News

Super Retail Group, the owner of Rebel and Supercheap Auto, posted robust Christmas trading with a 3 per cent rise in sales in the first half, but warned rising wages and rents are tipped to dent its profit margin.

Chief executive Anthony Heraghty said the group, which also counts Macpac and BCF as part of its retail stable, delivered another record interim sales result across its more than 700 stores, defying cost-of-living pressures.

Preliminary first-half group revenue was $2 billion, and first-half profit before tax between $200 million and $203 million in the 26 weeks to December 30, the company said in an ASX statement.

“The group has traded well over the cyber sales and Christmas holiday trading period,” Mr Heraghty said.

“We maintained positive like-for-like sales growth in the first half, however cost-of-living pressures on the consumer did lead to a more constrained retail trading environment at the end of the second quarter.”

Investors liked the news with shares jumping 5.76 per cent to $16.72 on Monday after Super Retail’s profit before tax range topped many analysts’ expectations.

All of Super Retail’s brands posted record sales in 2023.

At its biggest brand, Supercheap, which has proved resilient to the performance of the economic cycle, sales were up 4 per cent to $760 million in the first half of 2023-24, or up 3 per cent on a same-store basis. Pre-tax profit is tipped between $106 million to $107 million.

BCF was the strongest performer with sales climbing 8 per cent to $484 million, or 2 per cent higher on a same store basis, and pre-tax profit between $40 million and $41 million.

At sports chain Rebel, sales fell 1 per cent, or 3 per cent on a same store basis, to $673 million, and pre-tax profit between $64 million and $65 million.

Smaller stablemate brand Macpac’s sales were up 4 per cent to $105 million, or flat on a same store basis, with pre-tax profit around $8 million.

Despite the more challenging sales environment, the retailer said the resilience of the lifestyle and leisure categories would underpin Super Retail’s performance as consumers sharpen their focus on value.

Mr Heraghty added that well-executed promotions during peak end-of-year trading helped to deliver revenue growth. But the improved gross margin achieved in the first half is expected to be dented by the higher cost of doing business due to a rise in wages, rents and electricity.

He said the Rebel chain was particularly susceptible given the composition of its lease portfolio and its higher number of staff in store.

Rebel’s first-half normalised pre-tax profit result includes a $5 million provision (or $8 million for the full year) for deferred revenue as a result of loyalty credits issued to customers, in line with previous disclosure.

“Following the successful launch of Rebel’s new customer loyalty program in October 2023, more than 40 per cent of Rebel’s 3.9 million active club members have already earned points by shopping at Rebel,” Mr Heraghty said.

This year, the company is investing significantly in personalisation and loyalty as well as new store openings and refurbishments, including superstore formats.

Super Retail will release its half-year results on February 22.

JPMorgan analyst Bryan Raymond said the result was hard to fault (outside of Rebel), but questioned the sustainability of the share price at current levels.

“The composition of this trading update may result in profit taking as the earnings beat was driven by gross margins rather than sales, as well as leisure being a key driver rather than Rebel,” he said.

Mr Raymond expects Super Retail to continue its capital management, forecasting 25¢ per share special dividends to continue over each of the next four results this year and next.

Retail workers are leading a push for more paid leave, with an increasing number of employers offering five weeks of annual leave in what an industrial relations expert calls a “win-win-win” for workers, employers and the economy.

IKEA and Bunnings are among major retailers that have agreed to five weeks of annual leave, while the retail union says it is in negotiations with Coles, Woolworths and Kmart for more paid leave.

The union movement says more paid holiday leave will improve workers’ wellbeing and boost the economy, but employer groups warn it will impose extra costs on businesses.

Shop, Distributive and Allied Employees’ Association NSW secretary Bernie Smith said there had been no wages trade-off to achieve five weeks of annual leave in agreements negotiated with Bunnings and IKEA.

“Other employers like Big W, Apple and The Reject Shop have either included a fifth week of paid leave or are on a pathway to five weeks of annual leave,” he said.

Smith said retail workers deserved extra annual leave entitlements after years of productivity gains but low wages growth.

“We also know the importance of a healthy work-life balance for workers and the benefits this creates for customers and businesses,” he said.

Smith also said that giving workers more paid holiday leave would boost the economy, “particularly for the retail, hospitality and tourism sectors, where many people spend their leisure time”.

But Business NSW chief executive Daniel Hunter warned that widespread adoption of five weeks’ annual leave would raise inflation because higher staff costs would be passed onto consumers.

“While big corporates may have the flexibility to offer five weeks of annual leave, this prospect is challenging and potentially damaging to small and medium businesses,” he said.

“If widely adopted, it could add billions of dollars in cost to the books of already struggling businesses – limiting their growth and ability to borrow.”

IKEA’s 4000 Australian employees are entitled to five weeks of annual leave – or six if they regularly work overnight shifts – which the company’s co-worker experience manager, Greg Day, said had a positive impact.

“We believe it makes for a more engaged workforce who can more easily balance work and home life and want to build a meaningful career in retail with us,” he said.

Day said the introduction of five weeks’ annual leave would not affect customers or workflow.

“The main motivation for us is to be able to attract the very best co-workers to join IKEA, and for them to want to stay with IKEA and build their career with us,” he said.

IKEA employee Luke Nocke wants to use his extra week of annual leave to go to concerts and musical festivals outside Sydney and a motorcycle trip up the coast.

“It means I have enough extra leave days up my sleeve to take one here and there for things like spending time with friends, playing basketball and catching up over lunch with my family,” he said.

Nocke also said more holiday leave would benefit his physical and mental health.

“Having five weeks means it’s easier to take a day off to re-energise when I need it without stressing that I’m using up all my leave days,” he said.

Annual leave for full-time workers at Bunnings will increase from four to five weeks across the life of a new enterprise agreement, which began in November 2023.

Bunnings chief people officer Damian Zahra said the new package also provided higher rates of pay, more flexibility and choice on how employees structure their workweek in addition to the phased increase in annual leave.

“We want to attract and retain a high-performing team by providing industry-leading benefits and a great culture,” he said. “The new agreement, including the five weeks of leave, plays an important role in doing that.”

Australian Council of Trade Unions president Michele O’Neil said more annual leave would improve the wellbeing of workers. The union movement is also pushing for new laws to support rights for casual and gig workers and the right for workers to disconnect.

“Improved annual leave entitlements enable working people to have a better work-life balance, spend time with the people they love and it’s good for our community’s health and wellbeing,” she said.

Australian workers are legally entitled to four weeks of annual leave, which University of Sydney Business School associate professor Chris F. Wright said was relatively standard in international terms but was outdated.

“These entitlements reflect outdated social norms, originating in a time when family structures were very different from today, and there is a strong case for updating them,” he said.

Wright said European countries such as Austria, Denmark, Finland, France, Germany, Luxembourg and Sweden provide workers with 24 or more days of annual leave.

But Korea (15 days), Canada (10-20 days depending on provincial law and an employee’s length of service), Japan (10-20 days depending on an employee’s length of service) and the US (no statutory entitlement exists) are less generous.

Wright said additional annual leave would relieve a major source of pressure for workers with care responsibilities.

“Overall, I would expect additional annual leave to be a ‘win-win-win’ for workers, employers and the economy.”

More paid leave will also alleviate the recruitment challenges that are endemic in industries such as retail, hospitality and agriculture, Wright said.

“Jobs in these industries are often low-paid and insecure and the quality of employment conditions are not competitive compared to other industries.”

Boxing Day and Black Friday sales in Australia have been extraordinary for CE and appliance retailers like JB Hi Fi, The Good Guys, and Harvey Norman, with record sales reported. However, smaller audio and custom installation retailers are facing financial challenges with unpaid tax bills. The Australian Tax Office (ATO) is expected to take a tougher stance on debt collection in 2024, potentially leading to an increase in business insolvencies. This comes as unpaid taxes and business debts to the ATO soared to $45 billion in 2023, a significant leap from the pre-pandemic figure of $26.5 billion.

Defying Economic Pressures

Despite the cost-of-living pressures and the rise of November’s Black Friday sales, Australian consumers’ Boxing Day splurge is tipped to make a “modest” jump on 2022’s spending. The Australian Retail Association estimates that Australians spent $24 billion on Boxing Day Sales, marking an increase of 1.6% from the previous year. However, when accounting for population increase and inflation, real retail sales would have fallen by about 6% over that period. Retail sales volumes fell by 1.2% in aggregate terms and by 4.5% in per capita terms.

Financial Challenges for Retailers

Retailers in the discretionary space have been hardest hit as households cut back on spending due to soaring mortgage and rent payments and general cost-of-living. Australian real per capita household disposable income collapsed by 6% in the year to September 2023, and household consumption fell by less (-1.9%) than incomes (-6.0%) over the same time period. With the household savings rate already near zero, real per capita consumption is expected to remain weak in 2024, making it a tougher year for discretionary retailers.

The Impact on Smaller Retailers and the Construction Industry

Smaller retailers in the premium audio and custom install market, who owe millions in taxes, are particularly vulnerable. More assertive debt collection by the ATO could push many of these businesses over the edge in 2024. The construction industry has been hit hard, with a significant increase in insolvencies. Retailers are also facing challenges due to cost of living pressure and declining consumer spending behavior.

John Winter, the CEO of the Australian Restructuring Insolvency and Turnaround Association, has indicated that the ATO’s leniency in 2023 is over. He predicts a difficult year ahead for businesses, especially those in sectors like construction, e-commerce, and retail, due to the impact of cost-of-living increases and higher interest rates on consumer spending. The concern is that younger consumers are not being exposed to premium audio products due to the focus on entry-level audio by major retailers, which could impact future audio sales.

Francoise Bettencourt Meyers became the first woman to amass a $US100 billion ($146 billion) fortune, marking another milestone for the heiress and for France’s expanding fashion and cosmetics industries.

Her wealth jumped to $US100.2 billion, according to the Bloomberg Billionaires Index. The milestone came as shares of L’Oréal SA, the beauty products empire founded by her grandfather, rose to a record high, with the stock set for its best year since 1998.

Despite the gain, Bettencourt Meyers’ fortune is still significantly less than that of French compatriot Bernard Arnault, founder of luxury goods purveyor LVMH Moet Hennessy Louis Vuitton SE, who was second in the global ranking with $US179.4 billion as of Wednesday’s (Thursday AEDT) close.

France’s growing domination of luxury retail has spawned several other ultra-rich families, including the clan behind Hermes International SCA, who have amassed Europe’s largest family fortune, and the Wertheimer brothers, who own Chanel.

The reclusive Bettencourt Meyers, 70, is vice-chair of the board of L’Oréal, a globe-spanning €241 billion ($392 billion) company in which she and her family are the single biggest shareholders, with a stake of nearly 35 per cent. Her sons, Jean-Victor Meyers and Nicolas Meyers, are also directors. 

Run by executives from outside the family for decades, the firm was founded in 1909 by Bettencourt Meyers’ chemist grandfather, Eugene Schueller, to produce and sell a hair dye he had developed.

Bettencourt Meyers keeps her life private, shunning the glitzy social life sought by many of the world’s wealthy. She has written two books – a five-volume study of the Bible and a genealogy of the Greek gods – and is known for playing piano for hours every day.

Stock rebound

As an only child, Bettencourt Meyers came into her wealth following the 2017 death of her mother, Liliane Bettencourt, with whom she had an at times contentious relationship.

A legal battle in the noughties grew from a family feud to a political scandal that centred on whether the elderly mother was fit to manage the family’s wealth. Last month, Netflix came out with a three-part documentary, L’Affaire Bettencourt (aka The Billionaire, The Butler, and the Boyfriend), relating a saga that featured a former French president and secret recordings made by a butler.

L’Oréal grew rapidly in the decade leading up to the pandemic but took a hit during the health crisis when people under lockdown used less make-up. That was followed by a rapid rebound as consumers splurged on luxury items, sending the shares up 35 per cent this year.

The company’s stock could rise another 12 per cent over the next year as its product and geographic diversity shows resilience, according to Consumer Edge Research analyst Brett Cooper.

Bettencourt Meyers also chairs her family’s holding company, Téthys, which has the L’Oréal stake. Her husband, Jean-Pierre Meyers, is chief executive. In 2016, the two set up subsidiary Téthys Invest SAS, which bets on areas that don’t compete with the company.

With the stated intention of making “direct long-term investments in entrepreneurial projects”, the CEO of Téthys Invest is Alexandre Benais, a former Lazard investment banker.

Téthys Invest recently acquired a stake in French insurance broker April Group. Last year, it bought into decade-old fashion brand Sezane, and has also invested in French private hospital operator Elsan. The firm is partly funded by L’Oréal dividends.

Asahi Group Holdings has named Amanda Sellers as the new group CEO of Asahi Beverages, the company’s Oceania business.

Sellers has been the Group’s interim CEO since June, following the resignation of the previous CEO, Robert Iervasi. 

“The board of Asahi Group Holdings has huge confidence in Amanda’s ability to continue with the impressive growth trajectory of our business in Oceania while also delivering our sustainability commitments and setting us up for long-term success in Australia and New  Zealand,” said Atsushi Katsuki, president and CEO, Asahi Group Holdings. 

Sellers has been working as the CFO for Asahi Beverages for almost five years. She has more than 20 years of experience in the beverages industry and has held senior positions at Treasury Wines, where she served as CFO for Asia and Europe and previously as CFO for Australia and New Zealand.

With her appointment, Sellers has become the first woman to hold the CEO position of a regional headquarters within the Asahi Group.

“As interim group CEO over the past six months, I’ve had the pleasure of getting to know our customers and suppliers much better,” said Sellers. 

“I’m confident that through these valued partnerships and the plans we’ve developed together, we’ll grow our businesses and deliver even more  for our consumers.” 

Australia Post will soon end daily letter deliveries as part of a series of postal reforms announced on Wednesday designed to modernise the government-owned postal service and help it turn a profit.

Letters will only be delivered every second business day for 98 per cent of locations, although parcel delivery would continue daily. Australia Post will also have an extra day to deliver regular mail.

The changes announced jointly by the communications and finance ministers, have been trialled and will roll out over the next 12 months along with other reforms like increasing the number of parcel collection points.

Australia Post CEO Paul Graham said the reforms recognised the “true cost” of mail delivery and would help the service build a more sustainable business focused on parcels.

“As eCommerce continues to boom and fewer and fewer Australians send letters, the changes to letters frequency announced today will free up our posties to also focus on parcels and packages,” Graham said in a statement. 

Letter deliveries have fallen by two-thirds since 2008 alongside a massive e-commerce fuelled boom in package delivery. Australia Post delivered half a billion parcels last financial year, or roughly 20 per person.

But it lost A$200 million ($131.70 million) before tax for the 2023 financial year ended in June, only its second time in the red since 1989, and warned of future losses without reforms.

Losses in the letter business rose 50 per cent to A$384 million.

Australia Post is government-owned but self-funded and required to deliver a financial return.

A trial found the proposed reforms let workers carry up to 20 per cent more parcels and deliver to 10 per cent more locations.

The changes will also allow Australia Post to manage priority mail, roughly 8 per cent of all letter traffic, differently to “deliver services at a more commercial rate,” the joint ministerial statement said.

Australia Post has applied to the competition regulator to increase the basic letter postage rate to A$1.50 from A$1.20 from early near year.

Sigma entered a trading halt on Wednesday as it raises about $350m through Goldman Sachs, as part of plans for a back door listing of the $3bn Chemist Warehouse.

It comes after the pharmacy wholesaler this year won a lucrative Chemist Warehouse contract from rival EBOS.

Chemist Warehouse had previously been working on a potential float with advisory firm Rothschild & Co, but after former UBS investment banker-turned real estate company boss David Di Pilla bought in, some speculated that Chemist Warehouse and Sigma could become close, given Mr Di Pilla’s strong ties to the Chemist Warehouse founders.

It was after his investment that Sigma won a key Chemist Warehouse this year.

The structure of the deal is set to be announced by Sigma imminently.

The $350m being raised by Sigma is to provide working capital, while some say that the money may be needed to provide enough free float, should Chemist Warehouse take scrip in the business that may equal about 90 per cent.

There needs to be at least a 20 per cent free float needed under the ASX listing rules and 30 per cent for S&P index inclusion.

Sigma said on Wednesday it was in a trading halt “pending a material transaction”.

Mr Di Pilla is the managing director of HMC Capital, formerly known as Home Consortium, and he amassed a stake of more than 19 per cent in Sigma more than a year.

He formed the company after buying the sites of the former Masters home improvement chain that were owned by Woolworths.

At that time, the sites were purchased for more than a collective $700m with a consortium that included his former UBS Australia boss Matthew Grounds (now the Barrenjoey group boss), Spotlight Group and Chemist Warehouse.

Also working with Mr Di Pilla has been star equity capital markets operative Robbie Vanderzeil, who has worked at UBS and Jarden.

Sigma is an ASX-listed pharmaceutical wholesaler and distributor and also has a network of independent and franchised pharmacies and healthcare providers across Australia.

Its brands include Amcal, Guardian, Discount Drug Stores and PharmaSave.

The Australian reported in June that Sigma Healthcare had reached a $2bn pharmaceutical drugs deal with Chemist Warehouse.

The deal provided a 10.7 per cent stake in Sigma to Chemist Warehouse that bound the wholesaler and retailer.

Under the deal, Chemist Warehouse had the right to purchase certain non-core assets from Sigma, which have a value of $24.5m.

Sigma had already supplied consumer goods to Chemist Warehouse to the value of around $1bn a year, and the new drugs deal was to result in its revenue generated by the nation’s largest pharmacy chain rising to $3bn a year.

The Australian reported in October that Chemist Warehouse, which is controlled by founders Jack Gance and Mario Verrocchi, made a net profit of $302m for the year to June, down 22 per cent from the $385m it made a year earlier. 

Revenue reached $3.09bn, compared to $2.99bn in 2022.

A $250m increase in cost of sales on the CW Group Holdings balance sheet was the main reason for the difference in net profit.

Market sources on Wednesday anticipated that the $350m was step one for a deal that could take some time to eventuate, with regulatory approvals potentially needed to occur that could take months, such as the Australian Competition and Consumer Commission.

Department store chain Macy’s has received an $8.8 billion acquisition offer from an investor group composed of real estate-focused investing firm Arkhouse Management and global asset manager Brigade Capital, according to the Wall Street Journal.

The investor group offered to acquire Macy’s shares they do not own for $32 a share, the Wall Street Journal reported on Sunday.

Stephanie Jimenez, senior manager of Macy’s corporate communications, told Inside Retail the company declined to comment on the offer at this time.

Initial reaction to the news was far from positive.

“While this would be lucrative for investors, it would not, in our opinion, bode well for the future of Macy’s,” said Neil Saunders, MD at GlobalData. “As critical as we are of Macy’s current management, they are at least focused on trying to run the business as a retailer. 

“An investor group that sells off real estate and perhaps takes other actions such as spinning off the e-commerce business, would certainly make some short-term gains. But unless some of those profits were reinvested in revitalising the core retail business, it would leave Macy’s in the worst of all worlds.”

The offer comes amid tough competition from online retailers, which have taken a big bite out of Macy’s value.

Saunders noted that Macy’s real estate portfolio is valued at least $6 billion based on a conservative estimate and Arkhouse’s bid is 32 per cent over the share price.

“Management must now make a judgment call. Either they show confidence in their future plans and keep Macy’s as a public company, or they let Macy’s go private in a transaction that will likely see the brand fade further and faster,” said Saunders.

Last month, Macy’s disclosed its third-quarter net sales declined 7 per cent year over year to $4.86 billion while net income plunged 60 per cent to $43 million.

Before taking the reins of Propel Group, the company behind some of Australia’s best-loved workwear brands, Caroline Elliott was the COO who restructured the local operation of French fashion label Kookai and orchestrated the local franchisee Magi Enterprises’ acquisition of the global licensing rights in 2017.

Six years later, Elliott is back in her element, overseeing the recent acquisition of Driza-Bone by Gina Rinehart’s Kidman and Co’s, marking the Australian mining magnate’s ‘foray into fashion,’ and positioning the remaining brands inPropel Group’s stable for growth.

These include RB Sellars, Goodwoods and NatEquest, with Rossi Boots almost finalised as the glass slipper to complement Kidman and Co’s Driza-Bone purchase.

“I’m an accountant by profession, but for most of my career, I have gone into businesses that are going through some restructuring – either acquiring or divesting businesses – I go in and embed myself into the business in some leadership capacity to help navigate through that.” Elliott told Inside Retail.

The family-owned Propel Group is an Australian entity that is inspired by the landscape with community at its core. Regional apparel retailer RB Sellars, founded in 1996, is its biggest business. It acquired Driza-Bone in 2017, and keeping the ownership of the heritage brand on Australian soil was a priority for Elliott, who took over as CEO of Propel Group in 2020, after a year as COO of the company.

Elliott has ensured the ownership of multiple other businesses’ remain in capable Australian hands over her career and attributes her success to a sushi manufacturing, wholesale and retail business she grew for six years prior to it falling into voluntary administration.

How the Driza-Bone acquisition came about

According to Elliott, Rinehart’s Kidman and Co approached Propel Group in regards to its portfolio of iconic Australian brands. “The approach was made by them twice,” she told Inside Retail in an exclusive interview. “She’s been a very proud Australian and interested in Driza-Bone for some time. So we started talking about it a couple of months ago and that came to fruition last week.”

The sale of Driza-Bone will enable Propel Group to accelerate its growth strategy for the stable of brands that remain under its ownership. The undisclosed funds from the sale will support growing the company’s founding business RB Sellars in Australian, New Zealand and international markets. This is the future focus for Elliott and Propel shareholders.

“We’ve been expanding the RB Sellars footprint in Australia and New Zealand. We’ve opened about five stores in this calendar year to date already and we’re going to continue to do that,” Elliott said.

“With the sale of one of our brands out of the group, it allows that to potentially fast track our investment into the brands that we’ve still got in our portfolio.”

Elliott confirmed that heritage brand Rossi Boots, which Propel acquired in April 2020, is in negotiation to be sold toKidman and Co. “Yes, that is under discussion at the moment, but I can’t give you any more than that at the moment,” she said. 

What’s left to Propel into the future

With the deal done on Driza-Bone, and Rossi Boots soon to follow, Propel is now focusing on actively expanding RB Sellars’ market share in Australia and globally – both through brick-and-mortar stores and online.

“We still have a lot of growth in the other brands that we’ve got. We’ve got a really good team here,” Elliott said.

“We run a shared services model, so although the brands sit autonomously, behind that is a shared services team that I run to make sure that we can efficiently support the brands as best we can, so nothing really changes there. The staff who currently work for Driza-Bone will transition over to Kidman and Co, but our shared services model stays in place.”

For example, the company set up its own distribution centre this year, so it no longer needs to use a third-party logistics provider. “That’s been operating now since April and going really well,” Elliott said. 

Beyond workwear, another area of expansion for the company is in the equestrian space through Goodwoods, an online retailer of equestrian products, and NatEquest, a wholesale business that sells equestrian supplies. Propel Group brought these businesses on board about 18 months ago through a new shareholder.

“If you look at our social media and Instagram you’ll see that horses feature often with our customer base, and so having an equestrian [business] come into the group just made sense,” Elliott explained.

Acquisition of new businesses could also be on the horizon. “I never say never, we’ve acquired three brands since I arrived,” Elliott said.

“We’re always looking at opportunities that might arise, but they need to have some affiliation with the brands that we currently have in the portfolio.”

Elliott said that Kidman and Co has agreed to continue selling Driza-Bone through RB Sellars stores. The upcoming autumn/winter collection, which Propel Group worked on as an extension of the 125-year anniversary range, will also go ahead as planned.

“With the change in ownership of these iconic brands at the moment, I just think it’s great that they’re staying in Australian hands with people who are, you know, really invested in them and will invest in them,” Elliott said. “That’s good for Australia and good for the brand’s longevity.”

Propel Group is selling its water-resistant coat and apparel brand Driza-Bone to billionaire mining magnate Gina Rinehart via her S Kidman and Co pastoral company. 

The deal, whose value has not been disclosed, marks Rinehart’s foray into fashion retail. 

Driza-Bone, acquired by Propel Group in 2008, was merged with country apparel retailer RB Sellars in 2017. The brand marked its 125th-anniversary this year.

“We will bolster Driza-Bone’s expansion strategies, enabling the brand to venture into new international markets while staying true to its Australian heritage and commitment to superior quality,” said S Kidman & Co chief executive Adam Giles.

“The Driza-Bone brand is synonymous with the spirit of the Australian bush. We are committed to upholding and nurturing Driza-Bone’s legacy of Australian craftsmanship while also propelling it to new heights.”

Clothing, footwear and accessories monthly turnover has dropped by $30.6 million in October 2023, Australian Bureau of Statistics (ABS) data revealed.

Overall sales in fashion for October were $2.98 billion, down from $3.01 billion in September 2023. Compared to October 2022, fashion sales have fallen by exactly $20 million. 

Department store sales have also dropped by $12 million to $1.90 billion in October 2023, however, the sector is up by around $8 million compared to October 2022.

Overall Australian retail turnover fell 0.2% to $35.76 billion in October, following a rise of 0.9% in September and a 0.2% rise in August. 

"Retail turnover fell in October after a short-lived boost in spending in September,” ABS head of retail statistics Ben Dorber said. “Turnover was down in all retail categories except food retailing [up 0.5%].

“It looks like consumers hit the pause button on some discretionary spending in October, likely waiting to take advantage of discounts during Black Friday sales events in November. This is a pattern we have seen develop in recent years as Black Friday sales grow in popularity.” 

Retailers will now be banking on a windfall from the Christmas sales period, according to the National Retail Association (NRA).

“The decline in spending, despite the Halloween discount buzz, indicates shoppers are being more conservative about where they spend their money, and the RBA’s snap decision to raise interest rates in November was ill-advised,” NRA director Rob Godwin said.

"We implore the new RBA Governor Michele Bullock to hold interest rates in December to give retailers a fighting chance this Christmas. 

“Consumers can expect competitive bargains to ramp up in the 12 days before Christmas as retailers pull out every trick in the book to make up for a flat year of sales.”

Victoria experienced the biggest decline in retail sales at 0.8%, while Queensland experienced a 0.6% sales boost, which NRA claim could be attributed to the record number of cars sold across the state in October.

However, despite the monthly drop, overall retail sales lifted by 1.2% year-on-year, up $421 million from October 2022.

Australian Retailers Association (ARA) CEO Paul Zahra said this yearly positive lift is mostly attributed to spending on essentials such as food. 

“Shoppers are increasingly feeling the crunch of the cost-of-living crisis and interest rate increases, making it a challenging time to be a discretionary retailer,” he said.

“October’s underwhelming results also came amid the Reserve Bank of Australia’s last interest rate pause. We expect retail sales will be impacted even more by November’s interest rate hike.” 

Zahra said retailers will be watching for November’s retail trade results with interest, given the prevalence of this year’s Black Friday sales.  

“Black Friday has been forecast to be record-breaking this year, with shoppers desperate to cross off their Christmas wish-lists during the biggest pre-Christmas sale event of the year, which is likely to impact December’s numbers. 

“Retailers and Australians will be anxiously awaiting the RBA decision next week, which will affect the final few weeks of Christmas spending. 

“Whilst much has been said about the cost-of-living crisis, retailers are also experiencing a cost of doing business crisis and will be concentrating on offering the best service and value for budget conscious shoppers during the all-important Christmas trading period.” 

Luxury fashion retailer Oroton Group says its profit more than tripled on the back of higher sales and stricter cost and inventory management in FY23.

The company booked a net profit of $8.2 million in the 12 months ended July 30, up 3.5 times from last year. 

This comes amid a 25 per cent growth in overall store sales, with same-store sales up by 12 per cent, attributed to investment in in-store experience, additional trading days, and a return to physical retail after the peak of the COVID-19 pandemic. Online sales grew 3.4 per cent.

During the year, Oroton opened stores in Paddington and Mosman in NSW, and at Claremont (WA), along with a pop-up store at Melbourne International Airport.

“Our customers are responding well to our revamped digital channels and quicker and more reliable fulfilment, along with more targeted and relevant content and communication,” said Jennifer Child, CEO at Oroton. 

Oroton has also expanded its efforts to offer more sustainable fabric options including plant-based leathers.

“Oroton customers prize quality over quantity and they are increasingly conscious of their impact on the world. We see huge potential value in offering customers new ways to rent, reuse and resell Oroton apparel and accessories to extend their life and enjoy more variety with less environmental impact,” said Child.

The company expressed confidence in business to go through more challenging macroeconomic conditions ahead.

Wardrobe essentials like basic tees, socks and boxer briefs flew off the shelves at Japanese fast fashion giant Uniqlo, which opened nearly 10 new stores over the past year as budget-conscious Australians chased value for money in their purchases.

Uniqlo’s Australian business saw sales revenue lift 35 per cent to $570.2 million for the 12 months to August 31. However, this was offset by hefty increases in wages and other expenses, which saw net profit come to $31.7 million, a 1 per cent dip on the year before.

Uniqlo Australia chief executive Fuminori Adachi said that growing in the Australian market was a priority for the brand, which is why it invested in marketing, new store openings and design collaborations in the 2023 financial year.

“Our essential wardrobe items, which incorporate technology for ultimate comfort and functionality, continue to resonate with Australians, and we’ve seen popularity with some of our key products and categories, such as our AIRism range, premium linen, high-quality core T-shirts, 50 colourful socks and our boxer briefs,” said Adachi.

Uniqlo’s national store footprint is now 36, after opening new stores in Westpoint Blacktown, Erina Fair, Lakeside Joondalup, Pacific Epping, Bankstown Central, Macarthur Square and Myer Centre Rundle Mall, its first store in South Australia.

“The store openings were very exciting for me to see in Australia, and we felt so welcomed by customers in each local community,” the CEO said.

While sales increased, Uniqlo’s wages bill jumped 56 per cent to more than $127.7 million. Marketing costs lifted 41 per cent to $12.3 million, admin expenses climbed 35.9 per cent to almost $46.9 million, and financing costs more than doubled to $7.6 million.

“We are focused on controlling costs to pass on the best value to our customers. Being a Japanese company, we value long-term partnerships with our suppliers and work closely with them in terms of cost optimisation,” said Adachi.

Online beauty retailer Adore Beauty shares surged 20 per cent on Monday after it knocked back a $122 million takeover proposal from UK-based e-commerce and retail business THG.

The Australian company founded by Kate Morris and James Height, who together control 21.67 per cent, confirmed on Monday that it had received a non-binding indicative offer from the Manchester-based firm, which was first reported by Street Talk. 

Adore shares rose 20.9 per cent, or 19.5¢, to $1.13 on Monday afternoon. The offer range was about a 50 per cent premium to the share price of 82¢ on October 11 when Street Talk reported the appointment of UBS.

“Adore Beauty confirms that it received a non-binding, conditional and indicative proposal from THG … to acquire 100 per cent of the shares of the company by way of a scheme of arrangement for $A1.25-$1.30 cash per share,” the company said.

Adore said the proposal, which was subject to conditions including due diligence, “undervalued the company, was unable to be implemented, and was not in the best interests of shareholders. For these reasons, the board rejected the proposal.

Shopify’s global merchants achieved record sales of US$4.1 billion during Black Friday, a 22 per cent increase over last year’s period.

The top selling countries were the US, the UK, and Canada, while the average cart price was US$110.71 globally, the data shows. The top product categories by orders included clothing, personal care, jewellery, shoes, and decor.

In Australia, the cities with the highest sales were Melbourne, Sydney, and Brisbane. The country’s average cart price was AU$165.70, while the top five product categories consisted of clothing, personal care, kitchen & dining, shoes, and jewellery.

“Another epic, record-breaking Black Friday in the books for Shopify merchants. The world showed up for our merchants, and the excitement is only building, with Cyber Monday still to come,” said Harley Finkelstein, president of Shopify.

Shopify says it will provide another update after Cyber Monday concludes. 

Bunnings is the retailer 2500 Australians surveyed by KPMG believe offers the most excellent customer experience.

KPMG surveyed more than 20,000 people globally and over 2500 in Australia asking which brands deliver the best customer experience.

The Body Shop ranked second while Mecca landed third among the top 10 Australian non-grocery retailers, followed by Specsavers and Chemist Warehouse.

“In the retail sector, the digitisation of customer journeys across channels has been a differentiator that has helped move the bar for customer perceptions in Australia,” said Carmen Bekker, partner-in-charge at KPMG customer.

“Leading brands have been able to integrate these digital journeys with in-store experiences, recognising many Australians have retail journeys that begin online but also include an in-store touchpoint.” 
 

The report noted that customers generally are seeking more value for money, along with more seamless, omnichannel processes and more personalised experiences from brands.

“We see customer perceptions of value formed by how they feel about service and support. It is also formed by how organisations demonstrate their purpose, relevance, and ability to have a positive long-term impact on the environment and society,” said Bekker.

The Iconic, Bendigo Bank, Dan Murphy’s, Apple, and JB Hi-Fi are also featured in the top 10.

The study found that customer perception of experience excellence fell 3.8 per cent across all markets and that 61 per cent are willing to pay more to a company seen as ethical or giving back to society. Almost all respondents – 97 per cent – said the cost of living has impacted their recent purchasing decisions.

One of Australia’s biggest retailers, Cotton On, backed by billionaire Nigel Austin, is advancing its international push after opening more than 100 overseas stores last year.

The Australian market still makes up over half of group sales, which reached a record $2.2 billion, up 4 per cent, over the 2023 financial year across its various brands including its namesake chain, Typo, Supre and Rubi, according to accounts lodged with the corporate regulator.

The Geelong-based fast-fashion behemoth’s bottom line was dented by higher rent and finance expenses, as well as a jump in materials costs and wages over the year to June 25.

Net profit was just $5.9 million, reduced from $114.2 million in 2021-22, the accounts of parent entity COGI Pty Ltd showed.

Sales growth in Australia was strong, up $53 million to $1.2 billion. North America achieved sales exceeding $401 million, Africa $183 million and Asia – retail and wholesale – $274.8 million. 

After stripping out $56.6 million in dividends, retained earnings were $189.5 million at balance date.

During 2022-23, Cotton On increased its offshore retail footprint by 15 per cent. The group also invested in new distribution facilities.

“International expansion remains a key strategic priority for the group, in line with our vision to take Aussie lifestyle brands to the world, delivering good along the way,” the account said.

Cotton On’s borrowings reached $326 million, up from $215 million.

The company also rejigged its operating model into two primary divisions: Cotton On, which includes Cotton On, Kids, Body and Rubi; and Emerging Brands, which includes Factorie, Typo, Supre and Ceres Life.

Cotton On was founded by Tania Austin and her former spouse Nigel Austin, starting with two stores in 1991 to 1500 stores today across eight brands in 22 countries. Ms Austin left the business in 2008, and bought retailer Decjuba.

Mr Austin, who landed at no.65 on The Financial Review Rich List with an estimated fortune of $2 billion, is notoriously private.

Retail sales rose 2 per cent year on year to $35.87 billion in September, Australian Bureau of Statistics (ABS) data showed.

The data prompted both the Australian Retailers Association (ARA) and the National Retail Association (NRA) to urge the Reserve Bank of Australia to keep the current interest rates to encourage more consumer spending.

“The Reserve Bank of Australia’s monetary decision [tomorrow] will be pivotal to the success of retailers during the most important trading time of the year – and we urge the RBA to hold interest rates considering this,” said ARA CEO Paul Zahra.

ABS data revealed that cafes, restaurants, and takeaway sales rose 6.1 per cent to $5.45 billion while food sales jumped 3.5 per cent to $14.16 billion.

“Food and takeaway again led the spending growth, and this is consistent with what we’ve seen all year – shoppers are prioritising the essentials in a cost-of-living crisis,” said ARA CEO Paul Zahra. 

Other retailing composed of recreational, sporting goods, and cosmetics rose 1.6 per cent to $5.5 billion, while department store sales went up 1.3 per cent to $1.92 billion. Clothing, footwear and personal accessory sales inched 1.1 per cent higher to $3.02 billion.

“Pausing interest rates again this month will allow consumers to spend more freely during the November/December sales period and will set retailers up for the coming silly season,” said NRA deputy CEO Lindsay Carroll.

“We hope consumer sentiment increases as retail’s biggest sales season approaches, resulting in a positive start for retailers moving into 2024.”

Womenswear brand Forever New is opening three flagship stores in Kuwait as part of its strategic partnership with fashion conglomerate Apparel Group.

The collaboration will also expand Forever New’s online presence to 6thStreet.com in the UAE.

Founded in Melbourne in 2006, the brand is known for its wearable and timeless collections that celebrate modern femininity, with over 400 retail and concession stores globally and over 30 million visitors to its websites each year. 

“We’re proud to partner with the Apparel Group to further expand our presence in the Middle East,” said Dipendra Goenka, CEO of Forever New.

“With extensive omni-channel capabilities and a strong focus on the customer, the Apparel Group will help deliver an exceptional shopping experience for our Forever New customers in Kuwait.” Neeraj Teckchandani, CEO of Apparel Group, said the partnership reflects the group’s commitment to elevating the fashion landscape in the GCC.

“Forever New’s timeless elegance and contemporary designs are a perfect fit for our market, and we are confident that the brand will be warmly embraced by our customers.”

Furniture retailer King Living is expanding its footprint into North America, opening its first US showroom in Orange County, California late this year.

“After decades of research, we’ve crafted a space that aims to both inspire Californian residents as well as reflect our inherent dedication to authentic Australian design,” said King Living founder David King.

The new showroom will feature sofas, luxurious dining ranges, contemporary bed and mattress ranges, and outdoor collections.

The company intends to open a second US showroom in Chicago, followed by a second showroom in Canada – in Calgary – next year.

“The US is key to the King Living global expansion strategy and the market provides us with an unapparelled growth opportunity,” said David Woollcott, CEO at King Living.

The Australia-headquartered company said the success of its stores in New Zealand, Singapore, Malaysia, Canada, the UK and China was a key factor in its decision to expand into the US.

“This isn’t about growth for growth’s sake, this is about our belief that we will improve the lives of customers who choose our furniture; we are passionate about bringing our designs and our engineering to those who appreciate the King Difference,” said Woollcott.