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Australian suiting brand M.J. Bale is now B Corp certified, securing a maiden score of 84.2. 

M.J. Bale’s score is 4.2 points above the qualifying score of 80 and more than 30 points above the median score of 50.9 for all ordinary businesses.

Run by global non-profit organisation B Lab, the B Corp certification covers five key areas across environmental social governance (ESG), including governance, workers, community, environment and customers.

The menswear label scored highest in environment, with a score of 24.6, which includes a boost of 5.7 points in land/wildlife conservation.

It also scored high in workers at 22.4, followed by community at 17.7, governance at 16.9, and customers at 2.3.

“On behalf of all stakeholders, including our staff, board and network of partners, I am incredibly proud that we have attained the B-Corp certification,” M.J. Bale founder and CEO Matt Jensen said. 

“The certification is not an end in itself; we consider it more a baseline for us to continue to improve in all aspects related to our corporate governance and relationships with staff, community, environment and customers.” 

Founded in 2009, M.J. Bale has an 86-store national network, including shop-in-shops in David Jones and Myer. 

The brand is the Official Tailor to the Australian Test cricket team, Subway Socceroos, Wallabies, and the Kangaroos. 

In 2021, M.J. Bale became the first Australian fashion brand to be Climate Active-certified as carbon neutral for both products and organisation. It is currently renewing both its Climate Active certifications. 

In the same year, M.J. Bale produced what is understood to be the world’s first methane-reduced wool at its Kingston partner farm in Tasmania, and in conjunction with Sea Forest Tasmania. The commercial trial, which ran for 300 consecutive days, saw 48 Merino sheep fed a food supplement containing asparagopsis taxiformis, a native red seaweed proven by the CSIRO to reduce methane emissions in ruminant livestock by more than 80 per cent. 

The 15-year-old brand joins 8,000 other B Corp certified businesses across the globe, with over 1,000 of those in Australia and New Zealand. B Corp certified businesses in Australia and New Zealand’s fashion sector include KMD Brands, Modibodi, P.E Nation, Bassike, Kowtow Clothing and Boody.

B Corp scores are revised every three years as part of a recertification process. 

Wesfarmers-owned hardware giant Bunnings and food producers with large market power could be brought under a compulsory version of the Food and Grocery Code of Conduct set to be overhauled later this year.

But an inquiry led by respected economist Craig Emerson has downplayed calls for winemakers to be protected by the code, finding they did not readily fit into a scheme designed to cover supply of “groceries”.

“Many suppliers of grocery products are particularly vulnerable to the supermarkets’ market power because these suppliers do not have other avenues to sell their products at scale,” Dr Emerson said.

“In contrast, wine is sold in liquor stores across Australia, and in some states, wine is not available in supermarkets. Furthermore, around 60 per cent of Australian wine is exported.

“For all these reasons, the review considers it is not clear that there is a compelling case for adding wine to the products protected under the code [and] there are similar issues with other alcoholic beverages.”

Bunnings, however, controls 70 per cent of the retail horticulture market, more than the 65 per cent share of supermarkets controlled by Woolworths and Coles, prompting suppliers to raise similar concerns about its buyer power.

“By volume of units sold in their stores, plants are second only to tins of paint,” Greenlife Industry Australia said in its submission to the review of the food and grocery code being conducted by Dr Emerson, a former Labor minister and a columnist for The Australian Financial Review.

Bunnings disputes Greenlife’s claim and believes its share is closer to 30 per cent of the nursery market.

Code coverage of Bunnings would only cover its nursery division because that is the only area where it holds market-distorting power by being the only or main buyer to many suppliers across the country.

Dr Emerson concluded the case had not yet been made to expand the code to other retailers such as Bunnings, though he left the question open to more consultation, allowing Bunnings’ suppliers to argue the case.

He suggested Bunnings and its suppliers work together to form a voluntary code of conduct or similar document that gives suppliers similar standing as those covered by the compulsory code.

“The final report of this review will consider this specific issue further,” he said. The report is due to be handed to the government on June 30.

Poor conduct by chicken processors

An interim report being released on Monday also raised the prospect of producers sitting between farmers and supermarkets being brought under the code.

Family-owned Baiada Poultry and the publicly listed Ingham’s Enterprises supply about 70 per cent of Australia’s meat chickens, while about 80 per cent of chicken meat comes from about 700 chicken farmers.

“There are no fundamental issues of countervailing power between processors and supermarkets, and in fact in terms of farmer negotiation, processors are effectively acting as proxies for the supermarkets,” the Australian Chicken Growers’ Council said in its submission to the inquiry.

“That does not stop supermarkets ‘frightening’ meat poultry processors daily with increased demands (e.g. RSPCA accreditation, ‘swap’ to another processor etc).”

Dr Emerson said he had heard from farmers about examples of poor conduct by processors, but said a mandatory code “could result in it being unwieldly and imposing unnecessary compliance costs on an extended range of parties”.

That said, he called for submissions on what provisions should be added to the code to ensure that farmers who deal with aggregators or processors do not miss out on the protections provided in the Code.

At the ripe young age of 79, retail billionaire Solomon Lew is making one of his biggest bets on growth, announcing a plan to split his retail empire into three separately listed companies.

Following a strategic review of Lew’s Premier Investments vehicle, he announced on Tuesday that he would spin off kids stationery giant Smiggle and pyjama chain Peter Alexander in calendar 2025, with the two businesses to be primed for growth via international expansion.

Lew’s legacy brands, including Just Jeans and Portmans, will remain inside the Premier Investments vehicle, which many analysts have suggested will eventually consider a merger with department store giant Myer, in which Premier holds a 29 per cent stake.

Lew emphasises that any such deal is not on the horizon. While Premier supports Myer’s new executive chairman Olivia Wirth, and Lew believes the management team can lift the performance and profitability of the business, he says Myer’s focus needs to be on fixing itself.

Frankly, Lew’s got enough on his plate, keeping the Premier retail businesses running in a trying macroeconomic environment, while juggling the likely demergers of Smiggle and Peter Alexander.

Having pre-announced much of Tuesday’s first-half result, there were relatively few surprises, and one pleasant one. EBIT from the retail businesses came in above guidance at $209.8 million, gross margin dipped slightly, but the cost of doing business also dropped, an impressive result given the cost pressures other retailers have struggled to combat.

The second-highest EBIT and sales result in the company’s history underscores Premier’s skills in playing the macroeconomic cards it is dealt.

The stock surged 9 per cent in early trade on better margin control, before settling about 2 per cent higher. In the past 12 months, Premier shares are up more than 35 per cent.

The bigger focus for the market is Lew’s plans to split off Smiggle and Peter Alexander.

Many in the market expected the businesses would be lumped together; Citi put a value of about $3 billion on the brands.

But Lew says the fact Premier is looking to set up separate entities reflects the fact these businesses are on different growth trajectories and run to different rhythms.

Smiggle, for example, already has a well-established international presence in Asia and Europe, and is building its presence in the Middle East and now Indonesia via wholesaling agreements.

Peter Alexander, meanwhile, is at the start of its international expansion and announced on Tuesday that it would open up in the British market later this year, ahead of the critical Christmas trading period.

While the Lew family will retain major shareholdings in Smiggle and Peter Alexander, and Lew’s history says he will be a hands-on presence in both businesses, he is also keen to ensure that the next generation of management stars inside Premier are given their chance to shine.

Judy Coomber, managing director of Peter Alexander, and John Cheston, managing director of Smiggle, might be the best retailers the public has never heard of.

Premier and Lew will have plenty of time to test the appetite of the market for two new listed retailers, but the reception should be pretty good.

Fund managers have done well out of backing the nation’s best retailers to turn small-cap retailers into mid-cap and large-cap companies; think Brett Blundy and team at Lovisa, generations of good managers at JB Hi-Fi and, to a lesser extent, the team behind Universal Stores.

Clearly, the market will want to see the details of Smiggle and Peter Alexander’s structure and numbers. But Citi’s estimate of annual growth of between 7 per cent and 10 per cent, with half driven from international expansion, helps explain why these two spin-offs will create interest.

Peter Alexander’s growth in the first half, at 6.7 per cent against small falls in Premier’s other brands, is particularly eye-catching.

Zimmermann, the luxury women’s fashion brand acquired in August by private equity firm Advent International, swung to a loss last year despite a surge in sales.

Revenue rose from $382.5 million to $506 million in the 12 months to June 30, according to returns filed with the Australian Securities and Investments Commission. But rising wages and material costs pushed Zimmermann to a $27.3 million loss.

Advent acquired a 70 per cent stake in Zimmermann from Milan-headquartered Style Capital last year in a deal that valued the company at up to $1.75 billion.

The deal pushed Nicky and Simone Zimmermann up the Financial Review Rich Women List. The sisters, who founded the company in 1991 and control the remaining 30 per cent of the business, are now estimated to be worth $361 million.

Accounts filed with the corporate regulator by Zimmermann’s parent entity, Oceania (TopCo) Pty Ltd, show the fashion house sold $233.2 million in goods in stores, up from $178.6 million, and around $62.3 million online, up from $59.3 million. Wholesale revenue rose from $154.7 million to $211 million in the year to June 30.

There was also a $90 million earn-out provision from the acquisition of shares in Zimmermann International, an entity owned by Oceania, and associated with the sisters, according to the documents.

Oceania swung to a net loss of $27.3 million, compared with a profit of $2.5 million one year earlier. The group paid dividends of $500,000 last year to its shareholders, according to the filings. In 2022, dividends were $9.5 million.

Zimmermann chief executive Chris Olliver did not respond to a request for comment. Mr Olliver, who is married to Nicky Zimmermann, will remain the company’s CEO despite the deal to sell a significant stake to Advent.

The investment by Advent – which has a portfolio of retail assets including Brazil’s Skala Cosmeticos and perfume brands Parfums de Marly and Initio Parfums Prives – will help bolster Zimmermann’s growth in markets such as China and the Middle East. It also plans to expand its product categories and accessories, and strengthen its online offer. Zimmermann’s Sydney store will get a facelift and double its existing space.

Advent owns other consumer brands around the world including BareMinerals, Buxom and Laura Mercier, which are headquartered in the United States.

The private equity firm, which has $US95 billion ($145 billion) in assets under management, is one of the world’s largest buyout shops, behind giants Blackstone, KKR and TPG Capital. The Australian Financial Review reported earlier this month that it planned to establish an Australian office after acquiring Zimmermann, its first local asset.

The transaction was the third major deal for a big Australian brand last year. French skincare giant L’Oreal agreed in April to acquire luxury cosmetics brand Aesop, which was founded in Melbourne, for an enterprise value of $US2.53 billion, while tanning brand Bondi Sands was sold to Japanese cosmetics giant Kao Brands for $450 million.

Zimmermann employs 900 people and has stores in Paris, London, Shanghai, as well as in Cannes, Rome and Naples.

The retail sector is not expected to return to healthy levels until the middle of next year as consumers remain reluctant to part with their dollars in the face of stubborn inflation and high interest rates.

Despite the lure of bargains and deals during last year’s Black Friday sales, retail turnover for the December quarter grew at half the rate recorded during the same period last year, prompting KPMG to lower its forecasts for recovery in the sector, which has been in a “retail recession” for 12 months.

“We’re coming out of it, but we’re coming out of it slowly,” said KPMG national retail and consumer lead James Stewart.

“In reality, we probably bottomed in some respect last year. But the issue is the pace of the momentum coming out of it. It is just taking a while, and it’s going to take longer than what I think people would have hoped.”

KPMG’s previous retail health index report from September predicted a “modest acceleration in trading conditions”. But an incremental lift of 0.17 index points for the December quarter suggests “the overall health of the retail sector remains poor” and that “a balanced outcome by the end of 2024 may be at risk”, according to the December report.

In the second half of last year, consumers prioritised value for money, favouring “everyday low pricing” retailers such as Kmart and Bunnings and turning to online retailers like Kogan.com.au and Temple and Webster to find better deals. Meanwhile, the likes of Myer, Nick Scali and Kathmandu have flagged a hit to sales and profits.

Many retail executives had expressed optimism of a lift in consumer spending power in the second half of the year, thanks to the looming stage 3 tax cuts and the stabilisation and potential slashing of interest rates. Deloitte Access Economics predicted in December that the second half of 2024 would represent a “turning point” for the economy.

However, businesses will continue to contend with higher operating costs spanning electricity, fuel, manufacturing and packaging, and wages, as well as reluctant consumers.

“Anecdotally, a lot of retailer CEOs we engage with are realistic that the market is probably going to be a slow growth market for a little while,” Stewart said.

He said consumers were poised to potentially benefit from a retail recession as retailers are having to discount more heavily to encourage cashflow into the business, which puts margins under pressure. Tech retailers such as JB Hi-Fi and Harvey Norman are cutting prices to close sales with bargain-hungry shoppers.

Despite the current conditions, Stewart said food and household goods businesses would be fairly resilient as people still had to eat, and a flow of migrants coming to Australia increased demand for furniture.

“I don’t think any category will end up bruise-free, but inside each category you’ll have better performers than others, because of their business model and the way they go to market,” he said.

Consumer confidence was expected to remain gloomy until inflation eased or interest rates came down, he said.

The Reserve Bank has warned that borrowers will face tough conditions for the rest of the year, and force more to cut their spending or even rely on charity, before higher wages and interest rate cuts provide some relief in 2025.

February had the largest fall in unemployment, which has cast doubt on economists’ hopes of a winter interest rate cut by the Reserve.

The Albanese government has signalled that combatting the cost of living will be a key focus in its May budget.

Australians are tipped to spend around $18 billion on DIY projects, holiday travel, and festive treats this Easter season.

The Australian Retailers Association, in collaboration with Roy Morgan, identified the 2.4 per cent population growth to drive the higher Easter spending this year.

Australians are estimated to spend $6.3 billion on home improvement, down 0.5 per cent from the previous year, with average DIY expenditure to stand at $852 per person.

“Despite cost pressures, the lure of home improvement remains strong, with 7.8 million Australians undertaking projects, making it a bustling period for home and hardware retailers,” ARA CEO Paul Zahra said.

Meanwhile, confectionary spending is anticipated to surge 23.5 per cent to $2.05 billion as 17.3 million Australians plan to purchase Easter food and chocolate.

“Australia’s growing populace is driving the uptick in spending on Easter goodies, with the 18 to 34 demographic spending the most on such treats, reflecting the enduring appeal of Easter as a time of celebration and indulgence,” Zahra said.

In addition, travel spending is forecasted to rise 5 per cent to $9.6 billion, with a notable shift to overseas destinations. Around 53 per cent of the travelling Australians will take a holiday trip within their state while 34 per cent will go interstate and 13 per cent overseas.

Intrastate travel spending is predicted to drop 17 per cent to $2.3 million, while interstate travel spending is estimated to fall 2.8 per cent to $3.5 million. Overseas travel spending is expected to climb 26 per cent to $3.8 billion.

“While less Australians are holidaying, the overall spend is higher – those who have the money to spare and are less affected by the cost-of-living crunch, are still splashing out,” Zahra said.

Marquee Retail Group, which owns Colette and The Daily Edited, has collapsed into administration, citing an unexpected sales decline since October.

The company’s board of directors has appointed Domenic Calabretta, Mitchell Ball, and Richard Lawrence of Mackay Goodwin as voluntary administrators. 

Marquee said its unplanned downturn in sales from October 2023 to March 2024 was a result of rising inflation and interest rates. That was compounded by ongoing debt arrangement with the ATO, which dates from the Covid-19-induced drop in sales.

The firm will remain business as usual and aims to keep all stores open, with no plans to lay off staff at this stage. It is working towards a Deed of Company Arrangement and exploring the potential sale of the business as part of strategic options.

“Our decision today is about securing the future of the Marquee Retail Group and its employees, while emerging on the other side of Voluntary Administration,” said chairman of the board Bernie Brookes.

Marquee acquired fashion accessories and jewellery brand Colette by Colette Hayman in September 2020 and luxury fashion and accessories label The Daily Edited in December 2022.

During an interview with Inside Retail last year, Brookes said he was planning to expand both brands as well as look for acquisitions to fit under the Marquee Retail Group umbrella.

“We are thrilled to be increasing access to American Apparel for shoppers in Australia and New Zealand, who can now buy this iconic brand with just the click of a button,” said Chuck Ward, president of sales, marketing, and distribution at Gildan Activewear, the company that owns the American Apparel trademark.

“We will also be bringing our newest collections and styles of American Apparel to those markets and will be supporting the brand with our Craft the Culture campaign. With this campaign, we’re encouraging our customers to channel their creativity, express their individuality, and create timeless memories through our products.”

The new collection includes ReFlex lightweight fleece, Heavyweight cotton garment dyed t-shirt and muscle tee, Pique unisex mockneck t-shirt and matching unisex gym shorts, Sueded unisex t-shirt, and Unisex CVC henley t-shirt.

American Apparel’s staple items such as the 2001 Fine Jersey Unisex t-shirt and the 1301 Heavyweight Cotton Unisex t-shirt will also be available on the website.

The company’s products will remain available for wholesale purchase.

American Apparel is returning almost eight years after it closed its stores in Australia following its US bankruptcy.

Godfreys is set to disappear from the Australian retail landscape after administrators failed to find a buyer for the 93-year-old business.

The vacuum retailer, which collapsed in January after failing to stay relevant in a fast-paced retail environment, will begin winding down its remaining 87 stores and eventually let go of more than 600 staff.

PwC administrator Craig Crosbie said while he received 55 expressions of interest and six indicative offers, these were either withdrawn eventually or were not enough to keep the business alive.

“This is not the outcome Godfreys had hoped for following a rigorous process to find a purchaser for the business that could keep the store network trading,” he said in a statement.

“In the absence of any further bidders coming forward as intermittent trading continues, the process of closing all remaining stores will progress over the next eight weeks.”

Godfreys stores will remain open over the next two months to allow for the chance to clear existing stock before all stores are due to shut on May 31.

Franchisees will no longer receive support from Godfreys’ head office, where 25 staff have already been made redundant.

“We recognise this is a difficult time for staff, franchisees, and other stakeholders, and we will continue to work closely with all parties to ensure they are informed and supported over the coming weeks.”

Administrators have already shut 54 stores and axed nearly 200 jobs after taking over the business in late January.

The vacuum retailer was founded in 1931 by Godfrey Cohen and business partner John Johnston during the Great Depression and became renowned around the country for its memorable advertisements.

Over the years, however, Godfreys failed to keep up with innovation, missing out on the “stick” or cordless vacuum trend, in which retailers such as Harvey Norman and Bing Lee captured market share.

It also opened too many stores too quickly, which led to the retail chain becoming saddled with debt. The company also suffered from several changes to its structure and leadership.

Jane Allan, the daughter of late co-founder John Johnston, attributed the company’s recent woes to COVID-related disruption, a tougher economic environment and cost-of-living pressures.

Godfreys was sold to private equity in 2006 and listed on the ASX in 2014, but it saw high turnover, a revolving door of senior management and a perpetually sinking share price.

Johnston rescued the business twice over his lifetime, buying it back just in time for his 100th birthday in 2018 with the aim of delisting it, before he passed away later that year.

KMD Brands CEO and managing director Michael Daly has declared that improving Kathmandu’s sales performance is the company’s immediate priority following a 21.5 per cent revenue dive for the first half of FY24.

Kathmandu’s total sales dropped by $41.7 million to $152.3 million, with operating profits slipping from a positive $2.7 million in the first half of FY23 to negative $18 million in the first half of FY24.

Sales were down by 22.9 per cent in Australia and down 15.9 per cent in New Zealand.

Online sales plunged by more than a third (36.9 per cent) to $16.4 million, with KMD citing a return to stores following post-COVID transition. An online penetration at 10.9 per cent of direct-to-consumer sales remained above pre-COVID levels. 

Meanwhile, Kathmandu’s gross margin decreased by 240 bps (down 2.4 per cent of sales), driven by clearance of end of line products in August. 

Excluding August, gross margin for the period was down 50 bps (0.5 per cent of sales) lower year-on-year despite currency headwinds.

“In the second half, the group will be cycling less challenging sales performance last year, particularly Kathmandu in the fourth quarter,” Daly said. 

“Improving Kathmandu sales performance is our immediate priority as we approach the key winter trading period. We expect to see progress in the second half and into FY25 as we launch new innovative products, quick to market programmes, elevated visual merchandising, increased personalisation through the recently released ‘Out There Rewards’ and an expanded third-party brand strategy.”

KMD Brands’ two other businesses, Rip Curl and Oboz Footwear, also recorded revenue dives in the first half, driving a total revenue drop across all three brands of 14.5 per cent to $468.6 million.

Rip Curl sales dropped by 9.2 per cent to $278.3 million, cycling record sales last year. 

Direct-to-consumer sales including online decreased by 5 per cent, reflecting weakened consumer sentiment in key global markets, with KMD noting stronger results in Europe, Asia and South America. 

Online sales alone increased by 4.3 per cent and remains above pre-COVID levels. Wholesale sales decreased by 14.1 per cent, as wholesale accounts reduced their inventory holdings in response to the challenging consumer environment. 

Despite the challenging conditions, Rip Curl’s gross margin increased by 90 bps (0.9 per cent of sales) reflecting improved pricing and freight rates, plus exiting its low margin business in North America and Europe. 

Rip Curl’s operating profit (EBIT) also remained positive at $20.8 million despite a 34 per cent drop on the prior corresponding period.

Meanwhile, Oboz Footwear recorded a 20 per cent drop in revenue to $38 million, driven mostly by a wholesale sales decrease of 23.5 per cent, which was also impacted by stockists reducing inventory. 

Online sales boomed by 34.2 per cent, with KMD citing strategic promotional activity.. 

Gross margin increased 450 bps (4.5% of sales) reflecting lower freight rates, improved channel mix, improved pricing and new product introductions. 

Oboz continued to invest in brand, online and product to support long-term growth objectives - including international expansion. 

While the North American wholesale operating margin remained below historic levels, Oboz expects the operating expense investment to be leveraged with future sales growth opportunities.

First half sales trends have reportedly improved for all three brands as they begin the second half year. Group sales for February 2024 were down 3.5% on last year, noting that February is not a significant trading month.  

“We expect the wholesale customer inventory reduction cycle to end this financial year, giving us a more positive FY25 outlook in the wholesale channel for both Rip Curl and Oboz,” Daly said. 

“We believe that with our portfolio of iconic global outdoor brands and leadership in sustainability, we remain a unique investment proposition and well-placed for the future.”

Australian workforce management software maker Deputy has cracked the billion-dollar valuation milestone, with its first external investment in six years making it the first private technology “unicorn” company to emerge since the tech funding market soured in early 2022.

The more than doubling of its valuation since 2018, when it last raised capital, marks a major turnaround for the start-up. Deputy almost went bust during the COVID-19 lockdown era, when demand for its software, which helps shift workers communicate and organise their rosters, dropped dramatically.

It highlights a financial windfall for company founder Ashik Ahmed, who was first exposed to the need for better organisation of shift workers as a 16-year-old immigrant from Bangladesh, when he was flipping burgers at Hungry Jack’s.

He founded Deputy in 2008, alongside entrepreneur Steve Shelley who had spent years wrestling with inefficient ways of organising his staff at his former company Aerocare, which provided services to airline and freight companies such as cleaning and loading and offloading cargo.

The new investment was made by US-based Express Employment Professionals, a global staffing and labour hire company. Deputy initially engaged Express as a potential customer, but the company liked its product so much it decided to buy a $37 million stake, at a valuation exceeding $1.1 billion.

Myer shares rose more than 7 per cent after the department store unveiled a major shake-up of management, appointing former Qantas Loyalty chief executive Olivia Wirth as its executive chairwoman and announcing the exit of its chairman, Ari Mervis.

The company’s CEO, John King, flagged his retirement last year and will leave in early June. Mr King joined Myer in 2018 and has spent almost six years stabilising the business, which has been buffeted by a greater preference for online shopping and a shift among luxury brands to move away from concessions towards their own boutiques.

Mr King said Myer was now a “stable, successful business, which is now ready for the next phase of its growth” under Ms Wirth. “I’m enthusiastic about that, and I’m excited as a shareholder to watch the story unfold,” he said on Thursday.

“We have transitioned Myer into a stronger and more profitable business, culminating in last year’s strong financial performance, which included the best sales result in almost two decades.”

But the process to replace Mr King has been difficult, with industry sources suggesting that strain was the reason for Mr Mervis’ departure. He was appointed Myer’s chairman in November after the exit of JoAnne Stephenson.

Sources said  Solomon Lew had favoured Mark McInnes, the former CEO of ASX-listed Premier Investments. He was hired by another billionaire rag trader, Brett Blundy, who has stakes in Adairs, Lovisa and Accent Group, and holdings in discount clothing chain Best & Less and lingerie giant Victoria’s Secret.

Mr Lew’s Premier Investments, which owns Smiggle, Peter Alexander and other leading retail brands, owns about 29 per cent of Myer. Mr Lew has separately appointed UBS to review Premier Investments’ businesses, which could lead to the spin-off of some of its holdings into separate ASX-listed vehicles.

Ms Wirth and former long-time Premier Investments director Gary Weiss joined the Myer board in October. On Thursday, Dr Weiss was appointed deputy chairman.

Ms Wirth brings a wealth of experience in a growth area for Myer in data and analytics after running Qantas Loyalty until earlier this year. She missed out on the top job at the national carrier after Alan Joyce’s departure as CEO last year.

“The board felt at the next stage of the journey of the customer first plan, this was the structure of the business of this time,” Mr King said.

“Olivia is a great executive, a great leader. The airline industry is one of the most customer service industries around – our business is all about customer and focus, so it doesn’t matter whether you’re selling an airline ticket or a dress, all the principles are still the same.”

Long-serving Myer head of stores Tony Sutton has been elevated to chief operating officer. He will report to Ms Wirth, who takes up her role as chairwoman immediately and will assume chief executive responsibilities from June 4.

Best to separate chair and executive positions

Myer shares were 7.5 per cent higher on Thursday afternoon at 86¢, their highest level since May. That gave the company a market capitalisation of about $711 million.

But Simon Connal, the co-founder of Ownership Matters, which advises institutional investors, said it was better governance to separate the chair and executive positions.

“Corporate governance principles in Australia favour the chair and CEO roles to be separated,” he said. “Such practice promotes the separation of the board and management, given the most senior position is that of the chair. At last count, there were 15 executive chairs in the ASX 300, so it is not typical in Australia.”

Mr Mervis was last year appointed chairman of Endeavour Group, which operates the Dan Murphy’s and BWS bottle shop chains. He is also the chairman of consumer products group McPherson’s. He did not respond to requests for comment on Thursday.

At Qantas, Ms Wirth oversaw the expansion of the Frequent Flyer program to generate more than $500 million in annual earnings, $2 billion in revenue and a membership of 15.8 million. Previously, she was the airline’s chief customer officer and head of corporate affairs. From June 4, Ms Wirth’s base annual salary will be $1.25 million.

Myer said on Thursday that profits in the 26 weeks to January 27 were $52 million, down from $65 million a year ago. The period was dented by discounting and higher costs, the company said.

Sales fell 3 per cent to $1.829 billion. Online sales were $390.1 million, or 21.3 per cent of total sales, an increase of 2 per cent on the prior period.

The company declared an interim dividend of 3¢ a share, down from 4¢ a year ago.

Myer also confirmed a report in The Australian Financial Review’s Street Talk column last month that KPMG had been hired to run a strategic review, which includes a possible sale of Sass & Bide, Marcs and David Lawrence. Myer bought a controlling stake in Sass & Bide for $42.4 million in 2011 and has sought to sell all three brands previously.

Bunnings has been named the most trusted brand for the year to December, dethroning Woolworths and ending the supermarket’s three-and-a-half-year dominance. 

Bunnings lost the title of Australia’s most trusted brand to Woolworths in May 2020. However, beginning October 2022, Bunnings has made a strong comeback, drawing the greatest increase in confidence among all those on the trusted brands list.

‘Bunnings is a brand with a vast reservoir of goodwill and reputational strength fed by dramatically more trust than distrust… its trust has been climbing steadily over the past year while its minimal distrust remains fairly stable,” said Roy Morgan CEO Michele Levine. 

According to Roy Morgan, Australians’ distrust of businesses has increased in recent years due to corporate greed, bad customer service, high prices, dishonesty, unethical tactics, and inadequate privacy policies.

Woolworths (2nd) and Coles (5th) have both dropped in the rankings of trustworthy brands. Aldi (3rd), Kmart (4th), and Bunnings (1st) all improved by one position.

After seasons of massive gains, athleisure clothing styles have plateaued on the runway. At this season’s ready-to-wear shows in New York, Milan and Paris, which drew to a close this week, ties, tailoring and trench coats took over from leggings, hoodies and bike shorts.

Closer to home, the Melbourne Fashion Festival is cheering the category on by enlisting Sydney label PE Nation for its Grand Showcase tonight. Further support comes with the runway debut of rising athleisure star R.Sport at the festival’s closing show.

This runway respite might not be enough. To stop athleisure from being pushed back into the gym changing room, Paul Burdekin, chief executive of The Upside, says that products need to find their fashion footing. This requires a step away from stretchy leggings into more structured styles.

“I think athleisure has had a very up and down consumer moment,” Burdekin says. “We are seeing consistent sales with our customers in the stretch category of tights and tops, but there is much faster growth in the lifestyle category.”

The label founded by Jodhi Meares in 2013 has expanded its collection of jackets, knitwear and pants.

“The response has been positive and we are happy with how business is progressing,” Burdekin says. “But this is still a head-down, bum-up environment.”

Nick Scali shares rallied to a two-year high after the furniture retailer reported growth in its order book last month, and Myer advanced on better-than-expected sales, countering the doom that has encircled households leading up to the peak of the interest rate cycle.

Chief executive Anthony Scali said foot traffic was up in most states where Nick Scali trades over the past few months, indicating consumer sentiment may be more positive.

Consumer confidence will get a further boost if shoppers believe that interest rates have stabilised, he said. He is also betting that the Labor government’s tax cuts will help consumption, and housing indicators are improving, too.

“I think the tax cuts and rate cuts will certainly help consumer confidence. That could be good for our business being in retail,” Mr Scali told The Australian Financial Review.

Nick Scali shares rocketed up 16.5 per cent to $14 each after it exceeded first-half profit guidance, posting a 29 per cent fall to $43 million in the six months to December 31, topping its forecast of $40 million to $42 million. Interim sales fell 20.2 per cent to $226.6 million and gross margin was robust at 65.6 per cent.

Mr Scali said other retailers would be watching the RBA, which kept the cash rate on hold at 4.35 per cent on Tuesday but retained its tightening bias, saying more rate rises may be necessary.

“We are definitely positive on sectors exposed to the economy coming into this reporting season as we believe that analyst forecasts are too low and valuations are attractive,” WAM Capital lead small caps portfolio manager Oscar Oberg said.

Shares in department store Myer gained 14.29 per cent to 76¢ on Tuesday, after its sales update proved better than feared. Myer forecast interim sales down 3 per cent $1.829 billion, or flat on a same-store basis. First-half net profit for the 26 weeks ended January 27 will be $49 million-$53 million, albeit dented by more discounting and inflationary cost pressures.

“If people believe that interest rates have peaked, I think that should help consumer sentiment because they know where they are in terms of what they can afford to buy spend,” Mr Scali said. Month-to-month store visit trends have improved, with traffic up 10 per cent in November and December, and up 4 per cent in January – the biggest sales month of the year.

Mr Scali said written orders were “solid” for the half at $212.7 million, up 1.1 per cent on the prior corresponding period; like-for-like orders were flat. Booked orders across both the Nick Scali and Plush brands in the second quarter were 8.2 per cent higher than a year ago, with November and December trading particularly strong.

The positive momentum continued into January when Nick Scali booked $58.9 million in orders, up 3.6 per cent on a year ago, and same-store sales up 2.6 per cent. Mr Scali said January was driven by volume growth with the average selling price down 6 per cent to 7 per cent.

Nick Scali declared a flat fully franked interim dividend of 35¢ a share, payable on March 26.

The company needs to fast track a planned store roll-out, the CEO said, noting site availability for Nick Scali was proving more difficult and rents were holding back the expansion of the Plush business. It has 64 Nick Scali stores and 44 Plush sites. Long-term, it aims to have 86 Nick Scali stores and 90 to 100 Plush stores in Australia and New Zealand.

The untangling of the freight situation is helping after the DP World strike was resolved, ending months of industrial action congesting ports.

“My sense is the ships will come back, which they will, and the supply will increase, and therefore there shouldn’t be too much pressure on lines,” Mr Scali said.

Jarden analysts said Nick Scali’s result was strong in a tough market, while Citi analysts argued the better-than-expected interim profit should be positive for investor sentiment.

WAM’s Mr Oberg said consumer-facing stocks have trailed the recovery seen in other sectors over the past six months, and the market was positioned much too bearish.

“The expectations in the market from the analysts covering both of those companies were factoring in negative outcomes around sales and gross margins. Things have turned out through October, November, December to be a lot better than people expected,” he said.

Further, Mr Oberg said Myer’s sales update was a tremendous result in the circumstances: “To get a flat top line result and then to see it improve through November, December versus their AGM update was really strong. That bodes well for the remainder of the year,” he said.

“Myer is still generating well over $50 million in profit, has minimal debt and is paying very strong dividends. It’s on a very low valuation, so it just feels like a matter of time before the market wakes up.”

Myer is looking for a new CEO to succeed John King, whose planned exit is in June.

Myer has reported a 3% decline in total sales for the first half of FY24 to $1.8 billion.

Myer now expects first half net profit after tax (NPAT) to be between $49 million and $53 million, which is down from $65 million reported the same time last year.

The NPAT guidance includes the impact of store closures and inflationary cost pressures.

Myer’s group online sales are expected to be $390.1 million, an increase of 2% on the first half of FY23 and representing 21.3% of total sales. 

The group’s comparable sales are up 0.1% on the prior corresponding period.

Myer CEO John King said the sector is navigating a number of economic hurdles. 

“Like many retailers, we have had to contend with inflationary pressures and greater promotional cadence, which has had an impact on profits,” King said.

“Our focus remains on seeking to drive further and sustainable cost efficiencies and inventory management. 

“We expect the consumer to remain cautious in the second half of FY24 but believe we remain well positioned with the strength of our leading loyalty program, our national distribution centre starting to scale and the continued roll out of successful brand extensions and new additions.”

The total inventory at Myer is expected to be lower than the same time last year.

Myer anticipates releasing its complete first half results during March 2024, following the completion of financial close procedures, board approval and completion of the half year review by the company’s auditors. 

The board is also continuing its search for a new chief executive officer and expects to update the market on progress in due course. 

Short sellers are under pressure after better-than-expected results from discount jewellery retailer Lovisa Holdings sent the stock soaring to all-time highs this morning.

The retail chain, which is backed by billionaire Brett Blundy, posted sales growth of 18.2 per cent to $373 million in the first half, underpinned by growth in its global store network, topping market expectations. Lovisa posted a 12 per cent rise in net profit to $53.5 million in the 26-week to the end of December.

Shares rallied 10 per cent following the result, pushing the stock above $27 apiece for the first time since listing in 2014.

The share rally arrives after sort sellers piled into the stock at the highest level in almost four years ahead of the results. Hedge funds betting against the stock make up about 4 per cent of the share float, the most since 2020, when short positions topped 7 per cent amid sweeping pandemic-induced store closures and a global retail slump.

Shorts against Lovisa started to rise around November when the retailer reported a 6.2 per cent drop in same-store sales during its expansion effort in the US and China. That missed market expectations, fuelling shareholder concerns about chief executive Victor Herrero’s $30 million salary.

Short positions have accelerated in the lead-up to the retailer’s half-year report and now amount to about $100 million – the highest level in dollar terms since the stock listed almost a decade ago.

“Expectations are very high coming into this result,” a local long-short fund manager, who is betting against the stock and was not authorised to speak publicly about the trade, told The Australian Financial Review ahead of the results.

“It’s been priced for perfection,” the fund manager, citing the stock’s historically high share price, mounting global headwinds for retailers and declining same-store sales as the reasons behind the fund’s short bet.

In the half-year report released on Thursday, comparable store sales fell 4.4 per cent compared to a year ago. The retailer’s store rollout program was also slower than expected, as well, with 854 stores as at December 31, behind UBS estimates.

“Some of the new stores may not be achieving the level of economics that the market analysts have been expecting,” the short-seller said.

Analysts had become increasingly divided on the Lovisa stock as the half-year report approached. UBS downgraded Lovisa to neutral last month, noting that the shares had rallied substantially (up 48 per cent) since November and pointing to growing signs that the store rollout was losing steam.

Jarden, which upgraded the stock to a buy in November, has held firm on its valuation, even as its analyst Ed Woodgate cautioned that investors should be “buying for the long term” as there “may be surprises before then”.

“Like every other retailer, Lovisa is facing a tough consumer environment,” he said in a note this month.

“While the trading update may be weak as Lovisa has to cycle one more period of strength and the net store rollout may disappoint, we expect investors will start to look long term once the worst of the bad news is in the rearview.”

Funds are divided, too

Funds also appear similarly divided on the stock. Hyperion, ECP Asset Management and Fidelity are among those holdings large long positions, based on recent filings.

QVG’s Chris Prunty, who counts the stock among the largest holdings in the firm’s long-short fund, is bullish on the outlook.

“We like Lovisa because the return on capital on new stores is very high, and they have a long runway to open stores in existing markets like the US and new ones like China,” he said.

“We understand the market has some concerns around the generosity of the CEO’s remuneration package, but we believe that if he can replicate half the success he had as Zara’s head of APAC, then he will have been underpaid,” he said.

The Lovisa short-seller estimated the stock could slip as much as 30 per cent – should the fund’s thesis behind the short play out.

“What we’ve seen with companies on high multiples in the past is that when you start to see cracks in the business, the market tends to be a bit more forgiving, until the cracks become the crevices,” the short-seller said, citing Domino’s Pizza and Pro Medicus as two stocks to have suffered this fate in recent weeks.

Had Clare Waight Keller possessed more of an ego, she might have been the first female creative director at Gucci.

“When Christopher [Bailey] left, Tom [Ford] and I had a conversation about me stepping up,” says the British designer from her home in London. Gucci’s then creative director offered Waight Keller Bailey’s old role as head of womenswear, widely considered a stepping stone to the top job.

But Waight Keller turned him down. “In the end I said no. I didn’t want to fail. I still felt like I was learning a lot.”

Instead, Waight Keller did things her way, leaving Gucci to becoming artistic director at the cashmere brand Pringle of Scotland in 2005.

“I guess I didn’t have a big ego,” she says of the decision [which, yes, she questioned after the fact]. “I wanted [the job], but I wanted it at the right time.”

Timing has been something of a recurring theme in Waight Keller’s career: she has seemed, somehow, to always be at the right spot at the right time, from landing at Calvin Klein in the early 1990s to now, designing a capsule collection for the Japanese fashion giant Uniqlo.

Bringing her intelligent and classic designs to the mass-market brand, Waight Keller has once again hit on a zeitgeisty intersection: this time, affordability and quality.

The collection, called UNIQLO : C, features a range of seemingly simple, infinitely wearable pieces – trench coats, turtlenecks, quilted jackets, wide-legged pants and combat boots.

Waight Keller, a long-time Uniqlo customer (“I’m a fan since they started with Jil Sander”), was drawn to the opportunity to work with the Japanese brand, and also with another culture. “Japan is an incredible place, and so different from the West. There’s a perfectionist nature but also a sense of respect for technique, craft and the working process. That really appealed to me,” she says.

Though Waight Keller has spent much of her career designing for luxury houses – at Chloé and then at Givenchy, where she designed the Duchess of Sussex’s wedding gown – she says the pace offered by Uniqlo is, somewhat paradoxically, slower than any of the Parisian brands she’s worked for.

“Luxury revolves around shows, and shows happen every three months,” she says speaking over the phone from her home in London. “You are in this very compacted time schedule – there’s a pre-collection, men’s, women’s, couture. You’re working on three seasons at a time, managing all these different teams.”

At Uniqlo, each collection takes six months to create, an almost absurdly luxurious amount of time. “It allows you to explore different fabrics, different techniques. You can finetune ideas. It’s an amazing laboratory.”

This collection – launching this week – is just the first in a series; she is currently at work on the fourth.

Waight Keller is one of the most admired designers of the past two decades. Timing has been on her side, yes, but she has also made a virtue of patience, believing preparation to be the key to success.

“I don’t like to fail,” she says. “I want to be really prepared. I don’t want to be in a position where I can’t deliver. I could observe other people’s mistakes without making them myself.”

The Birmingham-born designer started her career at Calvin Klein at nearly the precise moment a young Kate Moss was hired to be the face of the brand. “She would come in for fittings, and she would sit on the floor reading what looked like schoolbooks,” says Waight Keller. “She seemed so shy and tiny and we’d think, ‘Really, this girl is a model?’ But then you look at her and put her in the clothes and she’s incredible.”

At Ralph Lauren, she learnt the art of conviction from Lauren himself. “I hate to say ‘traditional’, but there was definitely so much of that rooted in what Ralph is all about,” she says. “It’s so underrated but it’s part of what has made his empire so incredible and given it longevity.”

It was an “amazing thing to observe,” she says. Most designers yield to trends in one way or another, she adds, but “he’s not interested”.

Timing was her friend at Gucci, too, under the masterful direction of Tom Ford, who was tasked with revitalising the once-sleepy brand in the 1990s. During Ford’s enormously successful reign, Gucci was “all about sex,” says Waight Keller.

“It wasn’t very me,” she admits, “but I learnt so much just by being there.”

When Waight Keller became artistic director at Givenchy (the first woman to do so at the brand), she was part of a wave of young female designers taking on the top jobs at storied maisons: Phoebe Philo as creative director of Celine in 2008, Sarah Burton at Alexander McQueen in 2010, Maria Grazia Chiuri at Dior (2016), Virginie Viard at Chanel (2019), Gabriela Hearst at Chloé (late 2020). Now, only Chiuri and Viard remain.

“It’s disappointing,” Waight Keller says plainly. “I really believe women bring so much to the industry. I find it unfortunate that so many women work at lower ranks of the industry. At most of the companies I worked for, 70 to 80 per cent of the workforce was women, but the top 20 per cent was almost always men.

“That’s really difficult to fathom at this point. That we should still be talking about inequality in what is essentially a women’s business… I can’t really get my head around that.”

For Waight Keller, the Uniqlo collection will mark the second-most public outing she has had as a designer. In 2018, when she had just taken on the role of artistic director at Givenchy, a new client came to her: Meghan Markle, soon to be the Duchess of Sussex. It was, she says, “a once-in-a-lifetime opportunity”.

“As a British person it was a huge, incredible honour,” she says. “It was done in secrecy and it was a monumental thing when I was still very new.” She won’t divulge more, citing Chatham House rules, but adds that the social media impact was “mind-blowing”.

Though Uniqlo audiences are vastly different to the couture clients she worked with at Givenchy, the brief is much the same.

“I brought back couture to Givenchy because I really felt that it would give the creativity and the burst of ideas that would help filter through the rest of the collections,” she says. “And honestly, I feel that way at Uniqlo.

“Couture at Givenchy was one of the happiest places I have ever worked because it was a small and very skilled group of people, where you could be free and play.”

Somewhat bizarrely, she says Uniqlo is similar.

“All the prototypes come 80 to 90 per cent perfect,” she says. “There is a cultural pride in everything they do. They never present anything unless it’s the best they can make it. This price point is a very different parameter to work in, but there is one designer there who says to me, ‘If it’s 99 per cent there, we still push for the one per cent.’”

The 2024 Australian Retail Outlook is out now. This must-read resource is packed with exclusive insights from Inside Retail’s survey of retailers about their performance, plans and predictions for the year ahead; trend analyses and advice from industry experts; and interviews with leading retailers, including Ikea, Lush, Outland Denim, Milligram, and many more, about their growth strategies in 2024 and beyond.

To give you a glimpse of what you can expect from this year’s report, we are sharing selected articles over the coming weeks. Be sure to download the 2024 Australian Retail Outlook to discover more.

Angus McKay, CEO & managing director, 7-Eleven 

KPMG: What do you see as the greatest challenge to Australian retail in the year ahead? Is this a new challenge vs prior years?

Angus McKay: One of the challenges that will continue into next year is being able to demonstrate value to our customers. There’s no doubt customers are becoming more price-sensitive, so as a retailer, we have to make sure that our customers see that we are providing value.

That can come in the form of special offers, co-buy promotions or rewards for loyalty. The search for value is no better demonstrated than by the uptake of the Fuel Price Lock feature of our My 7-Eleven app, which has just had a 27 per cent year-on-year increase of users. In this case, the extra value for the customer comes when they link the app to Velocity Frequent Flyer rewards.

KPMG: What is a key investment area or opportunity for retail to thrive in over the next two to five years?

AM: There are two areas where we will continue to invest over the medium term – digital enablement and sustainability. 

On digital, we want to make things easier for our customers to play with us. We don’t want to create clutter and noise, we aim for quality over quantity. This means we must be smart about how we interact with our customers. The key will be to use data with precision so what you offer them matches customer needs and wants. 

In the sustainability space, work will continue around packaging and recycling, along with the sustainability of some ingredients in our own branded products.

John Gualtieri, CEO, Kmart and Target ANZ

KPMG: What do you see as the greatest challenge to Australian retail in the year ahead? Is this a new challenge vs prior years? 

John Gualtieri: In the current economic climate, with its high cost-of-living pressures, many Australian households are feeling significant pressures on their income. Value imperative is a growing influence on customer behaviour and will continue to be a driver in our industry for some time.

Retail has always needed to adapt to the evolving needs of consumers. While value is of increasing importance, it’s also becoming apparent that consumers expect retail to deliver access to great products at great prices.

This shift in consumer mindset expectations presents a significant opportunity and challenge for retail brands in Australia. For Kmart and Target, this trend aligns naturally with our ethos as a business. 

As an Australian, design-based product development company of our size and scale of operations, we deliver the lowest-cost product development, production and distribution model, which means we can continue to consistently deliver better products at lower prices. 

With our size also comes a responsibility to make a positive contribution towards a sustainable future. The retail industry’s focus on sustainability will continue to be a key priority that we take on collectively.

Waste is a huge challenge, and one that we need to develop a collective and sustainable response towards as an entire industry. This next phase will require an unparalleled level of partnership within the retail sector – from suppliers to customers as well as peer retailers, global sustainability partners and governments – to develop a solution at scale that is fit for purpose and delivers sustainable solutions to the problem. 

KPMG: What is a key investment area or opportunity for retail to thrive in over the next two to five years?

JG: Data will continue to be a key investment for retail and will help us unlock new levels of value creation – that will ultimately benefit consumers.

Data can deliver efficiencies in operations, but the real value is in using it carefully to drive growth and deliver an augmented customer experience through things like enhanced design capability, product availability and personalisation, as well as automation that drives better efficiencies, and ultimately a better customer experience as a result. 

The recent establishment of our distribution centre in New Zealand with automated product sorters and an automated inventory management system highlights the efficiency gains that are possible. These advancements liberate our team members from time-consuming manual tasks.

AI stands before us as another seismic shift for our sector, the potential of which we are only beginning to understand. The introduction of our AI-powered live Chatterbot marks the beginning of a new journey in this space. This tool is engineered to engage in end-to-end conversations with our customers, leading to an enhanced customer experience.

Scott Fyfe, CEO, David Jones

KPMG: What do you see as the greatest challenge to Australian retail in the year ahead? Is this a new challenge vs prior years? 

Scott Fyfe: In 2024, the economic headwinds facing Australian retail are likely to be onerous. Inflationary pressures will continue to impact consumer behaviours and whilst these challenges aren’t entirely new, their interconnected nature demands a heightened level of strategic agility and innovation from retailers to propel them forward.

KPMG: What is a key investment area or opportunity for retail to thrive in over the next two to five years? 

SF: Seamlessly integrating innovation across the value chain and crafting unforgettable customer journeys will be the currency of success. This will propel retail businesses beyond transactional exchanges, into a future of lasting connections and sustainable growth.

Daniel Bracken, CEO, Michael Hill

KPMG: What do you see as the greatest challenge to Australian retail in the year ahead? Is this a new challenge vs prior years? 

Daniel Bracken: For the next six to 12 months, the biggest challenge for retail will no doubt be a low level of consumer confidence, driven by high-interest rates and economic concerns. Add to this the challenge of increasing operating costs from labour, occupancy and COGS.

KPMG: What is a key investment area or opportunity for retail to thrive in over the next two to five years? 

DB: Retailers need to continue to invest in digital, data and customer insights. But also physical in-store environments need to keep pace with the expectations of customers.

Assaulting a retail worker in Western Australia could attract a jail term of up to seven years under proposed legislation, bringing the state in line with tough penalties in NSW, South Australia and the Northern Territory.

Under the proposed laws the maximum penalty for assaulting retail workers will be seven years imprisonment or three years and a fine of $36,000 if dealt with summarily.

Under the change the maximum penalty increases from 18 months imprisonment and a fine of $18,000.

Labor is seeking to curb increased rates of violence against retail workers which records show have doubled over the past two years.

Labor is seeking to curb increased rates of violence against retail workers which records show have doubled over the past two years.

"All retail workers, whether they're a casual in their first job or doing the night shift at the local convenience store, have a right to feel safe at work," Mr Zahra said.

"No one deserves to be spat on, threatened with weapons, intimidated or harassed for simply doing their job. People who engage in these types of behaviours are committing a crime - it's a simple as that. "