News

The world's 100 largest luxury goods companies generated sales of $US217 billion ($306 billion) in the 2017 financial year, according to Deloitte's annual Global Powers of Luxury Goods report. Almost 60 of the top 100 increased their sales year-on-year, with 22 reporting double-digit growth.

Drilling down, the Australian luxury goods market is expected to grow by a healthy 6 to 8 per cent each year until 2024. However, the sector's growth appears to have peaked at 16 per cent in 2016.

Deloitte's national retail leader, David White, signalled continued "significant growth" in online sales, while also pointing to "the rise of the flagship store" as a key trend.

"Australia can expect to see the arrival of further international luxury brands," says White. "Those already in market will continue to expand their store footprints."

David White, Deloitte’s national retail leader, says that international luxury brands are targeting the Australian market.
David White, Deloitte’s national retail leader, says that international luxury brands are targeting the Australian market. Louie Douvis
Given Chinese tourists make up about 30 per cent of our luxury consumers, retailers have responded by opening stores in peak tourist areas in Sydney and Melbourne, as well as on the Gold Coast and around Brisbane's CBD.

Meanwhile, as China's economy continues to rebalance, CommSec Research finds "consumer confidence is around its best level in 20 years", supported by the second-best spending on jewellery in three years. Gold, silver and jewellery sales in China rose by 14.1 per cent in the year to August, up from 8.2 per cent in July.

Thus little surprise that American luxury house Tiffany & Co reported sales surging by 28 per cent in Greater China over the June fiscal year.

Superyacht sales
Turning to one of the ultimate tests of the discretionary spend, superyacht brokerage recorded its strongest performance in a decade in 2017 with just shy of 430 sales, according to Boat International.

Superyacht sales had their strongest performance in a decade, partially due to the "Trump effect" of low taxes.

At the annual La Belle Classe Superyachts symposium, held this year at Yacht Club de Monaco, many spoke of the continued "Trump effect" of stimulating sales by removing taxes.

At the same time, it was noted the rise in the world's number of millionaires has had no impact on boat orders. Olivier Blanchet, yachting and aviation specialist banker at BNP Paribas, painted the picture, saying only 3 per cent of the world's high-net-worth individuals owned superyachts.

"Our priority is to find out why 97 per cent of these people do not own a yacht," he stated.

The answer could lie in the adage that boat stands for "break out another thousand".

Amazon reported sales that missed analysts’ estimates, and issued a disappointing revenue forecast for the busy holiday quarter, suggesting the online marketplace may be reaching a saturation point in the US.

Revenue gained 29 percent to $56.6 billion in the third quarter, the e-commerce giant said Thursday in a statement. Analysts’ projected $57.1 billion. Sales will be from $66.5 billion to $72.5 billion in the current period, falling short of analysts’ average estimate of $73.8 billion. Shares declined as much as 6.5 percent in extended trading.

US shoppers are projected to increase their online spending by as much as 22 percent this holiday season, according to Deloitte Insights. Amazon is poised to benefit from that shift, capturing almost half of all US online sales, according to EMarketer Inc. While Amazon has dominated e-commerce in the US, it faces stepped-up competition from rivals like Walmart.

The company showed slowing revenue growth in all categories quarter over quarter, including online sales and subscription sales, Amazon Web Services sales and its fast-growing advertising business. Amazon has relied on the growth of its Prime members, estimated at about 97 million in the U.S., who pay fees in exchange for shipping discounts, video streaming and other services.

Amazon’s stock had gained about 50 percent this year, as investors bet on the Seattle-based company’s continued dominance and its expansion into new areas. The shares have dropped about 15 percent from their September high amid a broader market downturn and closed at $1,782.17 before the results were released.

Amazon also is investing in physical stores and the pharmacy business. It purchased online pharmacy PillPack in June, which followed its $13.7 billion acquisition of Whole Foods last year to jump start its grocery business. It has opened cashier-less AmazonGo stores — which sell pre-made sandwiches, salads and grocery items — in San Francisco and Chicago. The company’s fast-growing cloud computing and advertising units, which are more profitable than its main e-commerce business, help fuel Amazon’s investments in more retail categories, video content and devices such as tablets and Echo smart speakers.

Amazon Chief Executive Officer Jeff Bezos spends heavily to keep ahead, building new warehouses and data centres around the world, inventing new devices and trying to re-imagine the convenience store experience. Investors can get skittish when signs suggest the company is ramping up expenses without regard to maintaining a profitable business.

Parcel delivery capacity issues and a tight labour market could prevent Amazon from meeting demand. Amazon plans to hire 100,000 seasonal workers this year and pledged to pay all of its warehouse workers at least $15 an hour, which could help it secure the extra staff it needs during peak season. The company also launched a new program to help people buy vans and start their own businesses making Amazon deliveries.

Amazon reported net income of $2.88 billion, or $5.75 a share in the third quarter, from $256 million, or 52 cents, a year earlier. Analysts estimated profit of $3.11 a share.

PAS Group chief executive Eric Morris has announced he will retire after 13 years at the helm of the retail company and transition into a non-executive director role in 2019.

Morris will be succeeded by PAS Group chief commercial officer Paul Burdekin in July.

“It has been a privilege to have built and helped steward PAS from its single brand roots over 13 years ago through the integration of nine acquisitions, the company’s 2014 public listing, and meaningful investment in growth across both our retail footprint as well as in new brands and digital transformation,” Morris said during an address to shareholders during PAS Group’s 2018 AGM.

“This is the right time for me to move on, and welcome Paul as my future successor.”

Burdekin has a background in branded apparel and accessories, a space that, he noted, loves and has been successful in.

“Looking outward, we see a world that is ever more digitally connected,” Burdekin said.

“Fashion cycles are fast, trends are moving faster, and distribution channels are shifting as online continues to expand. All of this is being driven by the customer.

“Developing, building and harnessing that consumer connection across all channels and mediums is something I am passionate about, and something I am excited to work with the PAS team on.”

Morris said the business continues to be affected by the macroeconomic and competitive pressures that all retailers face, and PAS Group would continue to focus on store profitability – with 20 stores currently slated for closure due to being unprofitable.

A focus on accelerating digital transformation across the business’s portfolio is noted as a key opportunity for FY19.

PAS Group chief executive Eric Morris has announced he will retire after 13 years at the helm of the retail company and transition into a non-executive director role in 2019.

Morris will be succeeded by PAS Group chief commercial officer Paul Burdekin in July.

“It has been a privilege to have built and helped steward PAS from its single brand roots over 13 years ago through the integration of nine acquisitions, the company’s 2014 public listing, and meaningful investment in growth across both our retail footprint as well as in new brands and digital transformation,” Morris said during an address to shareholders during PAS Group’s 2018 AGM.

“This is the right time for me to move on, and welcome Paul as my future successor.”

Burdekin has a background in branded apparel and accessories, a space that, he noted, loves and has been successful in.

“Looking outward, we see a world that is ever more digitally connected,” Burdekin said.

“Fashion cycles are fast, trends are moving faster, and distribution channels are shifting as online continues to expand. All of this is being driven by the customer.

“Developing, building and harnessing that consumer connection across all channels and mediums is something I am passionate about, and something I am excited to work with the PAS team on.”

Morris said the business continues to be affected by the macroeconomic and competitive pressures that all retailers face, and PAS Group would continue to focus on store profitability – with 20 stores currently slated for closure due to being unprofitable.

A focus on accelerating digital transformation across the business’s portfolio is noted as a key opportunity for FY19.

Global footwear business Skechers saw record sales of $1.17 billion in the third quarter ended September 30, 2018, a 7.5 per cent increase, with more than half of total sales, 55.5 per cent, coming from international wholesale and retail sales.

“Achieving record third quarter sales is a notable accomplishment given the strength of our third quarter 2017 sales,” Skechers chief executive Robert Greenberg said.

“Both our domestic and international businesses grew, and we remained a leader in walking, work, casual lifestyle and sandals footwear in the United States.”

Greenberg said there is a significant opportunity to further grow the brand through wholesale, company-owned and third-party retail channels, as it invests in its international infrastructure.

“We are looking forward to fourth quarter growth across both our domestic and international channels and a new annual sales record,” Greenberg said.

Despite the increased sales, the business saw a 1.7 per cent decrease in net earnings for the quarter due to a recently enacted tax reform legislation, pushing the applicable income tax rate to 13.7 per cent compared to 9.4 per cent for the same period in 2017.

Accent Group, the Australian distributor of Skechers, saw a decrease in the brand’s wholesale sales in FY18 compared to the previous period. It expects to continue to see moderate declines in wholesale sales moving forward, as it executes its strategy to grow the Skechers store network.

Accent Group currently operates 81 Skechers stores across Australia and New Zealand.

Discount retailer The Reject Shop has blamed stagnant wage growth and rising household costs for an alarming drop in sales that will decimate December-half profits.

Reject Shop shares plunged as much as 40 per cent on Wednesday to 12-month lows after the discount variety retailer slashed December-half net profit guidance from $17.7 million to between $10 million and $11 million.

Chief executive Ross Sudano said despite strong marketing and merchandising and in-store execution, same-store sales had deteriorated markedly during September and October, falling 3.9 per cent in the last eight weeks and dragging same-store sales for the year to date down 2.4 per cent.

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

Reject Shop shares plunged $1.97 to a low of $2.50 before regaining some ground to close at $2.73. The shares have fallen more than 48 per cent this calendar year.

Mr Sudano blamed "the extremely weak retail environment", stagnant wages, rising household expenses and deep discounting by Woolworths and Coles for the fall in sales.

"We are doing everything within our power to manage the business for profitable growth through this extremely challenging consumer environment," he said.

"The continuing absence of real wage growth and increases in the cost of many basic expenses (including mortgage rates) ensures that competition for the discretionary spend of consumers remains high.

"In addition, we have seen increased investment in promotional pricing across many retailers, particularly in the fast-moving consumable goods (FMCG) space, resulting in additional investment in our FMCG pricing to ensure our value proposition is not damaged."

Early festive trade 'positive'
Reject Shop has been losing market share to larger discounters such as Wesfarmers' Kmart, Woolworths Big W and online retailers.

Nevertheless, the downgrade augers poorly for crucial pre-Christmas trading at other discretionary retailers if conditions do not improve.

Mr Sudano said Reject Shop had a strong seasonal program and many tactical activities in place to drive sales.

"Christmas plans are built on the successes from last year and the early trade of the Christmas merchandise has been positive," he said.

Chairman Bill Stevens told the annual meeting that despite the challenging environment and competition from new players, Reject Shop was pressing ahead with plans to lift store numbers from 358 to 400 to better leverage the group's infrastructure, including a new direct sourcing office in Hong Kong and a new distribution centre in Melbourne.

Sears Holdings is preparing to file for chapter 11 protection, a reckoning that would crystallise years of losses at the once iconic company.

Sears over the weekend reached a deal with lenders that would allow the troubled retailer to keep hundreds of its stores open through the holidays, according people familiar with the matter. That setup was expected today to be part of the filing.

The longer-term question is whether a smaller Sears ultimately emerges from chapter 11 protection or whether a bankruptcy case eventually leads to a liquidation or a sale and a final end to the storied department-store chain.

As part of the deal, Sears is expected to close at least 150 stores immediately after seeking bankruptcy protection, the people said. Meanwhile, an additional 250 stores will be under evaluation.

Currently, the company operates roughly 700 Sears and Kmart stores, according to one of the people.

Edward Lampert, chief executive officer of Sears, who has controlled the company through his hedge fund ESL Investments, believes the company can reorganise around roughly 300 of the most profitable stores, the person said, adding that it is possible even those stores will eventually be sold.

The plan that Sears and its lenders scratched out over the past week isn’t unfamiliar. Dozens of retailers have sought chapter 11 protection in recent years, because of the consumer shift to online shopping, expensive store leases and heavy debt burdens.

Retailers such as Claire’s Stores, Bon-Ton Stores, Payless ShoeSource, and Gymboree have all sought chapter 11 protection with early plans to close stores. Gymboree and Payless emerged from bankruptcy protection still operating, with a smaller footprint.

Others haven’t been as fortunate. Toys “R” Us and Bon-Ton Stores each sought chapter 11 protection with the hope of surviving. Bon-Ton, which operated more than 250 stores under banners including Carson’s, Bergner’s and Elder-Beerman, looked for an owner or investor that would keep the chain alive, but fell short and was sold to a small group of bondholders and pair of liquidators that closed the entire chain.

Toys “R” Us sought chapter 11 protection last September, and although it didn’t have a reorganisation plan or prospect to sell the chain, its management still hoped to survive the filing. Following a disastrous holiday season, though, it was ultimately decided to liquidate the more than 800 big-box toy stores in the US, and sell or liquidate its international businesses.

Sears’s lawyers and advisers were poised to file a so-called voluntary petition under chapter 11 today (AEDT) in the US Bankruptcy Court in White Plains, New York, said people familiar with the matter, formally beginning the restructuring process under court supervision. A late-night (local time) filing would likely put the company’s lawyers in front of a bankruptcy judge tonight (AEDT) at the earliest.

When a company seeks bankruptcy protection, it must receive a judge’s approval to cut any checks or make most decisions regarding its path forward, including paying its employees, its utility bills and other standard operations procedures. In addition, the company likely will seek immediate approval to begin using a bankruptcy loan, which will be used to make these payments and keep some stores operating.

Sears employs about 70,000 people, one of the people said.

The deal is expected to be presented to the judge following days of marathon negotiations between the pioneering American retailer and its bank lenders, Bank of America, Wells Fargo & Co, and Citigroup Inc. The banks are leading the provision of a so-called debtor-in-possession loan of between roughly $US500 million and $US600 million, which would be used to keep some of its stores open for the foreseeable future, according to people familiar with the situation.

The negotiations took place at the Manhattan offices of Sears’s law firm, Weil, Gotshal & Manges, according to a person familiar with the matter. Dozens of lawyers, advisers and bankers were present throughout the course of the negotiations that began Wednesday evening and stretched into the weekend.

The Wall Street Journal first reported last Tuesday that the 125-year-old chain hired M-III Partners, a boutique advisory firm, to prepare a bankruptcy filing.

The banks are the principal lenders on a $US1.5 billion asset-backed credit line, secured by store inventory as well as credit-card and pharmacy receivables. Much of that credit line has been drawn down, leaving the retailer desperate for cash as the holidays approached and a Monday loan repayment deadline loomed.

While Sears’s lawyers and advisers scrambled to reach an agreement with the banks in the past week, the retailer rebuffed offers of a lifeline from other investors earlier this year, according to people familiar with the matter.

Investors who owned the term loans backed by the same collateral as the banks made approaches as early as last year to discuss a potential debt restructuring or refinancing that would buy Sears more time, people familiar with the matter said. The company consistently said through its legal advisers there was “nothing to discuss,” according to one person involved in the talks.

The term-loan lenders were gradually paid off this year, receiving $US95 million in August alone, according to filings with the Securities and Exchange Commission. The repayments puzzled lenders, given the company’s looming debt obligations, scarce liquidity and negative cash flow, the person said.

Sears’s assets, including the Kenmore appliance brand and the Sears Auto Centers, could also be a part of bankruptcy-run sale, one person said.

One potential bidder could be Mr Lampert, the person said. The CEO who has controlled Sears for more than a decade has repeatedly bailed out the retailer with short-term loans, but baulked at providing another lifeline ahead of tonight”s (AEDT) deadline for Sears to repay $134 million in loans.

Mr Lampert, also the largest shareholder and biggest creditor, previously offered to buy Kenmore for $US400 million in August, but the deal never received the blessing of a special committee of Sears’s independent directors.

Jeweller Michael Hill International has suffered a collapse in its share price after plunging revenues in the last quarter raised concerns about its shift in strategy away from discount-based pricing.

Group revenue fell by 8.8 per cent to $122.9 million for the three months to September 30 with same store sales declining by 11 per cent in the same period.

Michael Hill shares fell by as much as 27 per cent and were down 24.7 per cent or 23c to 68c at 1.30pm (AEDT). The company’s shares have now lost 43 per cent of their value so far this year and are down nearly 60 per cent over the last two years.

Former deputy Myer chief executive Daniel Bracken will take over the top role at the ASX-listed chain on November 15 after the resignation last month of its current CEO Phil Taylor over health issues.

While reducing its reliance on discounting enabled a modest lift in its gross margin to 64.6 per cent in the three-month period from 63.1 per cent the prior year, the retailer (MHJ) conceded its strategy has encountered teething problems.

Its network of 169 Australian outlets saw same store sales drop 12.8 per cent to $71.6m with a 7.6 per cent fall from its 53-strong New Zealand network to NZ$25.3m ($23.1m). The company’s 84 Canadian stores saw sales drop by 11 per cent to C$24.4 ($26.3m).

The strategy shift “was not adequately supported by sufficient levels of marketing and promotional activities to drive top-line sales”, Mr Taylor said.

Michael Hill remains confident its bid to improve gross margin and reduce the level of discounting is the right strategy and will result in a brand and product “more valued” by its customers.

“While the transition is proving more challenging than expected we remain committed to the strategy and have taken many learnings from the first quarter which we are confident will drive performance in the critical December quarter,” Mr Taylor added.

The jeweller delivered a sharply lower full-year net profit in August, hit by one-off costs in relation to closures in its loss-making Emma & Roe and US businesses, which amounted to $25.5m.

Michael Hill booked an 85.9 per cent fall in net profit after tax to $4.6m, from $32.6m in the previous year. That was 18 per cent above consensus estimates.

Myer boss John King will this week reinstate the department store’s famous “My Store” marketing tagline that was dumped four years ago.

Recently returned from New York and London where he met fashion brand owners to secure new brands, Mr King has unleashed a furious pace of activity.

He has wasted no time since his appointment four months ago in unpicking his predecessors’ legacy, from sacking senior executives to closing clearance floors.

Central to Mr King’s strategy is to drag Myer back to the middle ground in terms of its fashion offer and reposition the company to better cater to the mass market, differentiating it from upmarket chain David Jones while delivering a premium offer to discount department stores such as Kmart, Target and Big W.

Having ended Myer’s 12-year relationship with store ambassador Jennifer Hawkins, Mr King has unveiled his next marketing plan, which will see the return of the My Store campaign, which included the airing of new television commercials last night.

High-profile models and celebrities strutting the catwalk or gliding through Myer stores are gone from TV ads, with everyday women the new stars.

The My Store marketing was replaced by then Myer chief executive Bernie Brookes in 2014 with “Find Wonderful”, which he said better reflected the ­aspirations and desires of Myer customers.

At the time the new slogan was the first shake-up of Myer’s marketing in a decade, but for all the enthusiasm, research and money behind the tagline, it failed to resonate with shoppers.

The retailer said the new campaign acknowledged Myer’s strong history, and the special place it held in the Australian community. “But it also looks to the future with a contemporary look and feel, to show how Myer is evolving and improving its product offering, online store and in-store experiences and service.’’

Mr King said the My Store tagline highlighted the department store’s strong tradition in the Australian retail sector.

“Myer is Australia’s department store,” he said.

“We have been there for generations of Australians, for their everyday life, but also for their most memorable and special occasions, whether that be: ‘My Birthday’, ‘My Christmas’, ‘My Father’s or Mother’s Day’ or ‘My Wedding’.

“The My Store campaign showcases how Myer has been, and will continue to be, a part of the Australian way of life.”

Mr King acknowledged Myer had in instances let down customers.

“We know that in recent times we have not always got it right for our customers. The new campaign will show that we exist for our customers, that we are putting them first, in every action we take and every decision we make — that we are ‘Their Store’ no matter where they shop with us in Australia,” he said.

Mr King, a former CEO of British retailer House of Fraser, has set a strong pace as the new boss of Myer, and while refashioning Myer’s marketing strategy he has cut down the retailer’s bloated executive ranks by making 30 senior executives redundant, including some veterans of the department store.

Upon his arrival in June he toured Myer stores and quickly came to the decision to dump predecessor Richard Umbers’s strategy of rolling out clearance floors across the country, declaring at his first press conference that he “hated” the concept.

Mr King also warned the landlords at Myer’s headquarters in Melbourne’s Docklands that he was prepared to exit the property and take out a smaller office elsewhere, and was looking to reduce the number of floors Myer occupies. He is prepared to move out of the Docklands if a better lease deal can’t be struck.

The Myer boss is, however, a fan of Mr Brookes’s Christmas format known as the “Giftorium” and has pledged to increase its footprint within its flagship stores.

Retail turnover saw a modest uptick over the month of August according to the Australian Bureau of Statistics, which noted a 0.3 per cent increase compared to a flat July.

Online retail sales contributed 5.6 per cent to total turnover, compared to 5.5 per cent in July, and 4.6 per cent the August prior.

The National Retailers Association called this increase the “weakest back-to-back results for 2018”.

“The August ABS retail figures are far from disastrous, but they do show that the sector is continuing to experience a modest sales period,” Acting NRA chief executive Lindsay Carroll said.

“[It] is certainly an improvement on July, with five of the six retail industries recording a rise in turnover, and all state and territories bar the Northern Territory seeing an increase in sales.”

Carroll added that these figures emphasise the need for governments to put retail-friendly measures in place ahead of the looming holiday period, urging for extended trading hours to be considered.

“It’s very important that we don’t get complacent ahead of the most important period of the year, especially with increases to Saturday and evening penalty rates being phased-in for casual employees in retail from 1 November,” Carroll said.

The Australian Retailers Association believe the strong figures enjoyed by the clothing, footwear and personal accessories (0.8 per cent monthly, 4 per cent year-on-year) and cafes, restaurants and takeaway food services (0.7 per cent monthly, 5 per cent year-on-year) are a consequence of the personal tax cuts starting in July.

“This quiet consumer confidence can be seen across various retail categories with consumers rewarding themselves with little luxuries across the market,” ARA executive director Russell Zimmerman said.

“We hope this boost to consumer confidence and discretionary spend flows through to the end of the year where retailers are hoping to see their biggest trade yet.”

When I first lay eyes on Rowena Bird, she’s marched barefoot onto a turf covered stage in dungarees and a blouse with impractical but mesmerising waterfall sleeves that swing hypnotically as she gestures to the auditorium about igniting a cosmetic revolution.

Her hair is as fluorescent as the lighting, reminiscent of LUSH’s glittery product range. As one of the five co-founders of the cruelty-free, largely vegan, eco beauty brand, Bird is also the inventor of its makeup range – injecting colour and playfulness into the everyday.

When I sit down with Bird on day two of LUSH’s annual global showcase, a Willy Wonka style beauty convention held in Manchester in the UK, Bird seems less flighty than her name suggests, admitting she was a bundle of nerves before this morning’s address. But it’s her important message that means she swallows that nauseous feeling to lead the beauty industry beyond the status quo.

“The future is naked. It has to be, because we have to save the planet,” Birds tells whimn.com.au, just moments after unveiling her reusable lipsticks, where customers replace only the product inside, not the whole unit, saving on plastic.

Naked, refers to LUSH’s innovation, inventing products free from traditional packaging of the beauty industry, where a foundation might come in a plastic bottle, housed in a non-recyclable but aspirational box, wrapped in plastic to ensure the freshness. Bird and the LUSH team, dream of a world beyond it.

40 shades in three undertones. Image: Lush Cosmetics

“We lead the way as the most unpackaged company out there and I would like to see others join in and realise you can make things solid and people still buy it,” she says, having released Slap Sticks, a naked foundation, Glow Sticks, naked highlighters and with a naked mascara made from 3D printing and naked Trix Sticks, used to conceal and contour, also less than six months away.

At the showcase Bird also announced an eye palette made entirely out of almond by-product that gets baked, and then the eyeshadow pigment pressed into it. Just. Wow.

“The almond gets mixed with glycerine and cornstarch which seals it and it’s baked like a biscuit and that’s the base. Once you’ve finished with it, you can put it in your compost or your garden and it will completely decompose,” she says with a twinkle in her eye.

It’s the sort of mad wizardry LUSH is leading the way in, and they have been for 23 years. While LUSH was founded in 1995 in Poole, the co-founders had actually worked together before that at The Body Shop and a mail order cosmetic business that actually bankrupted them, so this eco-campaigning isn’t born out response to seem relevant to consciously consuming Millennials, rather its woven into the very businesses’ fabric.

This is what a naked foundation looks like. Image: Lush

“It’s surprising when we opened the first naked shop in Milan, we thought we’d only open it for a couple of months and then change it back. It’s not changing back in Milan. People are loving it and realising ‘actually I can buy it without the plastic packaging’, even though our packaging is recyclable and you can do something with it, they’ll still buy it,” explains Bird.

“When you have a million lipstick tubes going into landfill, we need to reuse the packaging and give it another life and save the planet,” she declares.

Bird isn’t precious about having a monopoly here. In fact, she’s presenting next May at a global industry event in Berlin, after getting pissed off with the agenda.

“All the big beauty brands will be there. I was asked if I’d like to come and give a talk because LUSH is now known in the cosmetic industry now. I said, no, because we don’t have anything in common with these people. Look, I’m looking at your agenda list and you’re saying ‘cosmetic packaging’ and what you should be saying is ‘the end of cosmetic packaging’. She said, you should come and say that. So considering how sick I felt this morning before going on stage, I’m going to go and talk about it,” she laughs.

Rowena Bird is pioneering, package free. Image: LUSH

LUSH is proof businesses can do good things and still make a profit. The brand currently has 931 stores, 35 of which are based in Australia.

“One of the things we do as LUSH is that we are inclusive and all are welcome always and that includes other companies. They’re here [at the Global Showcase] and having a look and it’s well known brands look at us, and you’re welcome, look at our ideas, take them, we’ll tell you how we do them and let’s move forward,” says Bird, believing the industry needs a good shake down, using their palm oil soap story as an example.

“We created soaps and became really aware of palm oil and we became conscious of the orangutans and their habitats being destroyed. It took us two years to come up with a soap base that didn’t use palm oil but we did it. And we worked with them, we didn’t then say, look at what we’ve done, we’re very clever but you can’t use it, we’re the best. We didn’t do that. We said, alright everyone we’ve made a palm free soap base, please this is where you buy it from. It’s an independent company, use it. There’s no one else buying from them. So I want to stand on that stage, and ask why aren’t you buying it, why are you still using palm oil and putting virgin rainforests at risk? We have to go in and buy the rainforest back and replant it, we shouldn’t have to do that, it’s ridiculous.”

She’s proud of what she’s doing with the makeup range on two fronts: it’s sustainable and diverse.

“It’s groundbreaking because of the amount of makeup people buy, because it’s not bought on a needs basis.

“I also want everybody to be able to wear our makeup. The lipsticks and the colours, not everything has shimmer in it, if a guy doesn’t want to wear shimmer. This event, I’m meeting lots of people talking to me who are wearing makeup. It really is for everyone. Things shouldn’t be limited, which is why we don’t do a men’s range. Diversity and inclusion is so important to LUSH. We don’t label things; all our products are for a need.”

The new boss of Coles, supermarket veteran Steven Cain, will make his mark in the nation’s $90 billion grocery sector by driving one of the biggest shake-ups of Coles in more than a decade. It will see him kick out under­performing brands, narrow the range of brands within categories and fill the shelves with more private label goods.

Unveiling his five-year plan to the market yesterday, Mr Cain showed some of the steely determination and ruthlessness that have characterised his decades-long journey through the Australian and British retail sectors, as he confidently declared Coles would maintain its competitive edge by squeezing prices further.

Also under the gun would be brands that either failed to inspire shoppers or were merely mirroring what was already on offer — something Mr Cain said he had witnessed over his many years in the sector.
There is clearly more of an opportunity in the grocery space to differentiate and simplify ... but the way certainly I have seen these thing work in other places is that the big brands tend to get bigger, and brands that are just duplicating ... get smaller,’’ Mr Cain warned.

And Mr Cain showed he was a man in a hurry, as was his hallmark when tried to rescue a then failing Coles food arm back in 2003, before he was ejected from the business.

He has now returned with a much more powerful mandate from parent company Wesfarmers and a newly formed Coles board to drive through his changes at a rapid pace.

“The focus for me is getting on at it and as fast as we possibly can because that is a competitive advantage,’’ Mr Cain said.

“It will be about how fast we can execute it, how well we can execute it.’’

He has pledged that Coles will cut deeper on prices to put more grocery products on everyday low pricing while pulling back on heavily discounted promotions, and he believes private label, or supermarket-owned brands, should increasingly take shelf space.

Mr Cain could be about to start a war on two fronts when Coles emerges as a stand-alone ASX-listed company on November 21.

Stripping out some grocery brands could infuriate suppliers, while lower shelf prices could trigger a new price war with Woolworths.

During his maiden press conference and briefing with analysts Mr Cain fleshed out his five-year plan for Coles, after details of the $20bn demerger from Wesfarmers were released late on Friday.

“Obviously we will maintain our relative competitiveness in the market — that is not something that anyone wants to lose, the good work that has been done,’’ Mr Cain said. “Going forward, as we have said, more everyday low pricing, more own brand and fewer, deeper promotions is, we believe, the way forward.

“We will remain competitive on price and make sure that at Coles you are getting very good value.

“When I look at the five-year plan, that plan is to be better value in five years’ time than we are today.’’

Mr Cain, who has spent the past few weeks in the role touring supermarkets, said shoppers would notice changes to the stores under his watch and the curating of individual stores’ ranges to better serve local, ethnic communities, as well as improving its health food categories.

But the new boss of Australia’s second-biggest supermarket chain seems to have private label and the duplication of products high on his agenda.

“I’ll certainly have a watchful eye on simplification and removing duplication, but equally we know we have to do more on unique own brand products (private label) and we have got to do a better job for matching the stores for the local customer base.’’

Mr Cain wouldn’t nominate a target for private label penetration in Coles stores but said in some grocery categories there would be greater own-brand selection and fewer outside brands.

“In broad terms I would expect to see more small brands, smaller innovative brands in the store.

“I’d expect to see the removal of some duplication in some categories, particularly those in decline, and I’d expect to see more innovation in own-brand products around exclusive lines.’’

Mr Cain wouldn’t say which categories were “in decline’’.

However, there would be new brands, and not just private label, with suppliers able to benefit from this, he argued.

“The key to success will be around innovation and bringing new things to customers. By the way there will also be lots of new brands coming in, not just own brand and around that sort of ethnic and health space.

“The good news for suppliers is that the business is growing.

“I think it has had 43 consecutive quarters of growth. When we are growing it means the supplier base is growing.’’

Details released by Wesfarmers to the market yesterday showed Coles Liquor had sales of $3.3bn in 2018 and pre-tax earnings of $130m, while its convenience stores had sales of $5.8bn and pre-tax earnings of $133m.

But the once-struggling liquor arm of Coles, which includes its Vintage Cellars and Liquorland banners, has begun to turn around.

The Coles demerger scheme booklet shows that its liquor business on a pro-forma basis had pre-tax earnings of $100m in fiscal 2016, rising to $138m in 2017 and slipping to $130m in 2018.

However, Coles convenience stores reporting earnings of $190m in 2016, and the same in 2017, falling to $133m in fiscal 2018.

Coles has also shown to be holding $1bn of freehold property on its books.

ELI GREENBLATSENIOR BUSINESS REPORTER
Eli Greenblat has written for The Age, Sydney Morning Herald and Australian Financial Review covering a range of sectors across the economy and stockmarket. He has covered corporate rounds such as telecommunica... Read more

Shoppers are increasingly embracing mobile devices for purchases, with mobile now accounting for more than half of all transactions in the APAC region (51 per cent) during Q2 2018, according to new research from Criteo.

This number increases to more than 70 per cent for retailers that actively promote and support a native shopping app, with nearly half of purchases made in app (48 per cent).

The research found that customer conversion was six times higher in dedicated shopping apps (20 per cent) when compared to the mobile web (3 per cent), and four times higher than desktop shopping (5 per cent).

“Retailers in ANZ and across APAC are continuing to see shopper preferences shift as they become more reliant on the convenience and personalisation that mobile and in-app commerce experiences can offer,” Criteo head of Australia and New Zealand Pressy Sankaran said.

Sankaran said that it’s not enough to simply offer mobile apps and experiences; a strong omnichannel promotion strategy is required to generate increased sales on mobile. Omnichannel retailers that combine their offline and online customer data can apply over four times as much data to optimise their marketing efforts.

Additionally, while omnichannel customers only represent 7 per cent of a retailer’s potential customer base, they represent 27 per cent of sales compared to online-only shoppers, who represent 44 per cent of shoppers and 24 per cent of total sales.

David Jones is banking on the power of shoes.

The department store opens the first stage of its $200 million Elizabeth Street flagship redevelopment in Sydney’s CBD tonight, the much-anticipated “Shoe Heaven” at the top of the historic building.

“We’re looking to emulate the greatness the store once stood for,” David Jones chief executive David Thomas said.

READ NEXT

RADIO RATINGS
Listeners snub Aunty again
LILLY VITOROVICH
“We’re creating something unrivalled in Australian retail.”

Mr Thomas said the main inspiration for the shoe floor came via Paris department store Le Bon Marche, with nods to fellow Parisian Printemps and London’s Selfridges and Harvey Nichols.

Forty staff have been recruited specifically for the shoe floor, many of them with overseas experience, in addition to a continuing staff of more than 20.

Of the new hirings, 85 per cent are multilingual, and a number have been hired internationally.

With service top of mind, the offering also has to be impressive.

“We’ve got close to 100 of the world’s best brands together in one place,” Mr Thomas said.

“Our choice is not what to put in store, but what not to put in store — we’ve edited and curated a range ahead of the world’s best because of the brands that we have gone with.”

New partnerships have been forged with luxury labels Chanel, Louis Vuitton and Gucci, which will all have bespoke concession stores on the floor.

Brands new to the store include Christian Dior, Jacquemus, Malone Souliers, Roger Vivier and Rene Caovilla.

While the retailer won’t ­divulge sales figures on specifics, Mr Thomas said he expected sales to be “significantly more than we used to do — and we have very ambitious targets”.

To celebrate the launch, members of the Sydney Dance Company will perform tonight, and weekly for the immediate future, to bring “entertainment, shopping and theatre together”, Mr Thomas said.

Rafael Bonachela, artistic director of the SDC, is excited about the collaboration, the third with the retailer in his 10-year tenure at the company, which has ­included live performances at catwalk shows and appearing in campaigns.

“The dancers enjoyed it and I enjoyed it, and both organisations left wanting more,” Bonachela said. “Fashion and dance have always been connected in many ways.

“We celebrate the body and individuality and personality. There’s a lot of synergy between both companies.”

Bonachela will create a site-specific work for a group of dancers to accompany smaller vignettes from existing works.

“Every opportunity we get to be closer to the audience and ­people, it’s just about allowing the imagination to flow,” he said.

And, hopefully from the David Jones viewpoint, an opportunity for cash registers to ring.

Michael Kors is going high end.

The handbag maker is acquiring the Gianni Versace fashion house for $2.1 billion, including debt, providing Kors a launching pad into the exclusive European luxury market.

Shares of Michael Kors were down slightly near midday Tuesday, after closing down more than 8 percent Monday when news of the deal leaked. Shares of rival Tapestry, the parent of Coach and Kate Spade, were down fractionally.

After deal closes, Michael Kors will change its name to Capri Holdings, inspired by an "iconic, glamorous and luxury destination" island, the company said. It will retain the Michael Kors brand name.

It plans to grow Versace to $2 billion in revenue globally and increase its retail footprint from roughly 200 to 300 stores. It also expects to expand accessories and footwear from 35 percent to 60 percent of revenue.

The deal marks one of the first times an American company has cracked the code of super high-end luxury fashion, typically controlled by LVMH, the owner of Guerlain and Givenchy, and Kering, the owner of Balenciaga and Yves Saint Laurent. Michael Kors had already dipped into European fashion last year by buying shoe brand Jimmy Choo for $1.2 billion.

As part of the deal, Donatella Versace, who has helped run the company since her brother Gianni was murdered in 1997, will stay on to oversee the label. Donatella, her brother Santo and daughter Allegra will also stay on as shareholders in the company. Versace's management team will continue to be led by its CEO, Jonathan Akeroyd.

That retention will be crucial to Kors as it looks to validate itself to other premium European brands and their visionaries.

Versace is profitable, says Michael Kors CEO Versace is profitable, says Michael Kors CEO
2 Hours Ago | 02:57
"We are all very excited to join a group led by [Michael Kors CEO] John Idol, whom I have always admired as a visionary as well as a strong and passionate leader. We believe that being part of this group is essential to Versace's long-term success," Donatella said in a statement Tuesday.

While the number of sizable U.S. brands to acquire has dwindled, the European luxury market has become rife with opportunity. As founders and owners of European luxury brands put an eye toward retirement, a number of businesses, like Prada and Giorgio Armani, have been turning up on wish lists for luxury retailers.

Michael Kors said Tuesday that following the deal, the company hopes to reduce its proportion of business in the Americas from 66 percent to 57 percent, while increasing its European business from 23 percent to 24 percent and Asian business from 11 percent to 19 percent.

The global market for personal luxury goods was estimated to be worth $307 billion in 2017, according to recently filed registration documents for luxury marketplace Farfetch, which went public last week. The luxury market is expected to reach $446 billion by 2025, according to the data.

The push further into luxury serves also as a defense for the next economic downturn, more than a decade after the last one in the U.S. Those who can afford a Versace dress are among the most likely to continue to spend during a recession than those who shop more affordably, industry experts say.

"Where Michael Kors has traditionally sat has been hit harder than true luxury [in recessions], so diversifying across traditional luxury may give them some insulation," said Kathy Gersch, executive vice president of strategy and change at management firm Kotter.

Still, Michael Kors has some challenges with the Italian brand known for its bold prints in the U.S., where Versace has been under-invested, industry bankers tell CNBC.

Michael Kors has been eyeing the luxury space for quite some time. Both it and competitor Tapestry suffered the repercussions of expanding their affordable luxury brands too widely, thereby diluting their stature in the process. Meantime, the malls in which shoppers often pick up their affordable luxury brands have become increasingly desolate as shoppers head online.

Private-equity firm Blackstone, which owns 20 percent of Versace, will cash out as part of its deal.

Of all the bets Michael Kors Holdings could have made on its quest to become an American house of luxury labels, Versace, and its distinct rococo style, stands out as particularly bold.

Kors is nearing an agreement to acquire Gianni Versace in a deal that would value the Italian fashion house at about $US2 billion ($2.8 billion). Investors are skittish about the proposition, sending Michael Kors shares down the most since May.

Chief executive officer John Idol has used the words "heritage," "size" and "scale" to describe the type of luxury brands he's looking to add to the Kors stable. Versace has those three prerequisites covered. It's a 40-year-old Italian house with an international presence and widespread pop-culture relevance. Last year, Versace had revenue of €686 million ($1.1 billion) and returned to profit, according to figures provided by the company. Yet Kors would inherit a business with several issues.

"Despite its profile, Versace has struggled to grow sales," said Neil Saunders, managing director of GlobalData Retail. Michael Kors wouldn't be buying "a perfectly performing brand", but one that "needs work and some repositioning", he said. That work includes "toning down some of the brasher elements of the brand which are now out of step with the more subtle tone preferred by modern consumers".

While Saunders called the deal "additive", he said it may cause disruption in the short term and take several years to reveal the benefits.

Kors shares fell 7.7 per cent on word a deal was close. The stock had been up 15 per cent this year through Friday's close.

Versace, with its Medusa-head logo, is one of the more outlandish major Italian fashion labels. Artistic Director Donatella Versace's flashy designs celebrate extravagance and excess. Her runway show this month integrated the vivacious colour and dazzling patterns the label has become known for - a psychedelic amalgam of soft florals layered on stripes, checks or more florals. The bashful should look elsewhere for their clothes.

Though it's not for everybody, it's certainly for somebody. In recent years, Versace has grown to become a wealth symbol for the nouveau-riche. It's often mentioned in pop music as a label to aspire to - or brag about. Founder Gianni Versace was a fashion icon who dressed rock stars and princesses, and that flashiness remains aspirational today.

So if managed correctly, the payoff could be sizable. Versace would give Michael Kors a foothold in high-fashion. Its namesake label is known for "affordable luxury" and mass appeal, selling leather handbags that cost a few hundred dollars that can be found at Macy's or the discount rack at TJ Maxx. Its purchase of shoemaker Jimmy Choo last year added to its couture credibility, giving it $US600 sandals and $US1000 pumps. Versace's clothing ranges from $US350 T-shirts to $US10,000 skirts worthy of red carpets at the Oscars or Met Gala.

Kors is plotting a different course than that of longtime rival Tapestry, formerly known as Coach. Tapestry, which is also building a stable of brands, has stayed both near its own price point and its New York headquarters. The two labels it has acquired, Kate Spade and Stuart Weitzman, are US brands and play in about the same price range.

Italian newspaper Corriere della Sera reported earlier that Versace could be sold this week for about $US2 billion, with several groups interested including Kors and Tiffany & Co.

Sydney rag trader Michael Gazal could be heading for a $80 million payday after the company he runs confirmed it was in sale talks with the fashion giant behind Tommy Hilfiger and Calvin Klein.

But not everyone in the high-profile Gazal family will be cashing in if the sale of Gazal Corporation goes ahead, after Michael's brother David sold his 24 per cent stake in the company for $35 million late last year.

Fairfax Media reported on Tuesday that Gazal Corporation was in talks with American clothing group PVH Corp to privatise the company.

Most of Gazal's business comes through its 50/50 joint venture with PVH called PVH Brands Australia - which wholesales the Tommy Hilfiger, Calvin Klein, Van Heusen, Pierre Cardin, Trent Nathan and Fred Bracks brands.

Gazal confirmed talks were underway with PVH - which already owns 22 per cent of Gazal's shares - but stressed that they were in "the very earliest stages".

"Gazal is in preliminary discussions with PVH around the potential for a proposal by PVH for a privatisation of Gazal," the company said in a statement released to the ASX.

"The discussions may not continue and, if they do, might not result in a proposal. If a proposal is made, it may not result in a transaction."

PVH was not “about to make a move”, Gazal said.

The prospect of a takeover saw the stock shoot up 13 per cent to close at $4.75.

Gazal confirms sale talks with Tommy Hilfiger, Calvin Klein owner
RETAIL
Gazal confirms sale talks with Tommy Hilfiger, Calvin Klein owner
Add to shortlist
Gazal's tightly held shares have been on a run off the back of improved sales and earnings, with the stock more than doubling in value since January when they were worth $1.95.

Executive director Michael Gazal owns almost 40 per cent of the company, PVH owns 22 per cent, Anton Tagliaferro's Investors Mutual owns 10 per cent, while big box retailer Harvey Norman owns 9.3 per cent.

David Gazal, Michael’s brother, was until recently a major owner of shares in what was once the family business.

However he sold his 24 per cent stake in December, at $2.50 a share as part of a deal that saw him buy the company's Bisley Workwear business.

The deal included him selling 9.8 million shares back to the company and 4.2 million to PVH Corporation. That parcel of sold for $35 million would be worth $66.5 million at Tuesday's close price.

Gazal's adjusted net profit grew 23 per cent to $5.7 million for the seven-month period to March 21.

Excluding the write-off of its 7 per cent stake in the collapsed handbag chain Oroton, profit would have jumped 91 per cent to $8.8 million.

The PVH joint-venture brands including Calvin Klein and Tommy Hilfiger were its standout performers, with sales jumping 22 per cent to $144 million.

Tommy Hilfiger has launched tommy.com, the online flagship for the brand in Australia and New Zealand.
The site, which launched on September 19, offers the widest assortment of products across all categories, free returns, online package tracking and a dedicated customer service.

This is the latest addition to the growing Tommy Hilfiger eCommerce portfolio worldwide, building on the strategy to drive digitisation across the business.

The mobile-first built website will lead a broader digital strategy for Australia, which includes online and offline activities.

These include influencers, paid social, OOH, media and brand partnerships with Mercedes, After Pay and Pay Pal.

The new tommy.com flagship currently offers the first TommyXLewis collaborative collection, designed in partnership with British racing driver Lewis Hamilton.

The Tommy Icons capsule collection is also available, which is fronted by global brand ambassadors model Hailey Baldwin, model and activist Winnie Harlow, and actress Maggie Jiang.

Additionally, consumers can shop the summer/pre-fall 2018 and fall 2018 collections including menswear, womenswear, denim, swim, underwear, kids and accessories.

The site will exclusively supply Hilfiger Collection across the region, the pinnacle of the brand's product offering.

Followers of the brand have been invited to join the conversation on social media using #TommyHilfiger, #TommyAustralia and @TommyHilfiger.

Youth fashion chain Universal Store is ramping up plans for new stores and online retailing following a $100 million management buyout backed by three of Australia's most successful private equity investors – Brett Blundy's BB Retail Capital, Trent Peterson's Catalyst Direct Capital Management and Adrian MacKenzie's Five V Capital.

BB Retail Capital, Catalyst and Five V reached agreement over the weekend to buy the Brisbane-based business, which has annual sales of more than $100 million and 53 stand-alone stores across Australia, from founders Michael and Greg Josephson.

Universal Store's senior management, led by chief executive Alice Barbery and chief financial officer Stephen Harris, will emerge with a one-third stake alongside BB Retail Capital, which has built successful retail chains including Bras N Things, Adairs and Lovisa, Catalyst, which owns a major stake in Adairs and which floated Just Group (now owned by Solomon Lew's Premier Investments) and Pacific Brands, and Five V, which has investments in RateSetter, Canva and ParcelPoint.

Confidence vote
The deal is a major vote of confidence in Universal Store's management team, which has delivered several consecutive years of double-digit same-store sales growth and maintained EBIT margins above 10 per cent despite massive structural change in the clothing sector, including the shift online and the arrival of global fast-fashion retailers Zara and H&M.

"This is a long way from a turnaround story – it's a very well-run business, so we're very pleased to partner with the team," Catalyst managing director Trent Peterson told The Australian Financial Review on Monday.

Mr Peterson said there would be no major change in strategy following the acquisition, which is expected to be completed at the end of October – "it's one of keep doing what you're doing."

"We believe service is a really important differentiator in the retail environment and this is a business that delivers that in the stores every day," Mr Peterson said.

"A lot of the retailers who are struggling are often retailers who have dialled back service and they're retailers who haven't lent forward to bring what the customer wants as far as the omnichannel retail offer is concerned."

Target market
Universal Store targets fashion-forward 15-to-34-year-olds and differentiates itself from rivals by stocking exclusive products – a combination of private label brands such as Perfect Stranger, Luck & Trouble, Common Need and Token and exclusive ranges sourced from third-party brands such as Herschel, Abrand, Wrangler,Converse and Kiss Chacey.

It emulates fast-fashion chains by delivering stock to stores in four to six weeks and using short-run buying cycles to encourage shoppers to buy quickly or risk missing out. However, customer service is more akin to that in a upmarket boutique.

"Our market is competitive but we focus on our customer so much we've been able to deliver them what they want," said Ms Barbery, who joined Universal Store nine years ago after careers with GAP Inc, Colorado Group and Virgin Blue.

"Retail is not hard, it's just hard work and it's constantly paying attention to every store every day, every decision and every choice and not getting too comfortable."

Universal Store was also fortunate to operate in a part of the market immune from the housing and interest rate cycles.

No stress
"There's no mortgage stress for my customers ... they want flexibility, they want convenience, they want an outfit for the weekend or for that special occasion," she said.

The private equity consortium is expected to stay on board for the usual three to five years before considering exit options, which are likely to include an initial public offering and a trade sale.

Terms of the sale, which was handled by KPMG, were not disclosed but it is understood the deal valued Universal Store at about $100 million, representing about seven times earnings before interest and tax.

The founders of activewear business Lorna Jane are preparing to set up their first physical stores in China to capitalise on rising demand as more than 10 parties, including global private equity and trade buyers, eye a majority stake in the operations.

Asian trade buyers are also among the potential buyers as the Lorna Jane brand, which began in 1989, assesses its options amid a fast-changing sector where fitness and leisure wear is embraced by people in a broader setting and is no longer confined to just sports and fitness activities.

Industry players say Lorna Jane generates annual revenues of more than $200 million. This financial year it will make about 30 per cent of its total sales from online channels including Alibaba's big Tmall e-commerce site in China where the Lorna Jane sports bra is the No.1 selling item in its category, two years after being launched into China.

Founders Lorna and Bill Clarkson own 60 per cent of the company, and private equity firm CHAMP Ventures owns 40 per cent after acquiring that stake in 2010. The founders tested the appetite of buyers in a different sale process in 2014 but the ownership structure stayed intact at that point. Lorna Jane announced on August 20 that KPMG had been hired to undertake a strategic review of the business.

Sports and fitness participation in China is growing at 25 per cent per annum, as people embrace the same health and wellbeing lifestyle as those in Western countries.

"Activewear has now become ready-to-wear. There's now a blurred line between fashion and sports apparel," Lorna Clarkson said. The Lorna Jane brand was seen as highly authentic in China in a market where other Australian wellness brands such as Swisse and Blackmores in the vitamins sector had made large inroads.

Online followers
Chief executive Bill Clarkson, who is Lorna's husband, said the business now had 2.5 million followers on social media. This had helped drive online sales. "One of the things we've done is push hard to build our social and online presence, to the point that around 30 per cent of sales this year will come from online," Mr Clarkson said.

He said the company had a team based in Beijing and Shanghai and a showroom in Beijing. "Our aim is to eventually open stores in China and Hong Kong," he said. That was likely to happen in the next 12 months, but timing would depend on the identity of any strategic partner.

Mr Clarkson said Lorna Jane had 125 bricks and mortar stores in Australia and 32 in the United States. But the company is reducing its physical store footprint to shield the business from stubbornly high Australian rents and better take advantage of online sales that are gathering pace.

KPMG corporate finance partner Luke Lawrentschuk said on Monday there had been robust interest over the past few weeks from both offshore and local players. They included private equity firms and trade buyers.

"The interest has been very strong and has exceeded our expectations," he said.

KPMG declined to comment on the value of the business. "The business is performing extremely well and we'd expect the value to reflect this," he said.

Retail industry analysts said on Monday that businesses like Lorna Jane were generally valued at between 1 to 2 times annual revenues, depending on the growth trajectory.

Pressure on margins
IBISWorld analyst Kim Do said there had been an increasing shift to people wearing activewear as streetwear as fitness clothing made its way out of being specifically worn for sport or fitness activities, and into wider society.

But Ms Do said increasing competition from online-only sportswear retailers and fashionable gymwear brands like Gymshark, along with the arrival of big overseas players such as Decathlon in both the bricks and mortar segment and online in Australia, had put pressure on margins and intensified competitive pressure for all players, although the long-term growth rates of the entire category were solid.

"Over the next five years, health consciousness and fitness will continue to be on the rise. But the rise of new players who've built businesses using social media like Gymshark is adding to the competition," Ms Do said.

British sports fashion retailer JD Sports has also expanded into the Australian market, while online behemoth Amazon has been steadily building its local presence. Rebel Sport, owned by ASX-listed Super Retail Group, has expanded its footprint as stablemate Amart stores were all converted to the Rebel Sport brand.

Lorna Jane's first store was opened in 1990, in what was "the nosebleed section" of an upper floor of Broadway on the Mall, in Brisbane's CBD.