News

10 May, 2023
Michael Hill launches gold recycling program to boost circularity
Inside Retail

To align and boost the adoption of a circular economy, Michael Hill has launched a gold jewellery recycling program called “Re:cycle” online.

The program marks the first phase of the company’s new sustainable jewellery ecosystem which focuses on the “renewal and circularity” of existing precious metals and products.

The company says precious metals used to make jewellery can be refined and recycled repeatedly without losing their purity or value.

Daniel Bracken, CEO of Michael Hill, said the ‘Re:cycle’ program is the retailer’s first major foray into jewellery circularity.

“Through research, we know that recycling 1g of pure gold can reduce an estimated three tonnes of ore extraction and avoid up to 16kg of carbon emissions.

“This program, combined with our customers allows us to contribute towards reducing the need for virgin-mined gold.”

Customers can recycle any broken or old gold jewellery pieces in exchange for their value on Michael Hill’s dedicated gold recycling website. They have to send photos and details of their pieces in exchange for a postage label.

Once assessed and valued by Michael Hill’s experts, customers will be a gift card that can be used in-store or online.

The retailer has partnered with a precious metal services company, Morris & Watson, on this initiative.

10 May, 2023
The Iconic navigates tough consumer climate
SOURCE:
Ragtrader
Ragtrader

The Iconic’s Net Merchandise Value (NMV) dipped slightly by -0.2% in the first quarter of 2023, with parent company Global Fashion Group (GFG) reporting a tough consumer climate.

The Group said the Australia and New Zealand (ANZ) region is seeing more cautious consumer sentiment, matched with higher levels of promotion.

As well as The Iconic in ANZ, GFG operates Zalora in South East Asia (SEA) and Dafiti in Latin America (LATAM).

GFG said its overall NMV fell by -6.7% year-on-year (YoY) to €303.3 million in Q1, impacted by order volumes, down -19.1%, and Active Customers down -17.7%.

This was partly offset by the 15.4% increase in Average Order Value driven by inflation, country mix and category mix. Revenue was down -10.1% YoY.

In LATAM, NMV declined -13.7%, while SEA saw a drop of -6.9%. Both regions were affected by marketing investments, alongside reductions in Active Customers.

GFG delivered Gross Margin of 41.1%, a 1.7ppt decline YoY driven by price activity. Profitability was impacted by fixed cost de-leverage which led to an Adj. EBITDA margin of -12.1%.

While macroeconomic uncertainty continues, GFG said it is managing inventory carefully and has reduced inventory levels by €31 million compared to last year.

The Group said it expects to deliver NMV growth between -5% and 0%, c.€1.5-1.6 billion in NMV and c.€1.0 billion of Revenue by the end of year, all on a constant currency basis. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin is expected to be between -3% and -1%.

The Group expects to achieve Adj. EBITDA breakeven in 2024.

GFG said the outlook reflects the demand environment and near term de-prioritisation of growth to protect cash flow and improve profitability. It said these actions provide the opportunity to make year over year gains in Gross Margin and Adj. EBITDA across the second half of the year.

“Our focus remains the same as we set out at our recent Capital Markets Day,” GFG CEO Christoph Barchewitz said. “With ongoing market uncertainty, we are concentrating on what we can control - carefully managing our costs, our inventory and growing our Marketplace, which carries no balance sheet risk.

“This will allow us to stay on the path to profitability, whilst we wait for the right moment to return to investing in growth.”

10 May, 2023
ACTA Capital dives in on Seafolly auction
The Australian

Private equity firm ACTA Capital is understood to be running the ruler over Seafolly after the business was placed up for sale by the interests of luxury goods retailer Louis Vuitton in recent months.

It comes as other private equity firms have side stepped the opportunity, including Anchorage Capital Partners, which was believed to have looked at the retail brand but opted to bow out of the auction.

ACTA Capital is the firm of former Alceon executive Richard Facioni.

It manages Alceon Group’s investment in Mosaic Brands, the retail business behind Noni B, Millers Rockmans, Rivers, Katies and Autograph among others.

ACTA also has the Alquemie Group retail investment platform with licenced brands such as SurfStitch, EziBuy, Ginger & Smart and Pumpkin Patch.

Sources say that Seafolly, up for sale through FTI Consulting, has up to 40 per cent of the Australian women’s swimwear market, so the question is where the new buyer finds future growth.

It generates more than $90m of annual revenue and is not yet thought to have turned the corner into becoming profitable, but is no longer loss making.

US-based L Catterton, backed by the Arnault family’s company Louis Vuitton Moet Hennessy, purchased the business through a series of deals between 2014 and 2018, but Seafolly fell into voluntary administration in 2020 amid the global pandemic.

L Catterton bought the business out of voluntary administration.

It currently has 30 stores globally, including 26 in Australia and four in Singapore and the brand is sold in 2100 locations globally.

When it collapsed, Seafolly had 44 stores in Australia and its swimwear was stocked in 2,700 stores in 41 countries.

Sales were $112 million in the 12 months to December 2019.

Since that time, Seafolly has purchased the swimwear brand JETs and closed its Sunburn-branded stores.

Elsewhere, some believe that Brett Blundy’s play for Best and Less will result in a deal where the Australian clothing and homewares retailer remains listed, and the retail tycoon simply lifts his stake in the business, enabling Allegro Funds to stage an exit.

That’s because shareholders are unlikely to be keen to sell out price less than they paid for the shares when the business listed in 2021.

Best and Less floated at $271m or $2.15 per share, and Mr Blundy’s deal through his BBRC group involves an offer by takeover of $1.89 per share with a minimum acceptance offer of 55 per cent.

The last traded price before the offer was $1.985.

When the business was listed, Mr Blundy purchased a stake of 16.45 per cent and remains a director and the vendor, private equity firm Allegro, retained 32.43 per cent.

Executive chairman Jason Murray holds 8.27 per cent and is expected to also sell into Mr Blundy’s deal.

Allegro is likely comfortable cashing out at a lower price.

It inherited Best and Less as part of a wider deal with Greenlit Brands and has already made its money on its investment after Harris Scarfe was placed into voluntary administration, enabling it to reset the leases.

Harris Scarfe was then sold it to the Spotlight Group.

Working for Best and Less is E&P Corporate Advisory and law firm Ashurst.

10 May, 2023
Chanel’s Australian profits jump as luxury goods market soars
The Sydney Morning Herald

Profits at luxury fashion brand Chanel have surged in Australia over the past year as high-end brands continue to perform strongly despite rising living costs.

Documents filed with the Australian Securities and Investments Commission (ASIC) this week outlining Chanel’s financial performance in Australia for 2022 reveal the company recorded profits of $86.3 million in the 12 months to December 31 – a 32 per cent jump on its $65 million profit the year before.

Chanel had strong sales momentum in Australia throughout the year, booking revenue of $571 million, up from $454 million a year before.

Chanel has a bricks-and-mortar presence across Australia that includes more than 15 boutique stores and its products are also sold through department stores David Jones and Myer.

The 113-year-old brand – founded by French designer Coco Chanel – is a private company owned by Alain and Gerard Wertheimer, whose grandfather was one of Chanel’s early business partners.

Chanel has been reporting global annual financial results since 2018 and has performed strongly throughout the pandemic. Revenue hit $US15.6 billion ($17.8 billion) across all its markets in 2021.

The business will be due to share its global financials for 2022 in the coming month, but the group’s Australian numbers filed this week indicate that trading conditions remain strong.

Chanel Australia did not comment on the local numbers or the trading conditions which led to them.However, in an interview with the Financial Times last week, Chanel’s global chief executive, Leena Nair, said she was cautiously optimistic about the outlook for luxury goods, noting pent-up demand for products in markets such as China.

Luxury fashion operators have been resilient despite global economic jitters and predictions about a broader slowdown in discretionary spending.

The world’s largest luxury goods company, LVMH, smashed analysts expectations last month when it reported a 17 per cent jump in quarterly sales to €21 billion ($34 billion). The company told investors that the numbers marked an “excellent start to the year” despite uncertainties about the global outlook.

“Asia experienced a significant rebound following the lifting of health restrictions,” the company said.

Demand for designer goods has also remained strong across Australia’s second-hand market, including platforms such as eBay. Data from eBay Australia this year revealed that the listing price of a second-hand Coco Top Handle bag by Chanel increased from $3700 to $7000 between 2019 and 2022.

Local retail analysts have recently pointed out that a “two-speed” consumption pattern is emerging in Australia, with high-income earners still more than happy to spend on discretionary goods at the same time as lower-income Australians are cutting back.

“The tight economy shines favourably on higher-income groups due to the wage gains they are experiencing and ownership of assets,” UBS said in a note to clients last month.

10 May, 2023
Seafolly makes waves amid sale process
SOURCE:
Ragtrader
Ragtrader

Australian swimwear label Seafolly has opened an expanded footprint and new retail concept in Western Australia, with plans to update its existing retail fleet of 30 stores over the next three years.

The news comes amid media reports that Seafolly is up for sale by its private equity owner L Catterton, with management firm FTI Consulting handling the sale.

News of the sale follows nearly three years of leadership by current CEO Brendan Santamaria, who joined the brand after it was saved from collapse in mid-2020.

Speaking exclusively with Ragtrader, Santamaria said the new concept in Claremont is an expanded presence from a smaller concept store that existed in the area.

“We've relocated ourselves to what they're calling the new Claremont quarter - the fashion end of the quarter,” Santamaria said.

“Our new retail concept draws on inspiration from the beauty of Australian beach and coastal environments. They're what we call our next generation stores.”

The new store concept includes digital screens and an expansive fitting room experience alongside Seafolly’s Fit Stylists and customisable lighting.

It will also feature a heritage gallery showcasing some of Seafolly’s past campaigns.

Seafolly has a total of 30 stores - 26 in Australia and four in Singapore. From this, Santamaria said the brand will roll out the new concept and expand it over the next three years, which includes the opening of more retail stores in key locations.

Santamaria predicted that omnichannel retailing is balancing following a swing to online over the COVID-19 pandemic, citing this as the reason for its focus on bricks and mortar.

“The demand for Seafolly continues to increase across both in-store and online,” Santamaria said. “We're focused on supporting that omni channel experience.

“However, we haven't declined online - we've grown a bit year-on-year in like-for-like sales.”

“We find that whilst 70% of our transactions commence online, the transactions end up being in the bricks and mortar.”

In owned eCommerce, Seafolly is represented through four websites across Australasia, Singapore, North America and the United Kingdom.

Santamaria said that, since migrating with eCommerce platform Shopify, Seafolly has increased its average order value by about 15%.

“However, the business in the last three years really enjoyed more than 50% increase in its average transactional value.

“And what's driving that? We think the replatform has enabled us to unlock the omni channel environment that really includes a range of services from click and collect to ship from store, reservation of product and delivering that seamless shopping experience.”

As well as balancing commerce channels in online and in-store, Santamaria said retailers should also consider social commerce as well.

“In understanding consumer preferences and shopping habits, retailers are able to tailor their offerings and provide that real personalised experience, and this leads to greater loyalty and increases the likelihood of a repeat purchase,” Santamaria said.

“Experimental retail concepts will still remain a big trend, creating spaces that are designed to offer unique shopping experiences.

“That's the big thing where retailers will really move their shift towards that omni channel retailing and giving consumers that real seamless experience.”

Speaking on the future of Seafolly, Santamaria said he is looking forward to the business experiencing a full year of normality post-COVID.

“We're very proud of what we've achieved, what our employees have achieved for their hard work,” he said. “Hopefully we'll embark on the next phase of growth for the business, and we're working with our shareholders to help raise more capital that will allow us to unlock the value both domestically and in the number of international markets.

“Over the last 18 months to two years, we've gone really hard in recruiting the leadership team we've got and it's been fantastic.

“We're very excited about that next chapter.”

10 May, 2023
Best & Less CEO appointment intact under Blundy deal
Financial Review

Erica Berchtold, the incoming CEO of Best & Less Group, is on track to join the discount retailer in September as planned despite Brett Blundy and Ray Itaoui lobbing a zero premium, off-market takeover offer for the business.

The Australian Financial Review’s Street Talk column revealed that the pair had made a $1.89-per-share, cash offer for the chain on Sunday night – a 4.5 per cent discount to the last closing price, but supported by its biggest shareholder, private equity firm Allegro Funds.

Allegro controls 32.43 per cent, while Mr Blundy already owns a 16.45 per cent stake of Best & Less, and is on the board. He joined in 2021 when the group hit the ASX at $2.16 per share. The stock fell 3 per cent to $1.92 in afternoon trade on Monday, and was at $1.99 before the deal was announced.

The trust of executive chairman Jason Murray, Bignor Family, controls 8.27 per cent of the retailer and also agreed to back the deal, pending a superior proposal.

The offer was initiated by Mr Blundy’s BB Retail Capital and provides a liquidity event for those two big shareholders, making it appealing despite the discount. The structure of this deal means Best & Less will remain listed on the ASX.

Best & Less has formed an independent board committee to evaluate and respond to the offer, although the men will meet the minimum acceptance threshold of more than 55 per cent. Their ultimate holding will be dependent on minority shareholders wanting to retain some holding in the business controlled by Mr Blundy and Mr Itaoui.

Lead independent director Stephen Heath said while the offer does not contain a typical control premium, and despite the major investors’ acceptance, the independent committee determined that it should be made available to all shareholders to accept or not.

He said it was business as usual, and Ms Berchtold, the former The Iconic CEO, will still join the company on September 4.

“We will carefully consider the proposal and provide a formal recommendation in our target’s statement, and we will also commission an independent expert’s report.

“That being said, we note that the offer will provide an ability for shareholders who wish to exit large shareholdings in [Best & Less] to do so in an orderly fashion without unduly impacting the company share price,” Mr Heath said.

Mr Blundy, he added, is “an individual with a strong track record of delivering value in the retail sector”.

Sources close to the company said the move reflects the underlying confidence that Mr Blundy has in the business, despite its latest results showing first-half profits and sales weaker than expected, with its core customer hit harder by cost-of-living pressures and higher interest rates.

The billionaire is one of Australia’s most successful retailers and is also behind other listed names such as shoe company Accent Group and chairman of the fashion jewellery chain Lovisa. All of these investments are held via his private investment group.

Mr Blundy’s offer comes after he upped his stake to 9.9 per cent in March in troubled retailer City Chic Collective, which operates plus-size women’s apparel brands.

iRetail owner Ray Itaoui joined Mr Blundy in his bid for Best & Less which operates 248 stores and an online platform in Australia and New Zealand through its two brands: Best & Less and Postie.

Mr Blundy lives in Monaco, and has known Mr Itaoui for years. Mr Blundy previously told the Financial Review’s BOSS in 2016 that Mr Itaoui was one of the seven executives who were his partners in the many businesses he has built from Sanity Entertainment and Dusk.

Mr Itaoui is the former CEO of Sanity, which Mr Blundy founded in the 1980s. Mr Itaoui went on to become an integral part of the BBRC organisation and a multimillionaire in his own right.

27 Apr, 2023
New owner of Billabong, Quiksilver plans for regional break-up

Authentic Brands Group will look to expand Boardriders branded shop-in-shops, retail stores, e-commerce and wholesale distribution, as well as establish an online marketplace, after finalising its deal to buy the parent of Billabong and Quiksilver.

ABG chief executive and founder Jamie Salter overnight penned a definitive agreement to purchase Boardriders, owned by Oaktree Capital Management, which values the group at $US1.25 billion ($1.88 billion). The transaction was flagged a week ago after a prolonged sale process.

Billionaire Mr Salter said on his Instagram feed that as an early believer in the global appeal of action sports, “this one brings me back to my roots. We see big things on the horizon with @weareboardriders.”

The acquisition includes two of Australia’s most well-known surf labels, Roxy, RVCA, DC Shoes, Element, VonZipper and Honolua, as well as local retailer Surf Dive ’n Ski, which has more than 80 locations and an e-commerce platform.

Boardriders has operations across the Americas, Europe, Australia and Asia via a network of 500-plus owned retail stores, 7000 wholesale accounts, and e-commerce sites in 35 countries. It posted about $US1.8 billion in top-line sales last financial year to October 31.

ABG staff visited Australia in January as part of its due diligence process and will now likely send a team down under to hammer out final details with regional operating partners.

Headquartered in New York, ABG connects brands with operating partners and distributors, and earns royalty fees. Its brand portfolio includes surf, skate and snow brand Volcom, Reebok, Brooks Brothers, Elvis Presley, David Beckham, Juicy Couture and Ted Baker.

ABG confirmed that it will look to leverage its global network of category experts and operating partners to convert Boardriders into a licensed business model.

“The company is in discussions with several current and new operators in key regions to manage the manufacturing, physical retail, e-commerce and wholesale operations of Boardriders,” it said in a statement.

It already has licensing deals with two of its brands, Nautica and Brooks Brothers, with True Alliance. Michael Hendler’s True Alliance also holds the exclusive distributor rights of The North Face in Australia and New Zealand.

Conquest Sports, which holds the rights for the Converse brand in Australia and New Zealand, also has a joint venture with Blue Star Alliance to distribute surf brand Hurley locally. Blue Star looked at buying Boardriders, and could still strike a deal with ABG for certain brands via this JV.

ABG in 2021 bought US outdoor sportswear retailer Eddie Bauer, which was added to SPARC Group, a joint venture between mall owner Simon Property Group and ABG. It could add the Boardriders operations in the US to this platform, leaving only Asia Pacific and Europe to licence operations or brands.

Boardriders has a big business in Australia and NZ. It has its regional HQ at Burleigh Heads, Queensland and an office at Torquay, Victoria. It has about 300 corporate staff and 1200 working in retail at its 157 stores.

Some brand owners keep tight control of the brand designs and ethos by centralising design and specification while other owners allow local licence holders have more flexibility in terms of localising product design.

“There are no hard and fast rules. It will be interesting to see how they try to make this work regionally,” said one retail boss, who wished to remain unnamed.

“They need to find a middle ground. They need enough relatively locally to sell products because there are differences in countries and regions.”

It is unclear if Boardriders CEO Arne Arens will remain in the business, but his role would be significantly reduced given the operational break-up. He said in a statement that it was great to find a home for Boardriders with Authentic, one of the world’s premier brand owners and marketing platforms.

“Our brands and business have strong equity and an established and profitable organic growth strategy in place. We are confident that Authentic will bring the expertise and resources required to drive the next phase of Boardriders’ journey,” he said.

27 Apr, 2023
Shoppers spend in store but eat and drink at home as retail resets
SOURCE:
The Age
The Age

Australia’s retail sector is bracing for a jolt from changes in consumer spending as shoppers return to their pre-pandemic patterns and take a more cautious approach to household consumption.

Online-only brands and big-ticket homewares sellers could come under the greatest pressure as consumers let go of online shopping habits developed over the past three years, while retailers focused on dining and drinking at home are better placed.

A quarterly consumer survey from investment bank UBS shows alcohol is one of the few spending areas where consumers plan to cut back, while intentions to shop online plunge as bricks-and-mortar store trading continues to rebound.

While Australians overall are still happy to open their wallets – particularly wealthy consumers with strong job security – low and middle income earners are feeling the heat, the survey of 1000 shoppers found.

This pressure is likely to last, according to the International Monetary Fund’s economic outlook statement released this week, which predicted global growth would be feeble for the rest of the decade and higher costs of living would persist.

The online slowdown threatens the outlook for pure-play stocks such as Temple & Webster, Adore Beauty and Kogan, UBS’s equities team said. These three companies have all had steep share price losses over the past 12 months after reporting a slowdown in consumer demand.

The number of consumers saying they intended to shop online at stores such as Bunnings, Kmart and JB Hi-Fi are at their lowest levels since 2021.

UBS reiterated its preference on Wednesday for stocks exposed to spending from affluent earners, who have deep savings and may own their own homes, and younger consumers who have fewer financial commitments. Stocks such as Treasury Wine Estates and youth jewellery brand Lovisa are likely to stay resilient because their core consumers have the strongest spending intentions.

While overall Australians remain optimistic about their spending capacity in the next year, middle income earners have started to become more cautious, giving retailers such as Wesfarmers an advantage as shoppers “trade down” to more budget purchases, analysts said.

UBS retail analyst Shaun Cousins said consumers were also being more discerning about eating and drinking outside the home.

“The consumer is managing the higher cost of living with deliberate category decisions of where to spend. In alcohol, as well as food, we expect a shift to more at home, and less out of home, consumption, given the lower cost of at home consumption,” Cousins said.

“For Endeavour Group, this is a negative for its hotels division yet a positive for its retail division, reflecting its diversified position within the alcohol industry.”

Monthly household expenditure data from the Australian Bureau of Statistics released on Wednesday showed that through-year spending increased in all categories except for alcohol and tobacco sales, which declined by 12 per cent in February.

Overall household spending rose 11.8 per cent, driven by growth in non-discretionary purchases as households spent more on food and transport.

Major supermarkets Coles and Woolworths have previously flagged they expect more consumers will dine at home instead of at cafes and restaurants as more budget-focused shoppers feel the pinch.

A cost of living survey of more than 9000 Coles customers for March, released on Wednesday, showed that 66 per cent of shoppers reported cutting back on dining out and eating fast food.

The supermarket giant said young singles and couples were among those now starting to curb everyday expenses, with 86 per cent of shoppers saying they were now changing how they shopped to reduce their grocery bills.

27 Apr, 2023
Best & Less poaches new CEO from The Iconic
Financial Review

The Iconic chief executive Erica Berchtold is moving from high fashion to the value end after being appointed to run discount chain Best & Less.

Ms Berchtold has headed Australia’s largest online-only fashion and lifestyle retailer since 2019, during which time the business has grown to over $700 million in revenue. She now will need to look after 248 physical stores as well as an online platform at ASX-listed Best & Less.

Ms Berchtold will join Best & Less on September 4. In the interim, Jason Murray will remain executive chairman before returning to his role as non-executive chairman.

“After an extensive global search, I am delighted to announce Erica Berchtold as the next CEO of Best & Less Group,” Mr Murray said.

“Erica’s strong retail experience and track record of delivering profitable growth in a variety of retail markets, alongside her proven leadership skills, makes her the ideal candidate to lead the business through its next phase of growth. The board has been extremely impressed by Erica’s passion for our customer and category, and her value creation mindset.”

n February, former chief executive Rodney Orrock decided to leave the retailer to focus on his health and recover from his treatment for lymphoma.

Before The Iconic, Ms Berchtold was managing director of Super Retail Group’s Rebel sporting goods division, and she also worked for Specialty Fashion Group as general manager for Crossroads and Autograph, two women’s fashion apparel brands.

She started her career in technology sales and distribution before swapping into retail and joining Harvey Norman as a product manager in 2000. She then moved to Rebel, then owned by Harvey Norman as head of merchandise and marketing. Furthermore, she helped reposition the business ahead of its sale to private equity in 2007.

Under her leadership, The Iconic expanded beyond apparel and entered into partnerships with the likes of AirRobe, where shoppers could begin offering resale as an optional service at the point of sale.

Ms Berchtold said she was excited by the challenge of taking the retailer through its next phase of growth.

“Best & Less’ brands are synonymous with quality and value and having a close affinity with mum and her family,” she said. “As a mother of three young children myself I can personally attest to that, and I look forward to deepening that relationship further to move us closer to our goal of being the number one choice for mums.”

Ms Berchtold takes the helm at a tricky time in retail with the lower socioeconomic segment of consumers being hit harder by rising cost of living and higher interest rates.

In its latest half-year results, the retailer flagged that profits and sales were weaker than expected in the first half, with foot traffic and demand “weaker than anticipated”. Net profit after tax fell 31.8 per cent to $13.7 million for the six months ended January 1.

27 Apr, 2023
LVMH breaks into world top 10 as market value nears $US500 billion
The Sydney Morning Herald

LVMH, Europe’s largest company by market value, has now made it to the world’s top 10.

A first-quarter sales beat sparked a 5 per cent increase in the share price on Thursday (Paris time), giving the luxury powerhouse a 29 per cent rally for the year.

That, along with a gain in the euro against the dollar, lifted LVMH’s market capitalisation to $US486 billion ($716 billion), briefly ranking it as the world’s 10th biggest company. Should it reach $US500 billion, it would become the first European company to achieve that milestone.

“This illustrates the rise of wealthy people across the world, of a polarised society,” said Gilles Guibout, head of European equity strategies at AXA Investment Managers. “The luxury sector is therefore experiencing strong growth.”

For a growing crowd of investors, LVMH and its French luxury rivals are to the European stock market what big tech has been to the United States: dominant businesses whose growth holds up even as the economy waxes and wanes.

Shares of LVMH and Hermes International have on average returned more than 20 per cent annually the past decade, and Kering has returned 16 per cent. The Stoxx Europe 600 Index lags at 8.3 per cent annually.

“We have always invested in tech and in luxury, but the advantage of luxury on tech is that, while there are risks, disruption and obsolescence are lower,” said Guibout.

The robust sales of Louis Vuitton handbags and Moet & Chandon champagne that have lifted LVMH’s share price also have bolstered the wealth of its founder, Bernard Arnault. He’s the world’s richest person, with a $US198 billion fortune, according to the Bloomberg Billionaires Index.The catalyst for this year’s luxury gains, as in many recent years, is China. Coming out of the world’s strictest lockdowns, Chinese shoppers are splurging on luxury handbags and jewellery. LVMH’s soaring sales shows that demand for highly priced goods remains unabated even as a global economic slowdown looms.

Hermes International’s quarterly sales jumped as the maker of Kelly bags continued to see strong demand from Chinese customers. First-quarter revenue was up 23 per cent, Hermes said in a statement on Friday. Analysts had expected a gain of 16 per cent. Asia-Pacific excluding Japan was up 22.5 per cent. Hermes said it had a “very good” Chinese New Year.

The rally in luxury shares has cemented Paris’s standing as Europe’s biggest stock market, eclipsing London. The benchmark CAC 40 Index is on a record-setting spree, with gains of more than 15 per cent this year, outpacing other major markets.

The recent gains have taken LVMH’s valuation to 26 times forward earnings, twice that of the CAC 40. That doesn’t bother Nicolas Domont, a fund manager at Optigestion in Paris.

“It has become a must-have stock,” said Domont. “If it continues to deliver, I don’t have any problem paying the premium.”

LVMH shares closed 5.7 per cent higher at 883.9 euros on Thursday.

Sceptics say the durability of luxury sales in recent years has yet to be tested by a long economic downturn. In a recession, all but the wealthiest of shoppers are likely to curb their spending, they say.

“I have been dead wrong advising clients to stay away from luxury, but I am convinced [and stubborn] that something has to give in and that the risk-reward is still unfavourable,” Laurent Lamagnere, equity sales at Alphavalue in Paris, wrote in a note to clients on Thursday.

“I still don’t buy the idea that luxury is immune to consumption.”

27 Apr, 2023
Petbarn parent to acquire Habitat Pet Supplies
Inside Retail

Australian specialty pet care provider Greencross Pet Wellness Company is set to acquire Habitat Pet Supplies.

Habitat Pet Supplies is a family-owned business that sells a range of pet products including bowls, toys, collars and treats along with in-store pet grooming services.

It has five stores in Melbourne across Altona North, Burwood, Chirnside Park, North Melbourne and Port Melbourne, and sells online.

The deal, which is subject to the approval of the Australian Competition and Consumer Commission, will merge Habitat Pet Supplies’ business with the company’s Petbarn brand.

Co-founder Dean Pantalleresco said the business has “focused” on being at the forefront of pet retailing, adapting to industry growth and the evolving needs of customers.

Petbarn’s COO, Scott Charters, said the business will “continue the legacy” the Habitat team has built with its customers in the Melbourne community.

“Under the Petbarn brand, we will continue to provide exceptional customer service and education to local pet parents.”

Until the transaction is completed, the company will trade normally with no immediate changes to its suppliers or store teams.

27 Apr, 2023
Stay private and persevere: How Jo Horgan made Mecca a retail giant
Financial Review

The retail cosmetics powerhouse lost money for its first four years and was on the verge of shutting down. Now it turns over more than $570 million.

Jo Horgan was in her late 20s when she decided she’d take on long-established global giants at their own game: selling cosmetics.

Fed-up with men telling women how they should buy make-up and skincare, the former L’Oréal executive decided to open her own store. She called it Mecca. It opened in South Yarra in 1997.

“We had our launch party, which felt fabulous. And then a few sort of well wishers bought a couple of things. And then silence,” Horgan tells The Australian Financial Review’s Female Founders podcast.

Within four years Horgan, and her husband Peter Wetenhall – at the time a Boston Consulting executive who’d put up his future salary as a guarantee against the debt fuelling Mecca’s early expansion – were given a stark warning from their accountant.

“He sat me and Pete down and said, ‘you know, some businesses just aren’t meant to be and maybe this is one of them’. We had lost money for four years, and we didn’t have money to lose.”More than 25 years later and Mecca is a retail powerhouse turning over more than $570 million, and its success landed Horgan and Wetenhall on the Financial Review Rich List.

It took plenty of hard work, and as Horgan tells the podcast, a bit of luck by being at the right place at the right time. But it also took perseverance.

“I think that it is a hard road for anyone to do their own business, and it’s very cold and lonely. That said, there is a J curve that can come from perseverance. Mecca in the last five years has grown more than it did in the first 20 years combined.”

Horgan’s mum ran a mail-order fashion start-up, while her father owned factories that made yarn and clothing for the likes of Marks & Spencer. It seems obvious she’d be an entrepreneur too. Except, she’d choose to study English literature.

“My parents instilled in me the belief that education was the most important doorway in your life. And that’s something I now believe. And they coupled that with ‘do something you absolutely love’. I just love English literature. I loved languages. That was super fascinating to me.”

Horgan says another component to their success has been operating as a private company.

“I think having a private business allows you to have one focus, and that is the customer,” she says.

“I think as soon as you become a publicly listed business, you have a responsibility to shareholders, of which there are usually many. And I think that takes up a lot of headspace and time. So, I treasure the autonomy of the business where we literally can do whatever we think is right.”

That meant when the pandemic hit, the business could pivot quickly.

“We still act like we are, to quote Hamilton, young, scrappy and hungry. We’re very entrepreneurial, we move fast and we do believe that everything is possible.”

Horgan has built her empire in lockstep with Wetenhall, who left Boston Consulting to join Mecca in 2005 as co-chief executive to help grow the business as they prepared to have a second child.

“I quote Sheryl Sandberg from Lean In. I recount her telling that she feels the single most important decision you can make if you want to be a successful operator – if you are to choose to have a partner, have a partner who lifts you up, who multiplies your power, not a partner who diminishes or deadens your drive or opportunity,” Horgan tells Female Founders.

“Pete was, from the outset, incredibly supportive to the point where he literally guaranteed the bank loan that got Mecca off the ground against his future salary. So, he was an indentured slave to the bank. If it had all gone pear-shaped, he would have been working to pay the bank back.”

She recognises she was lucky – not many women have a husband with a salary that can be put up as a surety and the freedom to make the mistakes without yet having children.

”I’m lucky enough that I found an amazing bank manager, who was willing to take an absolute risk on us and the idea, and put that against Pete’s future salary. Not many women have that luxury: before kids, before commitments, before any of those things.

‘Choose Sunshine Sally’

“Less than 3 per cent of VC funds go to women-owned or run businesses. So the amount of capital out there for women to start their own businesses is paltry.

“That’s one example of how we need to address this gender inequality to allow full workforce participation.”

“One of my first objectives at Mecca to that was to start a female-founded business where we got women together, and we showed that women could create a successful company collectively, and we could build each other up and create something really fantastic as a collective.“

Horgan is an optimist, choosing to believe they can persevere when the chips are down from the very outset.

She lost her first day’s takings, about $1600 (she’d find it later).

“Things really can be stacked against you. But as I have always said, I am a natural optimist. And rather than having a voice in my head that said, ’Oh, you are so stupid, how could you ever let that happen? How does this bode for the rest of this adventure that you’re on? This is such a bad omen.” I was like, oh, well, onwards and upwards. There’s always tomorrow and there’s 10 million brilliant things about this, and I’m not going to focus on that one thing.

“It was a choice. I remember thinking at that moment, there are two paths. I can go down here, the Debbie Downer, or the sort of Sunshine Sally. I am choosing Sunshine Sally.”

 

27 Apr, 2023
Kogan slashes inventory by more than half in reset
SOURCE:
Ragtrader
Ragtrader

Australian online marketplace Kogan has slashed its inventory by more than half and returned its net cash to black compared to this time last year.

Kogan said the reduction reflects the significant right-sizing of inventory levels to match prevailing levels of demand. This includes rationalising inventory categories, renegotiating supplier contracts and recalibrating marketing spend.

As at March 31, 2023, Kogan’s inventory sat at $78.3 million (comprising $68.2 million in-warehouse and $10.1 million in-transit), down from $193.9 million (comprising $169.5 million in-warehouse and $24.4 million in-transit) as at March 31, 2022.

The etailer also accrued a net cash (after loans and borrrowings) of nearly $49.1 million, compared to -$(6.3) million in March 2022.

The reduction in cash since December 31, 2022 was offset by a corresponding reduction in Trade Payables, according to Kogan. As of today, all debt within Kogan.com has been repaid, while a small advance remains drawn within Mighty Ape.

Founder and CEO Ruslan Kogan welcomed the positive results despite subdued sales activity in the third quarter of FY23.

“After a series of challenging periods, I’m proud that Kogan.com has returned to sustained underlying profitability, reflecting the efforts of our brilliant team and the agile and robust business we have built,” Kogan said.

“The journey to get here has been one of the toughest in our 17-year history, but also one of our most rewarding.

“It goes without saying – we are a far stronger Company today than ever.”

Meanwhile, Kogan’s gross sales of $188.7 million declined 28% year-on-year, which it said reflected soft market conditions caused by interest rate rises and inflationary pressure.

Its gross profit of $34.3 million was impacted by soft topline performance mentioned above.

Kogan’s gross margin increased 6.5pp to 31.6% over the quarter, reportedly driven by the conclusion of significant discounting to sell-through aged inventory at the start of Q3 FY23 and an increased proportional contribution from the Marketplace, Verticals and Kogan First commission streams.

Its variable and marketing costs as a percentage of gross sales reduced to 8.1% from 10% in Q3 FY22.

It’s earnings before interest, tax, depreciation and amortisation (EBITDA) was $4.4 million, up from -$(4.0) million in the prior corresponding period.

Kogan ended the period with 2,296,000 active customers, with its NZ etailer Mighty Ape reporting an active customer base opf 760,000

Kogan First subscribers grew by 24.3% to over 407,000 as at March 31, 2023.

“In these current tough economic conditions, we are a proven and loved shopping destination that helps millions of shoppers save on products and essential services,” Kogan said.

“We are dedicated to helping our customers live life to the fullest.”

12 Apr, 2023
Scentre Group clocks 125 million customer visits this year
SOURCE:
Ragtrader
Ragtrader

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

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

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

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

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

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

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

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

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

Schwartz said it was the right time to step down.

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

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

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

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

12 Apr, 2023
Authentic Brands Group snaps up Aussie brands, Surf Dive ‘n Ski chain
Inside Retail

US-headquartered brand management company Authentic Brands Group has made a binding offer to acquire sports and lifestyle company Boardriders – including Australia’s 80-strong Surf Dive ‘n Ski chain of stores.

Boardriders designs produces and distributes branded apparel, accessories and footwear for boardriders globally and its portfolio includes Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element, VonZipper and Honolua.

Jamie Salter, the founder, chairman and CEO of Authentic Brands Group, said the acquisition would help “accelerate and expand” Boardriders’ branded retail stores, wholesale and e-commerce network worldwide.

“Along with the great brands and impressive global reach that will come with this acquisition, we see Boardriders’ potential as a thriving online marketplace under Authentic’s ownership.”

Arne Arens, CEO of Boardriders, said under Authentic’s ownership, the brand is “uniquely positioned” to expand and reach more consumers.

The deal is subject to the consultation of certain Boardriders employee representatives and is expected to be finalised in the third quarter of this year.

Salter said that as an early believer in the global and commercial appeal of action sports, the acquisition takes him back to the roots of his early career.

12 Apr, 2023
Plentiful prams but pitiful profits: Is it time to buy Baby Bunting?
The Sydney Morning Herald

Few items fit the definition of “essential spending” better than prams, cots and baby clothes.

These infant goods are ASX-listed retailer Baby Bunting’s bread and butter, and the business has become a major force in selling the basics – and extra bells and whistles – to Australians for their little ones.

But while the company’s core products are some of the least likely victims of a spending slowdown, Baby Bunting has been flagging tough conditions. Profits for the first half of this year collapsed by 67 per cent and its share price is down by more than 57 per cent over the past 12 months.

Sales grew strongly during the lockdown era when Baby Bunting stores were allowed to remain open when many other retailers shuttered. Now the business has to adjust to the post-pandemic trading environment, where families are being increasingly savvy when it comes to kitting out their nurseries.

The company is also on the search for a new boss, confirming when it delivered its half-year results that long-serving managing director Matt Spencer will leave his post later this year.

After a turbulent few months, stock watchers are trying to work out whether the market has been too tough on the company, which still has national growth plans in the works.

Industry: Baby and nursery goods retail.

Main products: Prams, car seats, baby clothes and accessories.

Key figures: Chief executive Matt Spencer (who will exit the company this year), chair Melanie Wilson.

How it started: The business was founded when the Nadelman family opened a single baby goods store in the Melbourne suburb of Balwyn in 1979. The company had grown to more than 20 stores before its share market float in 2015.

How it’s going: The business listed on the ASX in 2015 with an offer price of $1.40. Shares closed at $2.06 before Easter but went as high as $6.58 in April 2021 thanks to the company’s COVID lockdown boost.

The bull case: Optimistic observers are looking through Baby Bunting’s short-term challenges and towards its future aspirations.

The company told investors at its February update that shoppers were spending less on consumer staples like clothing and toys, and directing more of their spending towards discount department stores like Kmart for these purchases.

Wilsons analysts still see the company as a dominating force in the baby goods market, though, and say the business can reach $1 billion in annual sales once it completes plans to open another 50 stores in the coming years.

“We believe Baby Bunting has been oversold, and provides attractive value for investors able to look through near-term headwinds and recognise the opportunity with strong revenue growth, gross margin expansion and earnings growth medium-term,” analyst Tom Camilleri said when initiating coverage of the stock at the end of last month. Wilsons has an overweight rating on the company and a price target of $2.70.

Citi’s analyst team says the outlook for the company is uncertain, particularly because the macroeconomic environment is continuing to weaken, but also sees long-term potential in the business.

“Baby Bunting still has a number of long-duration growth strategies, which appear intact,” Citi’s equities team said after the company reported its half-year numbers.

The bear case: More cautious stock watchers have their eye on same-store sales growth at Baby Bunting, and are trying to predict how the business will perform if shoppers direct a larger portion of their spending on infant goods to other retailers, like discount department stores.

Back in February, the company told investors that comparable store sales were down by 2.1 per cent year-to-date. The business reaffirmed its profit guidance, saying it expects net profit after tax for the full year to come in at between $21.5 million and $24 million.

Macquarie’s analysts said the retailer’s run rate was below their forecasts, and noted that the numbers suggest the company is relying on a strong second half to meet their targets. “We remain cautious given the significant 2H23 earnings skew required to meet guidance,” they said.

The composition of sales was also a concern, with click-and-collect orders dropping by 30.2 per cent in the first half. The Macquarie team also noted the drop in “consumer staples” sales, like clothes and nappies, and softening demand for toys and “play time” goods.

“This category includes Playgear, which is high margin, with management noting this category is further normalising post-COVID,” Macquarie’s retail team said.

12 Apr, 2023
Kathmandu, Rip Curl sales boosted by travellers, firming plans for global expansion
SOURCE:
The Age
The Age

Globetrotting holidaymakers are fuelling strong sales momentum at Rip Curl and Kathmandu operator KMD Brands, with the group’s boss bullish on expansion plans in Australia and overseas despite economic uncertainty.

The ASX-listed outdoor lifestyle outfit recorded a $NZ14 million ($13 million) profit for the six months to the end of January – a 352 per cent improvement on the same time last year, when pandemic interruptions led to the company recording a $NZ5.1 million loss.

Sales at outdoor clothing maker Kathmandu were up by 51.2 per cent to $NZ194 million, while wetsuit and surfwear brand Rip Curl grew by 18.8 per cent to $306.4 million.

Chief executive Michael Daly said that sales had continued to surge in February, and were up by 31.9 per cent across the group compared with last year.

The return of international travel and tourism is helping to lift the retailer, as holidaymakers in places like Hawaii and Queensland drop in to buy travel supplies, clothing and T-shirts and make last-minute purchases before they jump on a plane.

Daly said that while it was hard to predict what would happen to spending confidence across the globe for the rest of this year, the company was well positioned because it sold ″⁣products for a purpose″⁣ and catered to shoppers who were still on a strong financial footing.

Rip Curl stores outside of Australia would continue to see strong demand, he said.

“With our stores being in places like Hawaii, Auckland CBD and the west coast of France, I’m not sure we’re selling necessarily to those that are going to really feel mortgage stress.”

Daly is optimistic about expanding Kathmandu’s bricks-and-mortar reach further across Australia and around the world.

Three years on from pandemic disruptions, he says there’s more than enough room for the brand to open between 40 and 50 new stores in Australia in coming years.

“If you look at our penetration in New Zealand, [we have] nearly 50 stores for 4.5 million people. And we’ve only got just over 100 stores in Australia for 25 million people. So we think we are underrepresented relative to population and relative to other retailers,” he said.

And the iconic Kathmandu puffer jacket has set sail across the globe, after the brand made its first deliveries of stock to wholesale partners in Europe and Canada at the end of last year.

The business has a goal of reaching $NZ100 million in annual sales in international markets – a big jump on the $NZ1.7 million it has today.

Daly says the company is keen to open physical Kathmandu-branded stores overseas, but is still crunching the numbers before it decides where is the best place to set up shop.

“We’ll be very targeted. And when we have that data, we can make that decision. We can be a little more aggressive then and have a go,” he said.

KMD Brands declared an interim dividend of NZ3 cents per share, to be paid June 30.

Shares are up 1.1 per cent to 95 cents in afternoon trade.

12 Apr, 2023
Peter Alexander to scale 35 countries with new agreement
SOURCE:
Ragtrader
Ragtrader

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

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

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

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

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

12 Apr, 2023
Premier profit hits $174 million as Jacqui E, Jay Jays turn around
SOURCE:
Ragtrader
Ragtrader

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

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

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

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

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

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

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

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

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

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

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

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

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

12 Apr, 2023
When retailing boss Solomon Lew pivots it’s time to take notice
The Australian

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

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

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

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

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

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

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

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

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

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

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

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

Online push

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

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

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

BOQ’s holding pattern

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

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

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

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

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

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

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

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

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

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

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

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

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

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