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New ABS data has revealed a third consecutive quarter of declining retail sales measured by volume, effectively showing the nation’s ‘retail recession’ has now extended to nine months. 

Volume data excludes the impact of inflation on retail sales, which have been trending up for much of this year. 

The last time there were three consecutive quarters of declining retail volume sales was in 2008 – at the time of the Global Financial Crisis. 

ABS figures show a sales decline of 0.5 per cent for the June quarter, which followed declines of 0.8 per cent in the preceding quarter and 0.4 per cent in the three months to December 31. 

ARA CEO Paul Zahra said the decline demonstrates a continued slowdown in consumer spending – and adds to the pressure retailers are already under as the cost of doing business skyrockets.  

“Retailers are seeing less demand at a time where wages, rents, insurance, utilities, supply chain and materials are all increasing in cost,” said Zahra. 

“Sales volumes are a good indicator of the health of retail as sales revenue numbers can mask pricing and hence, profitability.” 

Zahra used the data as the reason why the Reserve Bank should continue to show restraint in future interest rate decisions following this week’s decision to hold the base rate.  

For the month of June, volume sales fell by 1.2 per cent year on year. By category, food retailing sales volume was down 0.7 per cent and for the first time since September 2021’s pandemic lockdowns, sales at cafes, restaurants, and takeaway food services dropped, albeit by a modest 0.1 per cent. 

Sales of household goods were down by 1.5 per cent by volume, and in department stores by 1.4 per cent. 

“Clothing and apparel sales received a sugar-hit due to increased promotional activity with heavy discounting heading into winter clearance sales events,” Zahra noted, with volume sales up by 1.1 per cent and the only category to show growth for the quarter.  

“Most other categories suffered as a result of consumers prioritising essentials like food and cutting back on discretionary spending.”

Homegrown swimwear brand Seafolly has been sold by its private equity owner, US retail specialist L Catterton, to an Asian strategic buyer in a deal valuing the famous label at about $70 million.

Despite the tough market for retail, the sale marks the second struck this week for an Australian brand, after Bondi Sands was traded by its founders for $450 million to Japan’s Kao Corporation on Tuesday.

Seafolly’s buyer is understood to be an entity called Bondi Brands Group, which was created in June, according to documents obtained from the Hong Kong Companies Registry. The key founder is apparel manufacturer Vision Brands Group, but there are other offshore shareholders attached to Bondi Brands.

The deal completes a four-month sale process led by FTI Consulting which attracted international strategic players and local family offices.

L Catterton declined to comment on its exit from Seafolly, which was founded in 1975 by Peter and Yvonne Halas.

Seafolly also offers loungewear, knits and beach cover-ups. Over the years its swimwear has been promoted by ambassadors such as Kristy Hinze, Miranda Kerr and Behati Prinsloo.

Like so many in the rag trade, Seafolly founder Peter Halas is a story of immigrant success. Born and raised in Hungary, Mr Halas arrived in Australia in the wake of Hungary’s 1956 Communist Revolution. In June 1957, he settled in Bondi Beach, where he later met his wife.

Mr Halas got a job as a manufacturer’s sales agent, flogging sportswear and swimwear on commission to hundreds of small customers. He became a partner in a swimwear manufacturer called Waterlilly. About a decade later, in 1975, he founded his own company Peter’s Folly, which later became Seafolly. Back then, Peter’s Folly was selling denim sundresses, but later reverted to swimwear.

The label remained a family business until 2014, when the Halases sold a 70 per cent stake for about $70 million to L Capital Asia, the private equity arm of global luxury goods giant LVMH.

There were plans to turn the bikini company into a global lifestyle brand, but Seafolly ran into trouble over the past decade.

L Catterton bought L Capital Asia in 2016, inheriting numerous Australian brands including Seafolly, 2xU and RM Williams. The new group changed local management in 2019, when Ondrej Ruzicka joined the firm and began dealing with the various legacy brand issues.

By 2020, Seafolly fell into administration. The Halas family had cut all ties just two years earlier. Seafolly chief executive Brendan Santamaria joined in May 2020, and administrators KordaMentha were appointed soon afterwards amid COVID-19 lockdowns. Mr Santamaria will stay on under the new owners.

The business was battling onerous supplier and lease obligations locally and globally, and the summer of bushfires had also taken a toll on sales. Seafolly’s delivery partner, Toll, suffered a series of ransomware attacks, affecting deliveries.

Rescue plan

L Catterton was the owner and major creditor of Seafolly. KordaMentha previously flagged that Seafolly was unable to pay its debts and may have been insolvent from early April 2020. Around this time, Seafolly also purchased rival swimwear group Jets, which had also collapsed, although Jets is mainly known as a wholesale and e-commerce offering.

Within months, creditors backed a “rescue” plan by L Catterton. It is believed that L Catterton pumped in another $10 million of equity in the administration process. Seafolly also found backing from financier Longreach Credit Investors, which provided funding.

Mr Ruzicka, along with Mr Santamaria, has led the turnaround at Seafolly. The store footprint has shrunk to 30 outlets from more than 60 when the brand was riding high. Seafolly is also sold to third parties in the US such as department store Nordstrom.

Seafolly has about 32 per cent of the women’s fashion swimwear market in Australia and is on track to deliver sales of $90 million in the 2023 financial year, according to buyer documents. Total sales, according to the business’ three-year financial plan, are forecast to increase to $129.7 million in the 12 months to the end of June 2026.

L Catterton also sold RM Williams to billionaire Andrew Forrest’s private investment company Tattarang for about $190 million in 2020.

As for Seafolly, former chief executive Anthony Halas, son of Peter Halas, hopes the brand can return to its place in the sun. “I hope they are good new owners and it is someone who can bring it back to its former glory,” he said.

The administrators of interior and homewares business Fenton & Fenton are looking to find a buyer for the popular brand, which has axed nearly 60 workers and left some customers hundreds of dollars out of pocket.

The Melbourne-based business, founded by Lucy Fenton in 2008, sold eclectic furniture, homewares and art. It had showrooms in Prahran and Collingwood in Melbourne, as well as an online store, which has been replaced with a notice announcing it has appointed Ernst & Young (EY) as liquidators.

EY turnaround and restructuring leader Adam Nikitins said he and fellow administrator Stewart McCallum were still assessing the business but noted it had a loyal online customer base. Fenton & Fenton has a combined 428,000 followers on Facebook and Instagram.

Nikitins said he and McCallum were reaching out to impacted customers but confirmed some who made orders may not receive a refund unless they are a creditor.

“Customers will not be able to recover payments for unfulfilled orders other than through participating in any dividend in the winding up,” he told this masthead.

“There may be limited circumstances in which customer orders will be fulfilled where title to stock has already passed to a customer. The law in this area is complex and requires a specific fact pattern to be in place in order for orders to be completed. The liquidators have established a call centre to reach out to potentially impacted customers in order to accelerate the understanding and resolution of these matters.”

Customers who have outstanding credit or gift cards will not be remunerated.

“Regrettably, gift card customers will not be in a position to redeem their gift cards. Gift cardholders should make a claim as unsecured creditors in the Fenton & Fenton liquidation.”A number of customers took to Fenton & Fenton’s most recent Facebook post to query whether they would be refunded for their orders or outstanding credit. Fenton & Fenton was posting on social media as recently as Monday. It appears comments have been disabled on its Instagram account.

Nikitins said the business, which he described as “in a state of stasis”, ceased trading and terminated 58 employees on Wednesday afternoon. He said a number of interested parties had already reached out about buying the business.

“There’s been strong interest in the brand, intellectual property, the trademark and the database, so we’re pulling together necessary information to respond to those parties who have expressed interest in purchasing that,” he said.

The administrators will also assess Fenton & Fenton’s inventory and the “most appropriate form” to realise its value “for the benefit of creditors”. “We’re exploring all avenues and options available for us,” they said.

Depending on the interest, the business may be sold in its entirety, which would save the jobs of 58 employees, or in a piecemeal manner.

“There is a connection with the brand that could be enlivened if all parties were willing and able,” Nikitins said.

Lucy Fenton is the sole director of the business and has been contacted for comment.

Rising interest rates and operating costs including fuel, rent, and utility bills have put households and businesses under pressure, pushing up the number of expected insolvencies.

Entrepreneur Irene Falcone recently appointed administrators for her non-alcoholic drinks business, while chocolate maker Ernest Hillier collapsed for a second time in late June.

The shock collapse of popular wedding dress boutique The Bridal Atelier left brides-to-be across Australia stranded without their dresses, while weight loss company Jenny Craig folded in May.

Fashion has never been known for its strong links to reality, but a new trend is emerging where brands are creating digital imagery instead of real photographs to sell clothing.

Australian fashion business Jag, which is owned by APG & Co (stablemates include Sportscraft and Saba), is using enhanced digital software to create its campaign images in what it believes is a local first.

Paying models for a usage fee, the company will “sew” garments on to avatars to be used repeatedly. CEO Elisha Hopkinson calls it a “new frontier” for the company and says that “AI will play a vital role in how we work going forward”.

The brand’s latest campaign was shot using real models who were photographed in a variety of poses. Jag’s digital art team then superimposed clothing on them, cutting down the time, resources and funding required for full-scale fashion shoots, which often run to hundreds of thousands of dollars.

“This is a best-of-both-worlds scenario,” said Ms Hopkinson. “Models are paid for their likeness, and we can save time and money by using their images in different ways.”

To enhance the realism of the images, fabric is scanned to articulate the way it would flow and drape on a real person.

Ms Hopkinson dismissed the idea that using digital imagery was less impactful than shooting real images.

“If I was to show you two images – one that is rendered by 3D software and one that is shot by us, I doubt you’d be able to tell the difference,” she said. “There is absolutely the playfulness we want in the campaigns. But sometimes people just want pictures of a piece of clothing on a model, not necessarily a story.”

It’s a claim Kathy Ward, marketing director at Chic Model Management, rejects, saying that “authenticity is so important”.

“We believe consumers still want a real image,” she said. “This is how you build brand confidence. Seeing the way clothes actually look on models is not just important, it is necessary.”

Like many other industries, fashion is embracing AI. Wrapd, the discount sales platform founded by former Young Rich Lister Julie Stevanja and her sister, Sali Sasi, recently released an entire campaign created purely from AI. It cost just $60, compared with the $30,000 the founders spent on the first campaign they produced for Wrapd (then known as Her Black Book).

“As a start-up, we don’t have the luxury of ongoing shoot budgets,” said Ms Stevanja. Time is a factor, too.

“Creating AI campaigns was radically faster and cheaper than a real shoot,” Ms Stevanja said. “It would have taken a team months of researching, planning, casting, shooting, and retouching, not to mention the logistical wrangling. We were able to achieve shoots in locations all around the world in a single evening, something that would be physically and financially impossible in the real world.”

Ms Stevanja said she spent about 40 hours creating around 1000 separate images using AI prompts, but settled on just 30 for the final edit.

“It’s a totally different approach to a photo shoot,” she said. “You have less direct control of the outcome – for example, sometimes AI completely ignores a prompt, or does the opposite of what you ask, not to mention the absurdities you have to scrap altogether, like when the talent suddenly sprouts three legs or is sitting awkwardly on an invisible chair.”

Still, she adds, “absolutely anyone can learn the skill, because the trial and error stage is essentially free”.

Bunnings will cut 100 jobs from its New Zealand head office in a bid to become more efficient at a time when consumers are slowing their spending and seeking lower prices.

The retailer plans to cut about 30 per cent of 340 staff in areas including finance, human resources, merchandise, marketing and retail operations.

Bunnings managing director Mike Schneider said the restructure would not impact more than 5000 employees at the company’s 50 stores, trade centres and distribution centres in New Zealand.

“We continue to be absolutely committed to the New Zealand business and its growth and success,” he told The Australian Financial Review.

“We have really thought about this, and it’s about improving the operating model and about leveraging scale and cost. We see this very much as helping drive more simplicity and more group alignment.”

The New Zealand business will still have localised buying and marketing.

Mr Schneider said the job cuts were considered to help drive greater alignment between the Australian and New Zealand business. Any cost savings are not material to the wider group, which will report its full-year financial results in a few weeks.

“The outcome of that is more investment into our store network, more investment into our frontline team and more investment in value for our customers as well,” he added.

Wesfarmers-owned Bunnings also recently restructured its middle management store ranks in Australia, moving from eight regional managers to four general managers. Bunnings posted $17.7 billion in sales and $2.2 billion in earnings before tax for the 12 months to the end of June 2022. The retailer remains the key contributor to Wesfarmers’ profits and cash flow.

Wesfarmers chief executive Rob Scott warned in May that consumers were finding it much tougher, and he was bracing for an even more difficult second half with rising costs continuing to pressure both consumers and businesses. Since then, interest rates have moved even higher.

Australia’s biggest department store Myer revealed its sales growth has almost ground to a halt over the past six months as trading conditions deteriorated after the RBA’s barrage of interest rate rises, sending its shares tumbling.

In one of the first trading updates by a major retailer this earnings season, Myer on Tuesday said sales edged up just 0.4 per cent in the six months to the end of July after double-digit growth in the preceding half, limiting its total sales growth for its financial year to 12.5 per cent.

While net profit for the year will come in at $69 million to $73 million, up as much as 21 per cent, only $4 million to $8 million was generated in the second half, it said in a statement to the ASX.

Myer’s stock plunged 14.1 per cent to 61 cents in mid-morning trade.

The company will release its audited financial results in September.

Chief executive John King said Myer had been able to secure solid sales and profit growth despite the macroeconomic headwinds that hit the retail sector in the June half.

“We continue to tightly manage costs, inventory and cash to ensure we have a strong balance sheet as we begin [the new financial year], where we expect the ongoing uncertainty around the macroeconomic environment to persist,” he said.

Retail analysts are expecting further signs of a spending slowdown during company earnings season this month, as national spending data reveals that households are continuing to reduce their expenditure to balance rising mortgage, energy and grocery costs.

There was further evidence on Tuesday that rising household expenses are having an impact on the outlook, with the Westpac-Melbourne consumer sentiment index showing confidence fell further into “deeply pessimistic” territory in August.

The index slipped 0.4 per cent for the month. Westpac senior economist Matthew Hassan said pressure on family finances continued to weigh on the outlook.

The department store sector appears particularly vulnerable to a spending slowdown; turnover at the nation’s department stores fell by 5 per cent in June, according to Australian Bureau of Statistics figures.

Retail analysts are continuing to prefer the supermarkets and discount department stores like Kmart over fashion retailers and businesses focused on “big ticket” purchases in the current trading environment.

“The consumer is reducing spending in aggregate and when they do spend they are trading down by price point in apparel and general merchandise,” UBS analysts said in a recent note to clients.

Myer competitor David Jones has recently conducted an efficiency review of its store operations, which will result in up to 100 redundancies as the business looks to streamline its operations under new owner Anchorage Capital.

But David Jones chief executive Scott Fyfe told this masthead last week that he expects the consumer outlook to improve in the lead-up to Christmas.

Myer has emerged from the pandemic with strong trading growth over the past two years, and the company reported its best profit result in close to ten years in 2022. Its shares are still ahead by more than 20 per cent over the past 12 months, despite plunging on Tuesday.

King, who has led the turnaround of the business, has confirmed he intends to resign from his role in 2024 and a global search is being conducted for his replacement.

Department store Myer says sales and profit are continuing to grow despite the challenging economic environment, with its online business continuing to strengthen.

In a trading update issued today based on unaudited accounts, the company said it expects to report a 12.5 per cent increase in sales to $3.4 billion for FY23 and a full-year tax-paid profit somewhere between $69 million and $73 million. While that projection marks an increase of up to 21 per cent year on year, it is less than a Refinitiv forecast of $88.5 million, leading to a decline in its share price in Tuesday trading.

Online sales accounted for 20.5 per cent of the company’s turnover. A 4.5 per cent fall in FY23 reflected increased online shopping when physical stores were closed due to Covid-related restrictions during the previous comparable period. Online sales in FY23 are up 163.2 per cent on FY19, the last full trading year prior to the advent of the pandemic.

Myer said overall second-half sales extended 0.4 per cent despite a “deteriorating” trading condition while tax-paid profit for the half is expected to range between $4 million and $8 million.

CEO John King said the business continues to “tightly” manage costs, inventory and cash to ensure a strong balance sheet as it begins its new calendar year.

“Myer’s Customer First Plan has continued to deliver both positive sales growth and positive profit growth in FY23, despite the prevailing macroeconomic headwinds that have buffeted the retail sector throughout the second half.”

King will retire in the second half of FY24 and return to the US. The company has engaged search firm Egon Zehnder to recruit his replacement.

Amazon has confirmed plans to build Australia’s largest warehouse, one which will put a fleet of robots to work in the Melbourne suburb of Craigieburn.

The automated fulfilment centre, which at 209,000 square metres will be the size of 11 MCGs, will be 830 square metres larger than Amazon’s robotic fulfilment centre in Kemps Creek, Western Sydney, which was its first such Australian centre. The new site is scheduled to open in 2025.

As with the Kemps Creek site, the Craigieburn facility will have robots working alongside humans. The robots will collect stock from around the warehouse and bring it to employees so they can prepare packages for shipment.

“Instead of the associate going to the items, the items are coming to the associate. That helps speed [up] order processing time,” Amazon Australia country manager Janet Menzies said.

The investment in the robotics site is another sign that the e-commerce giant, which has poured $8.4 billion into its Australian operations since its launch here, is taking a long-term view of the local retail market.

Amazon has been upbeat about its growth opportunities in Australia, despite a deluge of data that suggests household spending is contracting in the face of surging living costs.

Analysts from investment and advisory group Jarden predicted this year that the total value of merchandise sold on Amazon in Australia would hit $5 billion in 2024.

Menzies said last month that the company has experienced a jump in subscription orders for everyday grocery items. It was also upbeat about its July Prime Day sales event.

Amazon shares are up by about 12 per cent over the past month. The stock surged after the retailer surprised the market with stronger than expected quarterly earnings. The US-based company posted sales growth of 11 per cent year on year despite a global spending slowdown.

Menzies said the investment in the new Melbourne site would be a win for the retailer’s third-party sellers, who would be able to store products there.

Amazon will recruit for new types of warehouse jobs at the Craigieburn facility, including IT and engineering roles to maintain the robots. The site will employ 2000 staff once fully operational.

Increasing investment in automated warehouses across Australia’s retail sector has driven the need for a range of new logistics jobs over the past few years.

Supermarket giant Coles is also looking for a new generation of tech-savvy warehouse workers to help staff its automated grocery facility in Queensland. 

As temperatures dropped throughout July, a slew of consumer and spending data left Australian retailers with little doubt that winter had finally come.

Data from banking giant ANZ this week suggested overall spending was down by 10.3 per cent in the first weeks of July compared with last year, while over at NAB consumer surveys showed Australian households were scrimping on meals out and little luxuries to ensure they could afford to cover their insurance policies and children’s activities.

Retail sales data released on Friday showed turnover dropped by 0.8 per cent across the country in June, with the sharp fall coming off the back of weaker than usual spending at end of financial year sales.

At the same time, brands are struggling to balance their own budgets – a survey of more than 200 local retailers by e-commerce software platform Shopify this month shows 58 per cent of businesses say they’ve had to pass on most of higher input costs to their customers.

But over on the ASX, consumer stocks managed to shrug off the gloom. The S&P/ASX200 consumer discretionary index had posted monthly gains of more than 3.5 per cent as of Friday, and consumer stocks accelerated after better-than-expected inflation data on Wednesday.

Kmart, Target and Bunnings owner Wesfarmers was ahead by close to 1 per cent for the month on Friday. Online retailer Kogan.com was up by about 30 per cent for the month, surging this week after a trading update confirmed that while overall sales were slowing, profitability was improving.

Rivers and Katies’ operator Mosaic Brands shot up by 19 per cent last Friday after revealing it would swing back to profit for 2023, as chief executive Scott Evans flagged that the retailer’s cohort of older shoppers was actually continuing to spend in the face of cost of living pressures.

“Do we think that the next six months is going to be all wonderful? No. Do we think it’s Armageddon? Not quite,” he said.

Analysts and economists have been forecasting the spending slowdown for more than a year now, with many stock watchers already baking this pessimism into their models.

And while there is no doubt that conditions are softening overall, recent spending data suggests there could be some winners despite the slowdown.

Australian consumers have increasingly been making trade-offs in their spending to make their dollars stretch further, and to be able to afford the parts of their budgets that they can’t bear to axe.

The phenomenon of “trading down”, or moving from one product to a lower-cost alternative, could open growth opportunities for a range of retailers, including discount retailers such as Aldi and Kmart.

UBS analysts said this month that Aldi was most likely to win market share in the current trading environment. The investment bank said last month that it also preferred brands that “are lower priced and able to win from a trade-down”, such as Wesfarmers’ discount department store Kmart.

“The consumer is reducing spending in aggregate and when they do spend they are: (1) trading down by price point in apparel and general merchandise,” the UBS team said.

Kogan.com founder Ruslan Kogan said this week that there were growth opportunities as consumers revisited their budgets, with the online retail platform seeing an improved performance in its phone plans business and its loyalty subscription program, Kogan First, even as overall sales slow.

“In this environment, where people are looking to save more money, that [program] has been very popular,” he said.

There’s also some evidence that older consumers are helping drive sales in areas such as fashion, even though clothing and apparel sales have weakened since the country emerged from lockdowns.

CommBank iQ cost of living data for the first months of this calendar year showed that consumers aged over 55 have increased their spending beyond inflation compared with 2022, and shoppers aged over 35 increased their clothing spending by 3.1 per cent in the first quarter of the year, as younger shoppers pulled back.

Things are also rosier at the luxury end of the retail market, where brands such as Chanel have had rapid growth as the world emerged from pandemic lockdowns.

Shares in ASX-listed designer brands platform Cettire have surged by more than 140 per cent year-to-date as the business reports that revenue momentum is growing rather than slowing.

Meanwhile, this month’s trading update from travel operator Flight Centre suggests that while households are working harder to balance budgets, discretionary dollars are still being spent when it comes to holidays.

Shares in the travel agent have advanced by more than 20 per cent this month and the business expects 2023 earnings will be better than previously forecast, coming in at between $295 million and $305 million.

Flight Centre managing director Graham “Skroo” Turner said in the trading update that the year-on-year growth in outbound travel suggested consumers are putting holidays first.

“Looking ahead, our expectations are that leisure travellers will continue to prioritise holidays
and experiences over other areas of discretionary spending,” he said.

Tapestry, the owner of brands including Coach and Kate Spade, agreed to acquire Versace and Michael Kors parent Capri Holdings in an $US8.5 billion ($13 billion) deal that shows the wave of consolidation in the luxury-goods sector is far from finished.

Tapestry and Capri separately built up their own stables of high-end brands in recent years, but they’ve been no match for the breadth and depth of European luxury houses LVMH and Kering. The continental giants own brands that touch on an array of sectors, including apparel, ready-to-wear, jewellery, watches and alcohol.

The Capri acquisition is an attempt to try to compete more effectively against luxury’s top players, particularly in handbags — strengths for both Coach and Michael Kors — and shoes. Tapestry owns the Stuart Weitzman footwear brand and Capri owns Jimmy Choo.

“By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach,” Capri chief executive officer John Idol said in the statement.

New York-based Tapestry is paying $US57 a share in cash, according to a statement, a 65 per cent premium over Capri’s last closing price. The $US8.5 billion enterprise value includes $US1.7 billion in net debt.

Capri shares surged as much as 58 per cent in New York trading, their biggest leap in the company’s nearly 12 years on the market. Tapestry shares fell as much as 10 per cent.

“Tapestry has made a good acquisition, paying a price that is in line with what we believed Capri was worth,” Citi analyst Paul Lejuez wrote in a research note.

The transaction is expected to close in 2024, subject to approval by regulators and Capri shareholders.

‘Powerful’ combination

The combination of the six brands “creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for” customers, employees and shareholders, Tapestry chief executive officer Joanne Crevoiserat said in the statement.

The combined businesses will be the fourth-largest luxury company in the world with a market share of around 5.1 per cent, according to GlobalData analyst Neil Saunders. In the Americas, it will be the second-largest player behind LVMH, he added.

The combined companies are likely to dominate the US handbag market. “The addition of Michael Kors cements Tapestry as the No. 1 player in the accessible luxury handbag market in the US by a wide margin,” Wells Fargo analyst Ike Boruchow wrote in a research note. The companies’ “accessible” luxury items are much less expensive than the highest-end brands, such as LVMH’s Louis Vuitton. The accessible-luxury sector has been challenged in recent quarters in the US, though, as aspirational shoppers there pull back on spending with the pandemic luxury boom waning.

China rollout

Tapestry, whose Coach brand has been in China for decades, will likely focus on accelerating the rollout of Michael Kors in the country, which could help compensate for more sluggish sales lately on the companies’ home turf in the US. Tapestry generates around 15 per cent of its revenue in China, while Capri makes around 6 per cent to 8 per cent of sales in the country.

By adding Versace to its brands, the acquisition gives Tapestry its first direct access to a European luxury marque. Capri bought Versace in 2018 and has focused on increasing the brand’s sale of handbags and other accessories, successfully boosting revenue.

The companies said there are no financing conditions attached to the deal. Tapestry has secured $US8 billion in fully committed bridge financing from Bank of America Corp. and Morgan Stanley. The company expects to fund the $US8.5 billion purchase price through a combination of senior notes, term loans and excess Tapestry cash, using a portion of it to pay down some of Capri’s debt.

Capri’s shares have tumbled recently as a pullback in spending by US consumers in department stores dented sales of the mass-market Michael Kors brand. The company shares had fallen around 31 per cent in the past 12 months.

Capri, also based in New York, had been scheduled to report fiscal first-quarter earnings on August 8.

Luxury giants have been snapping up smaller brands in the world of Big Fashion even as inflation has potentially darkened the outlook for discretionary spending. Cosmetics firm Estée Lauder Cos. took over Tom Ford in a $US2.8 billion deal announced last year and completed in April. Kering, which had held talks to buy Tom Ford before it was sold to Estée Lauder, agreed a deal last month for a 30 per cent stake in fashion house Valentino for around $US1.9 billion. Kering also agreed in June to acquire perfume maker Creed at an undisclosed valuation.

Meanwhile, Tapestry benefited from a stronger-than-expected rebound in China sales in the quarter ended April 1. The company expects mid-single-digit sales growth in China in its current fiscal year. Tapestry’s shares have climbed nearly 20 per cent in the past year, valuing the firm at about $US9.6 billion.

Tapestry said the acquisition will generate cost synergies of more than $US200 million within three years after the closing of the deal due to supply-chain and other operating efficiencies. The new company will employ more than 33,000 people globally.

Tapestry said it’s committed to an investment-grade rating and that it anticipates reaching a leverage ratio of below 2.5 times debt to earnings before interest, taxes, depreciation and amortisation within two years of the closing of the deal — a target that it will aim to maintain in the long term.

Tapestry will suspend its share buybacks to prioritise debt reduction after the acquisition. The deal will be immediately accretive to earnings per share, the company said.

The Australian luxury fragrance brand Goldfield & Banks has opened its first pop-up store, at Westfield Bondi Junction.

The store is located on Level 3, near Sephora and Myer, and is open until December 24.

At the store, customers can shop for Goldfield & Banks Native and Botanical collections and avail of a complimentary engraving on selected days.

Goldfield & Banks was launched in 2016 by French-Belgian Dimitri Weber who migrated to Australia after being captivated by its natural beauty. The brand is now available in 50 countries, including luxury department stores including Selfridges and Harrod’s in the UK and Bergdorf Goodman in the US.

Shares in Temple & Webster soared more than 14 per cent on Wednesday after the online-only furniture retailer said it was bucking a difficult environment and posted a massive increase in sales for the last five months.

The company said sales between July 1 and November 27 had risen 27 per cent compared to the same period last year, with revenues increasing even more strongly from October 1 – up 42 per cent. That sent shares to $7.41, up some 40 per cent in 12 months to give the company a $900 million valuation.

Temple & Webster chief executive Mark Coulter said the retailer had been cutting prices as shipping costs returned to the levels they had been before the COVID-19 pandemic. That, and better deals with offshore suppliers, had meant lower costs overall. “We’ve decreased our prices,” he said. 

Mr Coulter said Millennial shoppers were still spending at Temple & Webster despite more caution among consumers after the Reserve Bank increased interest rates for the 13th time since last May. The latest Australian Bureau of Statistics figures, released this week, showed a fall in retail spending in October compared to the previous month.

Those challenges, Morningstar equity research director Johannes Faul said earlier this week, would last into the first half of 2024 as consumers continued to limit spending. Some retailers, including Temple & Webster, offered Black Friday-themed discounts much earlier in 2023 compared to previous years, sometimes weeks before the official event on November 24.

You can’t apply for the role of muse in the fashion industry. It is never advertised and calling yourself one is tackier than a fake handbag. You simply know one when you see them.

Along with Jackie Kennedy, the Duchess of Windsor, socialite Babe Paley, performer Josephine Baker and actor Audrey Hepburn, Jane Birkin, who died on Sunday aged 76, was immediately recognisable as a muse.

She wore the title so well that even lending her name to the ultimate luxury handbag, the Hermès Birkin, failed to eclipse her style spirit.

“Having a Hermès bag named after you says it all,” says celebrity stylist Jess Pecoraro, who has worked with Jesinta Franklin and Pip Edwards. “My first thought when she died was that the bag is going to go up in price again. I have my eye on a vintage one and now I’ll never get it.”

The coveted handbag was created in the mid-eighties, after Birkin found herself upgraded on an Air France flight to a seat beside Jean-Louis Dumas, chief executive and artistic director of his family’s brand Hermès. After hearing how Birkin’s husband filmmaker Jacques Doillon had deliberately run over her signature wicker basket in his car, Dumas designed a practical, streamlined bag for the working mother.

Today, customers can pay thousands and wait years for a Birkin handbag in their preferred style to arrive at a Hermès boutique. A crocodile Birkin bag is currently available on luxury auction site 1stDibs for $US575,000 ($857,581).

In a statement on Sunday, Hermès paid tribute to Birkin’s influence. “We discovered and appreciated the extent to which Jane Birkin’s soft elegance revealed an artist in her own right, committed, open-minded, with a natural curiosity of the world and others.”

“She looked just as good carrying the bag as a basket,” says Naomi Smith, fashion director at Marie Claire.

For Smith, Birkin’s appeal stems from a commitment to simple pieces worn with a casual disregard for trends, labels and price tags.

“It helps that she was incredibly beautiful, but there are plenty of pretty women out there,” Smith says. “She had incredible style, and it was all her own.”

“When she was younger she wore provocative, sheer pieces with complete confidence that made them appealing rather than shocking. Girls today are still copying that look in sheer dresses, but she made it look so effortless.”

Muse was just one of Birkin’s titles. She first found fame as an actor in London and then Paris, where she became the epitome of French chic, after being paired professionally and romantically with controversial cultural figure Serge Gainsbourg.

“I think it’s fabulous that a British woman came to define French style,” says designer Bianca Spender. “She brought that British street style to Paris, which had been stuffy and done-up.”

“With her outfits, there was always a block heel that you could run in or a look that could go to a picnic or a nightclub.”

Birkin was also a singer, first recording the scandalous breathy duet Je T’Aime . . . Moi Non Plus with Gainsbourg in 1969. Despite (or because of) reported condemnation from the Pope, the song was an international hit with Abigail, from the groundbreaking television series Number 96, recording an Australian cover version in 1973.

Birkin’s daughters Charlotte Gainsbourg and Lou Doillon (her eldest daughter, photographer Kate Barry, died in 2013) continue her creative legacy, acting and singing.

“I saw Jane Birkin perform twice in concert,” says Rachel Wayman, fashion director at In Style. “She had the same magic on the stage and on the street.”

“I was at a café in Paris when I saw her walk past years ago. I had to get up from my seat just to watch her walk away. It was a moment,”

Of course, Wayman remembers the outfit: a T-shirt, military jacket, jeans and scuffed sneakers.

“Anyone could wear that outfit but no one could wear it like her. That’s what makes someone a fashion icon.”

Outdoor apparel retailer KMD Brands says all three brands contributed “strong sales growth” in the first three quarters of the financial year.

In a trading update, the company said group sales are expected to exceed $1 billion for the first time for the year to July 31. Underlying EBITDA is expected to be in the range of $105 million to $110 million.

A warmer-than-usual start to winter in Australia and dampening consumer sentiment have seen sales and retail footfall fall.

Despite slower winter trading, Kathmandu cycled its “best-ever” winter season performance last year.

Group CEO & MD, Michael Daly, said: “With three weeks of trade still to come, we remain focused on delivering our key Kathmandu winter and Rip Curl Northern Hemisphere summer results while continuing to moderate our cost base for the year ahead.”

For the fourth quarter, the business flagged trading continues will be more “challenging” as cost-of-living pressures and softening consumer sentiment persist.

Local investment firm Glow Capital Partners will acquire 51% of Australian uniform business Cargo Crew in a bid to grow the apparel brand globally.

Under the agreement, the Cargo Crew executive team will retain full management control and three members of Glow Capital Partners will join the board.

Launched in Melbourne in 2002, Cargo Crew is a major tailor predominately in the hospitality space. Founder Felicity Rodgers said the family-owned business is preparing for further global expansion.

“Our obsession with making the best product has led to strong international demand,” Rodgers said. “Already 25% of our online sales are from international customers who have sought us out and continued to buy.

“Last week we had a sale from South America with a note saying they couldn’t find another brand that brings together fashion and function like Cargo Crew.”

Rodgers said the partnership with Glow Capital was the natural next step for the business.

“We have an incredible growth opportunity ahead of us, so we welcome the expertise in scaling up and building a global brand that the Glow team brings,” Rodgers said. “Including Kate Morris, Justin Ryan and Alex Downie on to our board to guide us as we expand into other markets will be a huge asset and help us grow Cargo Crew to its full potential.

“Cargo Crew’s uniforms cater to hospitality, retail, transport, banking, health and government industries, and as our customers' businesses grow, their relationship with us deepens because we work with them to tailor a uniform fit for their changing needs.”

According to Glow co-founder Justin Ryan, it was a strategic decision to invest in Cargo Crew.

“Cargo Crew is a great Australian business with the opportunity to be a global brand,” Ryan said. “They have a proven track record with 21 years in business already and with an excellent founder and executive team, they are primed for growth that Glow can help accelerate.

“Having worked with the team for the last few months, we know we are values-aligned and have the same vision for the business's next phase of growth.”

Glow Capital Partners associate director Alex Downie said Cargo Crew plays a role for small and medium businesses across the country.

“In any service industry, the way your team presents themselves and moves about the space is a huge brand element,” Downie said.

Cargo Crew operates a 4,500 sqm headquarters in Bundoora, Melbourne, and ships uniforms to over 80 countries. It holds contracts with major local and international businesses includes Levi's, Stocklands, IGA and Birkenstock.

Australian apparel retailer Lowes has processed and recycled seven tonnes of old schoolwear through textile recovery organisation BlockTexx.

According to the brand’s Modern Slavery Statement 2023, Lowes committed nine tonnes of obsolete product to BlockTexx this year. Lowes confirmed 85% of its schoolwear items contain polyester cotton, which were deemed fit for resource, recycling and re-raw material handling.

Lowes head of product development and procurement manager Debra Vo has also reviewed the design and development process to prioritise highly recyclable materials. The first iteration looked at substituting nylon buttons for polyester buttons, with negotiations underway for sublimated polos to use recycled ranges moving forward.

BlockTexx owns proprietary technology that separates polyester and cotton materials such as clothes, sheets and towels of any colour of condition back into high-value raw materials of PET and Cellulose for reuse as new products across all industries.

According to Lowes’ statement, the brand is aiming to reduce resource waste associated with its schoolwear.

“Through this sustainable approach, Lowes is not only minimizing the environmental impact of discarded school uniforms but also promoting a circular economy by ensuring the resources are given a second life.”

Lowes is a family-owned apparel brand that operates 180 stores across Australia and has apparel contracts with 727 schools in the country. The company's annual turnover ranges between $230 million to $260 million with on average six million transactions per year.

Australian fashion spending surpassed other retail categories to grow 17.4% during the 'Click Frenzy' sales period, according to the latest research. 

Australia Post's latest quarterly Inside Australian Online Shopping Report showed online spend in May grew 9.7% month-on-month (MoM) and 0.6% year-on-year (YoY), with basket sizes for fashion hitting $151 on average.

This was despite an overall drop in average basket size in 2023 by 6% YoY to just $105.

During the end-of-financial-year (EOFY) sales event, fashion hit second place in overall popularity at 10.2%, behind home and garden at 12.4%. Overall, EOFY sales were up 4.3% on last year.

In the fourth quarter of FY23 online purchases in fashion were down 3% on the YoY, but up 9.5% QoQ, with an overall market share of 26%. Fashion is the second-highest category in market share behind variety stores at 36%, with that category up 18% YoY in Q4 FY23, and up 13% QoQ.

Despite the gains in fashion, the report found there is an overall softening overall in online purchases, with 9.4 million households (or 82% of the Australian population) making an online purchase during the 2023 financial year.

An average 5.5 million households made an online purchase each month in Q4 FY23 - an increase of 3.9% compared to the equivalent quarter last year. However, online spend is down 3.1% compared to last year.

With consumer buying confidence at low levels, Australia Post claimed consumers across the country, particularly younger generations, are becoming ‘strategic shoppers’ — looking for ways to maximise the value of their dollar and increasingly take advantage of key sales events.

Australia Post executive general manager of parcel, post and eCommerce services Gary Starr said that while an increasing number of households made an online purchase in the fourth quarter (compared to the last year), it’s clear that cost-of-living pressures are taking effect.

“Aussies are now more cautious and selective with where and when they spend their money, which is why online shopping carts are averaging smaller than last year,” Starr said. “Our love affair with online shopping hasn’t waned, however cost-of-living pressures are creating short-term headwinds.

“This is an opportunity for retailers to entice customers via sales events, subscriptions or other forms of rewards that create loyalty and repeat purchases.”

An Australia Post consumer survey conducted this year revealed that 85% of Australians aged 18-34 plan to shop (or have shopped) during dedicated sales events.

Meanwhile, customer loyalty programs and bundling services are proving popular with online shoppers, with 1 in 4 consumers turning to online retail subscriptions as part of their cost-saving practices.

Regional Australia saw a year-on-year (YoY) growth of 4.2% in the last quarter, compared to just 0.7% YoY in metro areas. The Northern Territory led in this last quarter, with an increase of 9.3 % YoY in online sales compared to last year.

In 2021, French Connection United Kingdom underwent an ownership change. Following that, Brandbank Group’s Australian distribution license with French Connection went up for renewal.

But Brandbank decided - after careful consideration - that it was going to end the agreement with the UK-based brand and reimagine the existing assets into a new vertical brand called ‘Unison’ - owned and operated in Australia.

As part of the rebrand, Brandbank will transition the same core team of 25 people who looked after French Connection Australia - across design, human resources and operations - and will refit its 11 standalone stores, 48 David Jones concessions and 57 Myer concessions into Unison. The website will also be updated to suit the new brand name.

Brandbank CEO Peter Halkett, who just joined the company two weeks ago, told Ragtrader that this large-scale brand launch was both timely and desired.

“[Brandbank] wanted to have something much more specific for the Australian market,” Halkett says. “Much more flexibility… So an Australian-focused brand with attributes that appeal to the Australian customer, and to really design a range that has all the products that we had in French Connection, but also has some more fashion products and slightly more premium.

“By reviewing and deciding to relaunch a new brand basically allowed the business to position it precisely and exactly how it wanted to rather than necessarily operate within the restrictions under a license agreement.”

French Connection first launched in Australia in 1998 through Brandbank, with Halkett saying the agreement originally involved shipping over all the product from the UK. Over time, Brandbank began overseeing and controlling the manufacturing and designing process in Australia

“In simple terms, controlling all facets of the brand from the manufacturer through to how it's presented at point of sale, flexibility is what it's all about now,” he says. “Distributing and licensing is quite different from being vertical. Brandbank made a very good decision by establishing its own brand now.

“It's been a successful business, but there are times when you've got to make a decision whether you want to continue. Because remember, when you have a license, a lot of the value of that business can be in the brand itself. We don't own brands. So when we have our own brand, we're creating more value by having that as our own brand name.”

As part of the transition, Unison will utilise the same sourcing channels that Brandbank uses for its other fashion brands, including Seed and Commonry. It will also continue producing many of the core product lines that were successful with French Connection Australia, while adding on new product styles.

“This is not like establishing a brand new business where we're starting with a blank piece of paper; we know what our customers like,” Halkett says. “When they go to the stores, and when they go to David Jones and Myer to our pads, our job is to set out exactly what Unison does compared to French Connection.

“We're hoping a lot of French Connection customers will like what we're doing with Unison, and, in many ways, we'll be designing many of exactly the same products with the same fabrics in the same fit and same style.”

Halkett says there will be no immediate changes to price points, with current lines averaging between $50 to $350, nor any major changes to its production output. French Connection Australia sold a core range with seasonal core and monthly drops. All of its styles will be designed in Australia, with manufacturing centred in Asia.

“What we're starting with is what we have today,” Halkett says. “There is definitely a lot of space for a lot more concept stores, because we only have a limited amount - compared to over 100 Seed stores, for example.

“In the future, once we transition customers, and we're satisfied that that's going well, we believe we can probably expand the size of the pads in time as we grow the range and as the brand gets more and more traction. Beyond that, I'm a New Zealander, so we'll have New Zealand in our sights at some point in time as well.”

Halket says when the brand does venture into New Zealand, it will likely open more owned stores than department store concessions.

Speaking on the entire Unison venture, Halkett says it will be the first large-scale launch of a new brand in Australia.

“It's a very unique situation,” Halkett says. “It's not for the faint-hearted. But one thing I appreciate about this business is they take a long-term view in their decision-making. This is definitely the right long-term decision.

“For me to join a new company and to immediately have such a significant brand launch is very exciting.”

BB Retail Capital (BBRC) has issued a compulsory acquisition notice in relation to its takeover bid for discount fashion retail brand Best & Less Group (BLG).

In an ASX announcement, BBRC advised BLG shareholders to accept the takeover offer at $1.89 per share and has extended the offer acceptance period until July 14.

“The bidder has advised that the compulsory acquisition will be on the same terms as the offer, including the offer price of $1.89 per BLG Share.”

In an effort to encourage a fast uptake, BBRC has told BLG shareholders that if they accept the offer now, they will be paid within seven days of their acceptance, but if they wait for the compulsory acquisition process, payment will be in at least six weeks’ time.

Meanwhile, BLG’s independent directors – Stephen Heath, Melinda Snowden and Colleen Callander – have all resigned.

BLG’s board has appointed Tim Dodd as a non-executive director of BLG with immediate effect. He is the global CFO of BBRC business across investments and operations.

Borrowers are gloomier than they have been since the global financial crisis and economists warn the pain will get even worse for households and retailers if interest rates keep rising as expected.

The Reserve Bank of Australia’s decision last week to keep the cash rate on hold at 4.1 per cent appears not to have improved the mood, with consumer sentiment falling 0.8 points over the past week, according to the latest ANZ-Roy Morgan survey, released on Tuesday.

The decline was driven by a deterioration in sentiment among people paying off their homes, which fell to its lowest level since the survey began in 2008.

The figures are the latest sign that households are feeling the heat from the most rapid interest rate tightening cycle in a generation as the RBA battles the most acute inflation outbreak in decades. The RBA has lifted its benchmark cash rate at 12 of its past 14 meetings.

Market pricing implies a 54 per cent chance the RBA will increase the cash rate to 4.35 per cent at its August 1 meeting, and puts the probability of an increase by September at 86 per cent.

The proportion of consumers who said now was a good time to buy a major household item was mired around the record low levels witnessed at the start of the COVID-19 pandemic, according to the survey.

The collapse in sentiment has translated to lower discretionary spending. Retail trade volumes declined in both the December and March quarters – the first back-to-back fall since 2011 – as consumers cut back on non-essential purchases such as appliances, clothes and electronics.

Spending on discretionary items fell by 0.6 per cent over the past 12 months, driven by a 4.8 per cent fall for furnishings and a 3.4 per cent drop for clothing, data released on Tuesday by the Australian Bureau of Statistics shows.

Non-discretionary spending, by contrast, increased by 6.9 per cent over the past year.

Commonwealth Bank economist Harry Ottley said consumers were trimming spending on items such as travel and entertainment, but spending more on childcare.

“We expect these trends to continue and for the consumer to further curtail spending over coming months as the fixed rate mortgage reset hits its peak,” Mr Ottley said.

Australians are spending on average almost $600 less online than they were a year ago, Airwallex’s digital economy index shows.

The data, released on Tuesday, is based on a representative sample of 1000 of the Australian fintech’s customers.

Airwallex director of strategy Amelia Hamer said Australians were easing up on non-essential spending.

“As interest rates have climbed and cost-of-living pressures have increased, it’s no surprise Australians are being more selective about where they spend online,” Ms Hamer said.

Retailers feel the heat

Sentiment among retailers has fallen sharply as a result of fewer sales, with the NAB business survey for June revealing conditions weakened further in the sector last month.

Confidence among retail businesses was weaker than any other industry, declining nine index points, according to data released on Tuesday.

Other consumer-exposed industries including wholesale trade and personal services also experienced falling confidence, meaning there were more pessimists than optimists.

JP Morgan economist Jack Stinson said the NAB survey indicated a near-term increase in the jobless rate was likely, after surveyed capacity utilisation fell to 83.5 per cent, its lowest level since April 2022.

“Capacity utilisation is a fairly good leading indicator of the unemployment rate, and the current level is consistent with a three-month ahead unemployment rate above 4 per cent,” Mr Stinson said.

“The metric has now declined in each month since January and like other leading indicators ... points to an increase in the jobless rate over the second half of the year.”

Consumers are also pessimistic about the outlook for jobs. The Westpac-Melbourne Institute sentiment survey, also released on Tuesday, showed household unemployment expectations up 32 per cent since the RBA started lifting interest rates in May 2022.

NAB head of market economics Tapas Strickland said the unemployment expectations index had correlated highly with the unemployment rate.

“Overall, that suggests a rising probability the unemployment rate could rise, though other signals such as job vacancies still suggest a tight labour market,” Mr Strickland said.