that sector.

No longer a one-day shopping extravaganza, Black Friday kicks off an extended discount period running through Cyber Monday. This has become an established feature of the retail calendar on both sides of the Atlantic—one that has dramatically changed the way people shop in the run-up to Christmas.

The Black Friday 2018 Shopping Report delivers detailed insights into consumer sentiment and intentions, exploring how consumers plan to shop, what they intend to buy, how much they anticipate spending, and whether they will be making purchases in stores or online.1

Providing retailers with in-depth intelligence on potential opportunities on the horizon, this year’s report also lifts the veil on several topics:

how consumers are planning ahead for the event—and the budgets they have set aside to shop
which product categories consumers are planning to shop—and the channels they will be using to research and make purchases in these categories
what is triggering changes in consumer shopping behaviors
This article, an extract of the Periscope by McKinsey report, highlights key findings on these topics and suggests what brands and retailers can do to prepare.

The predisposition to participate in Black Friday retail is high

Our survey showed many consumers are inclined to shop in the Black Friday period, and they are generally enthusiastic about promotions.

More than 70 percent of consumers plan to get involved in Black Friday

With retailers outside the United States now participating in Black Friday and Cyber Monday, discounting practices are stimulating ever-greater consumer participation in the annual shopping event.

In Europe, just 19 percent of UK respondents had participated in Black Friday retail back in 2015, compared with an impressive 54 percent in 2017. It was a similar story in Germany, with 9 percent of consumers getting involved in 2015; that figure jumped to 43 percent in 2017.

In Canada, consumer participation during the period has shown similar impressive gains, growing from 26 percent in 2015 to 48.5 percent in 2017 (Exhibit 1). And 81 percent of Canadian respondents say they definitely plan to shop or browse during Black Friday in 2018.

Anticipation in the other surveyed regions is also high, with 77 percent of respondents saying that they, too, plan to shop or browse at this year’s event and will consider making a purchase if the price is right.

Exhibit 1
Growing numbers of consumers report participating in Black Friday.
Positive attitudes abound—consumers expect to encounter enticing one-off promotions and deals

Consumer enthusiasm for Black Friday retail is running high; excitement levels among US (39 percent) and UK (36 percent) shoppers appear especially elevated (Exhibit 2). And around a quarter of Canadian (27 percent) and German (25 percent) shoppers say they are eagerly anticipating the event.

Exhibit 2
Consumers are enthusiastic to participate in Black Friday, particularly in the United Kingdom and United States.
Asked to evaluate the top motivational factors for participating in Black Friday 2018, 54 percent or more of consumers in all countries surveyed said taking advantage of steep discounts was their number-one reason. The opportunity to encounter unique one-off promotions was the second-most motivating factor for consumers, followed closely by making Christmas gift purchases (Exhibit 3).

Exhibit 3
Respondents report various motivations for shopping on Black Friday—but steep discounts are a primary factor.
Spontaneous behaviors will prevail, as consumers limit pre-event preparations

While many respondents expressed enthusiasm about Black Friday, relatively few say they have planned ahead. Preparation, if it happens, tends to be conducted online.

Limited consumer preplanning presents a major opportunity for retailers

Despite stating a clear objective to participate in Black Friday, consumers appear to be keeping their options wide open when it comes to exactly what they will purchase—and from whom.

Asked to evaluate their pre–Black Friday shopping preparations, the vast majority of respondents in all countries surveyed admitted to doing no or very little preplanning with regard to which stores or products they will seek out (Exhibit 4).

Exhibit 4
Most respondents say they do little or no planning for their Black Friday shopping.
This indicates that consumers are prepared to play the waiting game in anticipation of truly tempting offers that capture their attention or give them incentive to make a purchase.

Research nearer Black Friday will be conducted primarily online, but in-store browsing holds strong appeal

The ease and convenience of browsing retailer websites held the greatest appeal for the majority of respondents looking to hunt down ideas for their Black Friday purchases (Exhibit 5).

But browsing in-store came a close second for US (45 percent) and Canadian (47 percent) shoppers and held a strong attraction for 41 percent of German and 35 percent of UK consumers.

German (48 percent) and UK (38 percent) shoppers will be the most likely to wield their search-engine expertise when researching Black Friday deals.

Exhibit 5
Across countries, consumers are likeliest to browse retailers’ websites for Black Friday inspiration.
Digital and omnichannel purchasing behaviors will dominate

When it comes time for shoppers to make purchases, it is interesting to look at the channels they will use, the categories they will shop, and their changing preferences.

While European shoppers prefer to go digital, omnichannel is a popular option for shoppers everywhere

This year’s survey results reveal that European consumers mostly intend to head online to shop on Black Friday.

Germany leads the fray, with 33 percent of respondents saying they will exclusively shop online and 28 percent saying they will mostly do so.

It is a similar story in the United Kingdom, with “digital only” identified as the top choice for 29 percent of respondents and a further 34 percent saying they plan to shop mostly online (Exhibit 6).

Exhibit 6
For Black Friday purchases, many shoppers will go online, though some expressed strong omnichannel inclinations.
But Canadian shoppers weren’t far behind on the digital curve: while 16 percent plan to use only digital channels to make Black Friday purchases, 30 percent expect to be shopping mostly online.

By comparison, just 12 percent of US shoppers expect to shop exclusively online—with 21 percent saying they will be making mostly digital purchases.

That said, shoppers in all countries surveyed exhibited strong omnichannel inclinations. In the United States, 48 percent of respondents intend to shop both online and in stores. And it was a similar story for around a third of consumers in Canada (39 percent), Germany (32 percent), and the United Kingdom (30 percent).

This year’s findings indicate the percentage of consumers intending to shop only in stores is extremely low across the board—and was highest in the United States and Canada (4 percent).

Consumers intend to shop a variety of categories, and their channel preferences are changing

This year, clothing moved ahead of all other categories to take the top spot on consumer shopping lists in all countries we surveyed, bumping consumer electronics into second place. While digital remains strongly ahead as the primary method consumers plan to use when shopping for consumer electronics, 50 percent of shoppers in Canada and 54 percent in the United States still favor offline shopping when it comes to selecting new clothes.

Movies, books, and music emerged as the third-most popular product category, selected by 33 percent of US and 39 percent of Canadian respondents, while 40 percent of consumers in Germany and 42 percent of UK shoppers plumped for beauty and fragrances.

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Even in big-ticket categories where consumers have traditionally exhibited in-store or offline purchasing behaviors—such as for furniture, household appliances, and cars—there are indications that a growing number of consumers are now prepared to head online to snap up Black Friday deals.

However, consumers are still voting with their feet and heading to the store when it comes to grocery and beverages, with an average of 45 percent of all respondents stating that they prefer to shop offline for these items and the same number saying that they don’t plan to shop for them at all on Black Friday.

Online shopping: What is the motivation?

With an average of 54 percent of shoppers in all surveyed markets saying they are planning to shop more online this Black Friday compared with previous years, it is clear that digital is becoming increasingly dominant as a channel.

When asked to evaluate what is motivating them to shop more online, the simplicity and convenience afforded was the top reason for shoppers in most age groups and in most countries.

The findings also reveal that US respondents across every age category were the most likely to plump for online shopping as the ideal antidote to escaping the chaos they say they have encountered when venturing to stores to shop during Black Friday events.

Which channels resonate most with which shoppers?

Respondents were asked to evaluate their top three shopping channels of choice. This year’s findings highlight how a growing number of shoppers will be reaching for their mobile devices to research or make purchases (Exhibit 7).

Exhibit 7
Although most respondents report they will shop in store or on a desktop, an increasing share will use mobile devices to research or buy on Black Friday.
Indeed, taken together, mobile apps and mobile browsers proved a popular option, selected by 50 percent or more of consumers in all countries surveyed, with 75 percent of US and 61 percent of German shoppers using these channels.

Meanwhile, US shoppers in general appear to be stealing a lead on consumers in other countries, with 8 percent saying they will be turning to voice-activated digital assistants, such as Alexa and Siri, to bag deals on Black Friday.

Consumers allocate sizable shopping budgets to this year’s Black Friday purchases

Once again, this year’s research indicates consumers are planning to spend even more on purchases than they have in previous years. The following results reaffirm Black Friday’s increasingly preeminent position as one of the most significant revenue-generating opportunities on the retail calendar (Exhibit 8):

Of US respondents, 16 percent expect to spend $1,000 or more—up from 9 percent in 2017—with a sizable 22 percent budgeting $500 for Black Friday purchases.
Of Canadian respondents, 14 percent have allocated $1,000 or more for Black Friday sales, with an additional 20 percent expecting to spend $500.
A substantial portion of UK shoppers (37 percent) are budgeting between £200 and £300 for Black Friday purchases.
Of German respondents, 21 percent expect to spend €200, with a further 14 percent setting aside €300 for purchases.
Exhibit 8
Many respondents say they are planning to spend a substantial amount on Black Friday shopping.
With consumers clearly eager, ready, and willing to participate in and shop Black Friday 2018, retailers and brands should look to prepare the right promotions for the right customers to ensure they attract high numbers of shoppers—and secure big-basket orders.

No customer left behind
No customer left behind: How to drive growth by putting personalization at the center of your marketing
Read the article
Consumers have already set aside significant budgets to fund their Black Friday 2018 shopping sprees and have clear purchasing intentions when it comes to who they will be buying for and which product categories they will be prioritizing. But beyond that, they are adopting a much more spontaneous approach in relation to what items they will actually purchase, preferring instead to sit back and see which promotions and offers most entice them to spend.

With everything up for grabs, retailers and brands should focus on a few areas:

Stimulate wants and needs. The majority of consumers say they have invested minimal effort in planning which items they will buy. But they have certainly reserved significant budgets to fund potential Black Friday purchasing activities, giving retailers and brands a clear opportunity to stimulate wants and needs ahead of the event. Those able to up their game to craft the right marketing messages and promotions will seize the day, attracting shoppers to their stores and websites on the day.
Make it personal. Consumers are more open than ever to receiving personalized messages that stimulate them to consider potential product options. Retailers and brands that can leverage their customer data to stimulate demand with personalized campaigns ahead of the event will win a greater share of consumer hearts and minds.
Improve the in-store customer experience. It is clear from this year’s survey that many shoppers are now wary of battling for bargains and trying to make purchases in chaotic stores. Retailers and brands can consider implementing processes such as mobile payments and online ordering for pick up in store to relieve the pressure on store operations and limit the risk of alienating consumers or damaging brand loyalties.
Smart shopping is on the rise. A growing number of consumers are turning to smart shopping assistants, such as Alexa and Siri, to help streamline their shopping chores, and many of those doing so hold considerable shopping budgets for events like Black Friday. These big spenders represent a prime opportunity.
Think omnichannel. Today’s sophisticated shoppers are leveraging every channel available to explore their Black Friday options—whether for researching deals, seeking out inspirations for gifts, or experiencing the excitement of the shopping event in person. And digital channels are increasingly dominant. This makes it vitally important for retailers and brands to ensure they catch their target audiences in the right channels and provide a seamless experience as shoppers move from one channel to another to complete their purchasing journeys.

Former Dick Smith boss Nick Abboud has a new gig, heading up the discount variety chain Cheap as Chips. Alceon Group, which has a controlling interest in the South Australia-based retailer, confirmed the appointment to IR on Wednesday.

Abboud replaces Cheap as Chips’ previous chief executive, Shane Radbone, who led the company for four years and headed a management buyout in 2016. At the time, Radbone told The Advertiser that Cheap as Chips was a $150 million company and had a three-year plan to list on the ASX.

According to Cheap as Chips’ website, the company has over 30 stores in South Australia, regional Victoria and New South Wales and employs over 800 people.

Abboud joins the business from Kidstuff, where he served as CEO for less than six months. Prior to that, he famously steered Dick Smith from November 2012 to January 2016, during which time the electronics retailer debuted on the ASX in an oversubscribed $530 million float, before collapsing into voluntary administration.

Abboud was among the Dick Smith management and board members who testified in a nine-day public examination of the company’s downfall in October 2016. According to reports, pressure to maximise supplier rebates led to too-high inventory levels and a poor range of products, which ultimately proved to be an untenable mix.

Though he’s only 21, Dom Hadley owns nearly 30 pieces of vintage Tommy Hilfiger clothing, a collection he has cultivated across the past four years.

Yet many designs from the brand’s 1980s and 90s heyday have eluded the college student from Liverpool, who also runs a YouTube channel dedicated to vintage clothes.

So the news, last August, that Tommy Hilfiger was reissuing certain iconic styles in partnership with New York streetwear store Kith thrilled Hadley.

“That collaboration is just crazy because some of the pieces (Hilfiger and Kith owner Ronnie Fieg) chose for the collaboration, they’re all like the rarest vintage pieces,” says Hadley, who bought a zip-necked rugby shirt from the collection during a trip to Manhattan.

Increasingly, the vintage styles sought by young men such as Hadley are reappearing on racks. Brands such as Nautica, Ralph Lauren and Guess Jeans have all reissued, in one form or another, archival designs of the 80s and 90s, and last month Perry Ellis jumped on board with a limited collection of retro re-releases, the original designs tweaked only slightly.

Perry Ellis designer Michael Maccari reports that when he and his team “were looking back at the archive”, younger staff members said they would wear the colour-blocked cropped anoraks and bomber jackets that defined the brand’s pre-2000 heyday. These 90s looks have come full circle, embraced by a generation of vintage-minded millennials that missed them the first time.

Patrick Buhse, 27, marketing manager of a Harley Davidson showroom on Long Island, New York, calls these buyers a “movement”. Inspired by photos he has seen online of Snoop Dogg and Michael Jackson wearing Tommy Hilfiger in the 90s, Buhse has bought basketball sneakers and a long-sleeved polo from the Kith collection.

For older millennials, this thirst for retro designs is wistful: “As a kid who grew up in the 90s, (the Kith collection) brought back a little nostalgia (for) my first bottle of cologne by none other than Tommy Hilfiger,” says Reagan Lee, 35, a web designer in Sydney.

Given the graphic impact of much of the clothing, this nostalgia trip is gaining speed on visuals-happy social media platforms. A Guess T-shirt noisily striped in red and white or a Perry Ellis pullover slap­ped with a neon-green logo assert a loud aesthetic that stands out in the age of constant documentation.

“Instagram is now the most important visual medium for fashion and as a result the industry has homed in on streetwear’s graphics and logos as transmittable memes, seeing a huge revival in 90s logomania,” reads a report by Lyst, a website that tracks search activity of fashion brands.

Lyst reports that searches for Tommy Hilfiger have jumped up 34 per cent year on year, Fila searches have soared 202 per cent year on year, and searches for Gap and Nautica have begun to rise since July. Searches for Perry Ellis are flat, but its new archive collection could move the needle.

A colourful style from the Tommy Hilfiger archives.
A colourful style from the Tommy Hilfiger archives.
Fila’s conspicuous shoes, such as the Disruptor II, a lumbering lugged-sole sneaker from the 90s that was reissued in 2016, have allowed the brand to introduce itself to a much younger consumer, according to Mark Eggert, senior vice-president of footwear at Fila North America, who says the brand wants to offer a unique look, “especially with the advent of social media”.

Some of this social media buzz is organic, but often it is orchestrated. Armaand Mangat, 26, who helps manage his family’s chain of service stations in Ashburn, Virginia, first saw the Tommy Hilfiger Kith collection in an Instagram photo posted by racecar driver and Tommy Hilfiger spokesman Lewis Hamilton, 33. “They’re working with the right influencers,” says Mangat, who purchased a T-shirt from the hyped-up collection.

If Lyst’s data is any indication, Fila has benefited from persuading top models with big Instagram followings such as Kendall Jenner, Romee Strijd and Emily Ratajkowski to wear its shoes.

“We recognise that (Instagram) is where the kid is — that’s where they’re getting their information, they’re on the phone — so it was very critical for us to be there,” says Eggert. Similarly, Guess Jeans and Nautica have recently partnered with popular rappers A$AP Rocky and Lil Yachty, respectively, on limited, vintage-tinged collections.

“I didn’t know what Nautica was until Lil Yachty,” admits Hadley. Today, he counts it among his favourite brands.

For the launch of its retro collection, Perry Ellis partnered with Hypebeast, the popular streetwear site, for a series of ads and sponsored posts. The decision to market it with the site was natural, says Maccari. “You think about the young kids on my team, these are the places they look. They look to Instagram, they look to Hypebeast.”

What’s old is new again, as long as you can find it on your iPhone.

Marks & Spencer has reported falling clothing and food sales and warned that it sees little improvement in sales this year.

Like-for-like sales, which strip out the impact of new stores, were down 2.2% for the six months to the end of September.

Food sales were down 2.9% and clothing and home sales slid 1.1%.

M&S warned trading conditions for the remainder of the financial year will remain "challenging".

"We are expecting little improvement in sales trajectory," the firm said.

M&S chief executive Steve Rowe told the BBC that food was "trading behind our expectations", but the retailer was "reshaping" its business with prices lowered on hundreds of food items.

"What we are doing is making sure we protect the magic of M&S," he said.

Revenue fell 3.1% to £4.96bn, but underlying pre-tax profits ticked up 2% to £223.5m.

Shares ended the day 0.5% lower at 300.9p, valuing the company at £5bn.

How would influencers save M&S?
Analysis
By Dominic O'Connell, Today programme business presenter

Marks & Spencer has an organisation that is "silo-ed, slow and hierarchical". Not the words of a hedge fund looking to short the shares of one of the nation's favourite retailers, but the verdict of the company's own chief executive, Steve Rowe.

The damning judgement is delivered in the company's half-year results. They show the same pattern of trade of recent years - clothing in a slow slide, food a bit worse than expected, with like-for-like sales down nearly 3% - but are remarkable for their clear-eyed view of what needs to be done to break that pattern.

Fewer stores - 100 will close - a better online offering, and in general a tightening-up of management and structures that should save £350m a year.

Some critics will say that Mr Rowe is not going far enough, or fast enough, with some advocating a break-up of the company or other radical surgery.

There is a clue, though, in the half-year figures as to why stronger medicine has not been adopted. The average leasehold commitment that M&S has on its stores is 20 years. Going faster in closing stores or shrinking them would be extremely expensive.

Retail analyst Steve Dresser, director of Grocery Insight, tweeted: "You can't run a business on meal deals and 25% off wines forever but these things take time to back out of.

"Closures of established stores will also impact food as it's not always the case they didn't perform - onerous leases also impacted."

M&S plans to close 100 shops by 2022, as announced in May - a move it says is "vital" for its future.

Mr Rowe said the retailer was "continuing to review" its store closure programme and did not rule out further closures, especially as a third of its business would be online in future.

He said 32 million people visited M&S stores every year, so the retailer had "a broad range of customers".

"What we have to do is have a broad range of merchandise available that suits all their tastes," he added.

Chancellor plans High Street rates relief
Primark blames weather for sliding sales
Under its plan, M&S intends to have fewer, larger clothing and homeware stores in better locations.

The retailer points out that its clothing and homeware business has "an ageing customer base, a very wide range, a weak supply chain and and ageing store portfolio".

It is facing heightened competition from online retailers, as well as discounters such as Aldi, Lidl and Primark.

Its directors were not awarded bonuses this year because of the disappointing results.

Though he’s only 21, Dom Hadley owns nearly 30 pieces of vintage Tommy Hilfiger clothing, a collection he has cultivated across the past four years.

Yet many designs from the brand’s 1980s and 90s heyday have eluded the college student from Liverpool, who also runs a YouTube channel dedicated to vintage clothes.

So the news, last August, that Tommy Hilfiger was reissuing certain iconic styles in partnership with New York streetwear store Kith thrilled Hadley.

“That collaboration is just crazy because some of the pieces (Hilfiger and Kith owner Ronnie Fieg) chose for the collaboration, they’re all like the rarest vintage pieces,” says Hadley, who bought a zip-necked rugby shirt from the collection during a trip to Manhattan.

Increasingly, the vintage styles sought by young men such as Hadley are reappearing on racks. Brands such as Nautica, Ralph Lauren and Guess Jeans have all reissued, in one form or another, archival designs of the 80s and 90s, and last month Perry Ellis jumped on board with a limited collection of retro re-releases, the original designs tweaked only slightly.

Perry Ellis designer Michael Maccari reports that when he and his team “were looking back at the archive”, younger staff members said they would wear the colour-blocked cropped anoraks and bomber jackets that defined the brand’s pre-2000 heyday. These 90s looks have come full circle, embraced by a generation of vintage-minded millennials that missed them the first time.

Patrick Buhse, 27, marketing manager of a Harley Davidson showroom on Long Island, New York, calls these buyers a “movement”. Inspired by photos he has seen online of Snoop Dogg and Michael Jackson wearing Tommy Hilfiger in the 90s, Buhse has bought basketball sneakers and a long-sleeved polo from the Kith collection.

Perry Ellis is tapping into the retro clothing trend.
For older millennials, this thirst for retro designs is wistful: “As a kid who grew up in the 90s, (the Kith collection) brought back a little nostalgia (for) my first bottle of cologne by none other than Tommy Hilfiger,” says Reagan Lee, 35, a web designer in Sydney.

Given the graphic impact of much of the clothing, this nostalgia trip is gaining speed on visuals-happy social media platforms. A Guess T-shirt noisily striped in red and white or a Perry Ellis pullover slap­ped with a neon-green logo assert a loud aesthetic that stands out in the age of constant documentation.

“Instagram is now the most important visual medium for fashion and as a result the industry has homed in on streetwear’s graphics and logos as transmittable memes, seeing a huge revival in 90s logomania,” reads a report by Lyst, a website that tracks search activity of fashion brands.

Lyst reports that searches for Tommy Hilfiger have jumped up 34 per cent year on year, Fila searches have soared 202 per cent year on year, and searches for Gap and Nautica have begun to rise since July. Searches for Perry Ellis are flat, but its new archive collection could move the needle.

A colourful style from the Tommy Hilfiger archives.
Fila’s conspicuous shoes, such as the Disruptor II, a lumbering lugged-sole sneaker from the 90s that was reissued in 2016, have allowed the brand to introduce itself to a much younger consumer, according to Mark Eggert, senior vice-president of footwear at Fila North America, who says the brand wants to offer a unique look, “especially with the advent of social media”.

Some of this social media buzz is organic, but often it is orchestrated. Armaand Mangat, 26, who helps manage his family’s chain of service stations in Ashburn, Virginia, first saw the Tommy Hilfiger Kith collection in an Instagram photo posted by racecar driver and Tommy Hilfiger spokesman Lewis Hamilton, 33. “They’re working with the right influencers,” says Mangat, who purchased a T-shirt from the hyped-up collection.

If Lyst’s data is any indication, Fila has benefited from persuading top models with big Instagram followings such as Kendall Jenner, Romee Strijd and Emily Ratajkowski to wear its shoes.

“We recognise that (Instagram) is where the kid is — that’s where they’re getting their information, they’re on the phone — so it was very critical for us to be there,” says Eggert. Similarly, Guess Jeans and Nautica have recently partnered with popular rappers A$AP Rocky and Lil Yachty, respectively, on limited, vintage-tinged collections.

“I didn’t know what Nautica was until Lil Yachty,” admits Hadley. Today, he counts it among his favourite brands.

For the launch of its retro collection, Perry Ellis partnered with Hypebeast, the popular streetwear site, for a series of ads and sponsored posts. The decision to market it with the site was natural, says Maccari. “You think about the young kids on my team, these are the places they look. They look to Instagram, they look to Hypebeast.”

What’s old is new again, as long as you can find it on your iPhone.

Westfield shopping centre owner Scentre Group has defied the retail gloom, confirming its forecast growth in funds from operations of about 4 per cent for the year to December and reporting speciality store sales growth of 2 per cent for the 12 months to September 30.

Recent developments and strong tenant occupancy shown in today’s third quarter operating update has positively positioned the group (SCG) moving forward, the retail landlord said.

Occupancy across the portfolio sits in excess of 99.5 per cent. Foot traffic delivered a moving annual turnover of $23.9 billion in physical sales.

Sales growth within speciality stores is up 2 per cent for the year to September 30, ahead of the in store sales increases of major retailers, up 1.3 per cent for the year.

Scentre Group chief executive Peter Allen said high quality space with strong traffic flow was in high demand.

“Our objective is to own and operate the pre-eminent living centre portfolio in Australia & New Zealand and in the last three months alone, we have successfully opened more that $1 billion worth of redevelopment works across four Australian states,” said Mr Allen.

The group expects funds from operations to increase about 4 per cent for the 2018 calendar year.

Scentre forecast a distribution for the year of 22.16 cents per security, an increase of 2 per cent.

Five redevelopments have been completed this year to the tune of $1.1bn. The centres in New South Wales, Victoria, Queensland and Western Australia have increased their combined net lettable space by 106,550 square metres.

Westfield Coomera, north of the Gold Coast, recently completed the biggest investment works of the year.

Mr Allen said the redevelopments would set the centres apart from competitors.

“Each redevelopment has been designed to elevate the customer experience, differentiate our product offering and maintain our position as the premium location for our retailers to succeed,” he said.

A $NZ790 million New Zealand redevelopment is currently underway and is expected to be completed by the end of the year.

Tougher retail trading conditions in the next six months could see a new wave of asset sales in the sector, as fashion chain Sussan once again goes in search of a buyer with a new adviser at its side.

This time Sussan hired boutique Moelis to achieve a successful sale of the group built by a member of the billionaire Gandel family, Naomi Milgrom.

It comes as some market watchers believe retailers are in for an even tougher six months as a falling housing market and weaker economy are expected to take their toll on discretionary spending.

Earlier this year, investment bank Citi was working for Ms Milgrom to find a buyer for her business, while last year Deloitte was at hand. It is understood that her price expectations for the business are high.

But with Topshop recently brought to its knees in the Australian market, now could be the right time to find a buyer.

According to Sussan Group’s 2016 accounts, the company generated $459 million in revenue and $2.3m in net profit, lower than the $36m in the previous financial year, as it was forced to compete with global brands new on the scene, including Zara, Topshop and H&M.

Within the Sussan stable are brands such as Sportsgirl, Suzanne Grae, as well as the Sussan chain, and it has more than 550 stores in Australia and New Zealand.

Sportsgirl and Sussan are the more successful brands, with Suzanne Grae, which makes up about 200 stores, at one stage generating about $130m in annual sales and $6m in earnings before interest, tax, depreciation and amortisation.

Ms Milgrom bought Sussan from her billionaire parents, Marc and Eva Besen, and her siblings in 2003, but she has been eager to exit for some time as she concentrates on her philanthropic pursuits.

Fay and Sam Gandel opened the first Sussan store in 1939 on Little Collins Street in Melbourne, selling lingerie, and after growing it throughout the country, expanded beyond traditional lingerie and blouses in the 1960s.

Sussan stores previously capitalised on the strong demand for sleepwear, but the brand has lost market share to rival Peter Alexander, which is held within the stable of billionaire retailer Solomon Lew’s Premier Investments, owner of the Just Group.

Meanwhile, Australian label Lorna Jane hired KPMG for a strategic review around August, and Premier Investments could be a retailer that is considering an acquisition of the activewear brand.

Lorna Jane is owned by founders Bill and Lorna Clarkson, as well as private equity firm Champ Ventures, which acquired a 40 per cent interest in 2010.

Premier could integrate the apparel brand into its existing portfolio — which includes Peter Alexander, Just Jeans, Jay Jays, Portmans, Jacqui E, Dotti and Smiggle — where it could be a good fit.

However, weighing against a possible acquisition by Premier is that the business is based in Brisbane and the Clarksons are thought to be eager to retain a majority interest.

NEW YORK, United States — Ralph Lauren returned to growth in North America in its second fiscal quarter as a strategy to intensify marketing on social media bore fruit, also helping the upscale fashion group top Wall Street revenue estimates on Tuesday.

Its increased focus on social media is aimed at wooing more high-spending millennials as a lack of big discounts and promotions has shrunk its clientele in recent years.

The New York-based company said it spent about 30 percent more on marketing in the three months ending in September, compared with a year earlier, targeting events including its 50th Anniversary Fashion Show at New York Fashion Week.

Its revenue from North America rebounded, rising 1.4 percent after several quarters of declines.

Revenue overall rose 1.6 percent to $1.69 billion, better than analyst expectations of a 0.9 percent fall.

Net income rose to $170.3 million or $2.07 per share in the second quarter ending on September 29, from $143.8 million or $1.75 per share a year earlier.

Excluding one-time items, Ralph Lauren earned $2.26 per share, exceeding Wall Street estimates for the ninth consecutive quarter.

Analysts on average had expected earnings of $2.16 per share and revenue of $1.65 billion, according to IBES data from Refinitiv.

Zalando, Europe's biggest online-only fashion retailer, is working to counteract a fall in average order size and to ensure more returned goods are resold after it reported the slowest sales growth since it was launched a decade ago.

Facing rising competition from e-commerce players like Amazon.com and chains like H&M, Zalando cut its 2018 outlook for a second time in as many months in October due to the unusually long, hot summer, sending its shares tumbling.

Shares in Zalando, which have fallen by a quarter in the last year, were 6.4 percent lower at €32.19 by 10:14 GMT, making them the biggest decliners on the German MDAX index .

"Weaker sales growth versus consensus and continued deterioration in basket economics will disappoint," said UBS analyst Andrew Hughes, who rates Zalando "sell."

Third-quarter sales rose 12 percent to €1.2 billion ($1.37 billion), missing average analyst forecasts for €1.22 billion, and well below the 20 to 25 percent annual growth it has targeted for years.

In contrast, British rival ASOS last month met its full-year sales growth forecasts and reported a 28 percent rise in pretax profit, flagging years of double-digit sales growth to come and propelling its shares higher.

About half of the products Zalando sells are returned, with most of them processed and resold.
Zalando reported a quarterly adjusted loss before interest and taxation of €39 million, which it blamed on a slow start to sales of colder weather clothing, as well as rising fulfilment costs and problems with how it handles returns.

Returns

About half of the products Zalando sells are returned, with most of them processed and resold.

Previous changes to the handling of returned goods that needed to be ironed or repaired resulted in fewer of them being refurbished, an issue that has since been resolved, co-CEO Rubin Ritter told journalists.

Zalando said profitability was also hit by a 7 percent fall in average order size to €57.50, despite efforts to bolster orders by adding beauty products to its range in the hope that customers would add a lipstick when they buy a dress.

The company is taking steps to try to increase the profitability of smaller orders, including making size recommendations to reduce the likelihood of returns, and trialling a minimum order value of €25 in Italy, Ritter said.

He does not yet know if Zalando will extend that to other markets, as some analysts have recommended.

Higher transport costs and investments in logistics also weighed, although Zalando trimmed its expectation for capital expenditure for 2018 to €300 million, from a previous €350 million, as projects are spread over a longer period of time.

Ritter said Zalando planned a new centralised warehouse to process shipments of garments from brands before they are sent to regional centres for delivery to customers, as it seeks to increase the efficiency of its logistics network.

The brand returned to growth in North America in its second fiscal quarter as a strategy to intensify marketing on social media bore fruit.

NEW YORK, United States — Ralph Lauren returned to growth in North America in its second fiscal quarter as a strategy to intensify marketing on social media bore fruit, also helping the upscale fashion group top Wall Street revenue estimates on Tuesday.

Its increased focus on social media is aimed at wooing more high-spending millennials as a lack of big discounts and promotions has shrunk its clientele in recent years.

The New York-based company said it spent about 30 percent more on marketing in the three months ending in September, compared with a year earlier, targeting events including its 50th Anniversary Fashion Show at New York Fashion Week.

Its revenue from North America rebounded, rising 1.4 percent after several quarters of declines.

Revenue overall rose 1.6 percent to $1.69 billion, better than analyst expectations of a 0.9 percent fall.

Net income rose to $170.3 million or $2.07 per share in the second quarter ending on September 29, from $143.8 million or $1.75 per share a year earlier.

Excluding one-time items, Ralph Lauren earned $2.26 per share, exceeding Wall Street estimates for the ninth consecutive quarter.

Analysts on average had expected earnings of $2.16 per share and revenue of $1.65 billion, according to IBES data from Refinitiv.

Greencross chief executive Simon Hickey says the "world has changed" since the pet and vet retailer rejected a $770 million takeover offer from private equity investors TPG Capital and Carlyle Group two years ago.

TPG and Carlyle offered $6.75 a share but the Greencross board sent them packing, saying the offer "fundamentally undervalued" the company.

Despite a 13 per cent rise in underlying earnings (EBITDA) and a 20 per cent increase in revenues since 2016, Greencross is now recommending shareholders accept a $5.55-a-share cash offer from TPG that values the integrated pet and vet care company at $675 million.

Mr Hickey defended the board's recommendation, saying valuations for pet care retailers worldwide have fallen because of the entry of Amazon and other online retailers such as Chewy.

"Two years ago you're talking about a different time and a different perspective – the world has changed," Mr Hickey said, citing a 50 per cent fall in the valuation of British-based integrated pet and vet care retailer Pets At Home.

"The board has looked at this versus a range of other options and they believe it's in the best interest of shareholders," he said.

The offer, through a scheme of arrangement, represents a 22 per cent premium to Greencross' share price last week, before the stock went into a trading halt, a 34 per cent premium to the "undisturbed" share price on October 9, before takeover speculation emerged, and a 54 per cent premium to the share price in September, when Greencross reported a 14 per cent fall in underlying net profit.

Greencross shares emerged from the trading halt on Monday and jumped 19 per cent to $5.40, the highest level since March.

The board's support for the offer – which was foreshadowed by Street Talk on Monday – also reflects Greencross' weakened balance sheet – the integrated pet care and vet clinic company has about $268 million in net debt representing 2.8 times EBITDA.

Amazon moves in
Amazon, which has taken sales and market share from pet care retailers in the US, launched its pet supplies range in Australia in September, offering brands such as My Dog, Hills Science Diet and Royal Canin​ and products such as flea treatments, accessories and snacks.

More than a dozen direct-to-consumer retailers, including Pet Circle, My Pet Warehouse and Pet Shop Direct, have also entered the Australian market, adding to pricing pressure, while National Vet Care is snapping up vet clinics, making it harder for Greencross to expand via acquisition.

Greencross, which owns about 250 stores under the Petbarn, City Farmers and Animates banners and operates more than 190 vet clinics, is still growing sales but margins are coming under increasing pressure, crimping earnings.

At Greencross' annual meeting on Friday, Mr Hickey said top-line sales had grown 7.6 per cent in the first 17 weeks of 2019 but indicated first-half earnings would fall, saying cost savings were being reinvested into strategic initiatives including online retailing.

Citigroup analyst Sam Teeger believes Petbarn's prices are 18 per cent higher than those at Amazon and 22 per cent more than Pet Circle's.

"This suggests downside risk to Greencross' retail gross margins could increase over the near term as the company is required to invest in price," he said.

Cash and share option
TPG's head of Australia and New Zealand, Joel Thickins, said Greencross business, brands and products would continue to grow under private equity ownership but did not reveal detailed plans.

TPG has considerable experience in the global pet care market. TPG and Leonard Green are estimated to have made more than $US3 billion from their investments in US pet care company Petco. TPG was also the largest shareholder in Petbarn's previous owner, Mammoth Pet Holdings, and gained a 19 per cent stake in Greencross in 2013 when Petbarn and Greencross merged.

Subject to certain conditions, Greencross shareholders will be able to elect to receive $5.55 a share cash for all their shares, $5.55 cash for 50 per cent of their shares plus shares in the bidding vehicle – which may eventually be sold or floated – or $5.55 cash for 25 per cent of their stock plus shares in the bid vehicle.

Greencross is reviewing paying a fully franked dividend of up to 21¢ a share before the scheme implementation date. The offer price would be reduced by the value of the dividend but franking credits would lift the total amount received by eligible shareholders to $5.64 a share.

The offer values Greencross at $970 million including debt, and represents a multiple of about 10 times 2018 EBITDA and 14 times EBIT.

Greencross shareholder Spheria Asset Management, which owns about 3 per cent, said its intention was to vote in favour of the scheme in the absence of a higher offer.

The scheme is subject to limited conditions and is not subject to financing or due diligence. A scheme booklet and independent expert's report are expected to be mailed to Greencross shareholders in early calendar 2019 and they are expected to vote on the scheme late in the first quarter of 2019.

Greencross is being advised by Macquarie Capital, Allier Capital and Clayton Utz, while UBS and Credit Suisse are advising TPG.

Fashion and apparel retailers, salons and barbershops and specialty food and drinks stores are all expected to benefit from increased spending ahead of Melbourne Cup Day.

Retail spending figures for the past week were up 17 per cent compared to the rest of October, which admittedly was a slower than usual month, according to retail management software provider Vend.

The true impact of the Melbourne Cup will be revealed in the coming days, but it is expected to be similar to last year’s 6 per cent increase in retail spending compared to the October average, according to Vend.

Last year, fashion and apparel stores saw the biggest increase in spending in the week preceding Melbourne Cup, with an 8 per cent rise, followed by salons and barbershops, with a 4 per cent rise, and specialty food and drinks stores and florists, which both saw a 3 per cent increase.

Adelaide led the country, spending 11 per cent more than the October average in the week prior to the Cup last year, followed by Melbourne with 7 per cent, Sydney with 6 per cent and Perth with 4 per cent. Brisbane stores had a 13 per cent drop leading up to the Melbourne Cup last year.

“We’re confident spending will continue to lengthen its stride over the next week, but overall it’s likely to be neck and neck with 2017. Currently the average sales value over the past week is actually three percent lower than it was last year,” Vend country manager Dave Scheine said.

“But even a 6 percent boost in one week like we saw last year is still a real win for retailers – and probably a far better return than most of us will see on our Melbourne Cup bets on Tuesday.”

Squeeze on suppliers

This is in line with Kim McMillan’s sales so far in what she says is the busiest month of the year for her Melbourne business, House of Adorn, which supplies the raw materials to milliners and designers.

“I would say business has been steady with previous years,” she told IR.

For McMillan, the spring racing season begins in July, when designers begin buying materials in bulk to produce hats, fascinators and headpieces for major retailers, including David Jones and Myer.

Smaller designers creating bespoke pieces tend to purchase goods in August and September, followed by do-it-yourselfers, who order materials in October.

“October is our busiest month. We get busy as the weather gets better and people start going to events and weddings,” McMillan said.

In terms of fashion trends, McMillan said that styles tend to last longer in Australia than the UK, where she previously worked as a designer and sold piece through Asos, Fortnum & Mason and Rivers.

“I find Australia a bit more conservative; what may have been in trend last year still works this year. Instead of setting the trend, [Australians] are following the trends,” she said.

But while styles may last longer Down Under, the buying process, as in other parts of the world, is speeding up. McMillan noted that designers used to plan their collections, and purchase materials from suppliers like House of Adorn, a year or at least several months in advance. That is no longer the case.

“It definitely puts more pressure on the designers, because they have to make in shorter amounts of time, and it puts pressure on suppliers, because they’re coming in with a bulk order that we have to source really quickly.”