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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

‘Powerful’ combination

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

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

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

China rollout

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

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

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

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

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

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

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

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

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

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

Retail spending grew 2.3 per cent year-on-year in June as consumers spent more than $35.1 billion in stores and online, according to data from the Australian Bureau of Statistics (ABS).

The most “significant” sales increase was in cafes, restaurants and takeaway services at 8.6 per cent followed by food spending up 5.8 per cent.

However, all remaining categories registered a decline in spending when compared to last year.

Household goods registered the biggest decline of 4.4 per cent followed by department stores, down 2.1 per cent, clothing, footwear and accessories down 1.5 per cent, and ‘other retailing’ at 1.1 per cent.

Australian Retailers Association CEO Paul Zahra said sales growth for essentials like food “masked an overall decline” in retail spending.

“Food makes up more than a third of retail spending and its performance is being inflated by unavoidable price increases.

“Despite overall sales growth, the reality is that we’re very much in the grip of a discretionary spending slowdown.”

Zahra said it has become a “precarious environment” for retailers as they simultaneously feel the pinch of the spending slowdown and are left at the mercy of rising operating costs across the board.

“Shoppers have become far more spending-conscious due to the rising cost of living, and we’re seeing that reflected in these results,” said Zahra.

By state, ACT led growth by 6.2 per cent followed by South Australia at 5.4 per cent, WA at 5.4 per cent, NT at 4.5 per cent, Tasmania at 1.7 per cent, NSW at 1.5 per cent and Queensland at 0.1 per cent.

Ben Dorber, ABS head of retail statistics, said retail turnover fell due to “weaker than usual spending” on end-of-financial-year sales.

“There was extra discounting and promotional activity in May, leading up to mid-year sales events. This delivered a boost in turnover for retailers, but that proved to be temporary as consumers pulled back on spending in June.”

National Retail Association CEO Greg Griffith said the “lack of impact” from mid-year year sales shows how far consumer confidence has fallen.

“Consumers are only opening their wallets for non-discretionary spending, if not for special occasions.”

He advised other retailers to adopt sales tactics like the big retailers who have found consumer loyalty with their own branded products to ride out the economic storm

Australian-born online retailer Princess Polly is expanding its wholesale agreement with US retailer PacSun to 100 stores, as its parent company AKA Brands reports economic challenges in Australia.

Princess Polly signed the wholesale agreement in May this year, starting with 15 PacSun stores that would carry up to 50 Princess Polly styles. PacSun operates 350 stores across the US market.

The Australian fashion brand is also on track to open its first store in Los Angeles next month.

AKA Brands CFO and interim CEO Ciaran Long said Princess Polly’s wholesale growth marks part of an overall strategy.

“Importantly, we are increasing our total addressable market, particularly in the U.S., by introducing our brands to new customers through direct to consumer and omnichannel initiatives,” AKA Brands CFO and interim CEO Ciaran Long said.

“Looking ahead, we remain laser focused on chasing consumer demand, driving greater operational efficiencies and strengthening the balance sheet by paying down additional debt through the remainder of the year.

“We remain confident in the future of our brands and our business model and are committed to driving shareholder value.”

AKA Brands reported a net sales decrease of 14.2% to US$136 million for the second quarter ended June 30, 2023, compared to $158.5 million in the second quarter of 2022.

The decrease was driven by a decline in the number of orders and average order value during the quarter, AKA claimed, primarily driven by adverse macroeconomic conditions in Australia.

In the quarter, its Australian sales were down 28.4% to $48 million on the same period. Compared to the 2021 second quarter, Australian sales were down 31.1% from $69.7 million in Q2 2023.

AKA Brands’ US market saw a drop in sales of just 2.8% to $79.9 million in Q2 this year compared to last year.

The group’s overall net loss was $5 million and negative 3.7% of net sales in the second quarter of 2023, compared to a net loss of $4.2 million and negative 2.7% of net sales in the second quarter of 2022.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was $5.6 million, or 4.1% of net sales, compared to $5.9 million, or 3.7% of net sales in the second quarter of 2022.

“We continue to execute against our strategic initiatives and have made significant improvements in our operating efficiencies, which enabled us to deliver on our adjusted EBITDA and cash flow expectations for the second quarter,” Long said.

“I’m also pleased that we continued to strengthen our balance sheet by way of strategically reducing inventories, which were down 16% since the end of fiscal 2022, and we paid down $12.5 million of debt in the quarter.

“The U.S. performance was in line with our expectations, registering $80 million of net sales in the second quarter and delivering 12% growth on a two-year basis.

“Despite the inline performance in the U.S., our overall net sales were dampened by continued macro pressures and consumer challenges in Australia.”

Meanwhile, Australian-born brand Culture Kings, also under AKA, has struck recent partnerships with Rolling Loud music festival and the Ultimate Fighting Championship, and is reporting a strong performance in its Las Vegas flagship opened in November 2022.

Culture Kings operates seven stores in Australia, and one store in New Zealand.

AKA’s third Australian-born subsidiary, fashion retailer Petal & Pup, is exceeding expectations on the US Target marketplace according to the group, and is currently exploring additional omnichannel tests.

The fashion group also owns US fashion brand mnml, which AKA claims is a top 10 brand at Culture Kings and continues to leverage the Australian streetwear brand for new customer acquisition and marketing activations.

The boss of DIY giant Bunnings says the company’s push to simplify its back office should translate to a better experience for customers seeking bargains as its ongoing investment in technology starts to pay dividends.

The Wesfarmers-owned hardware chain restructured its senior management team this week, stripping out a layer of eight “regional manager” roles at the business.

Bunnings managing director Mike Schneider said while the changes are part of its stated strategy to streamline communication across its teams, the hardware giant was in no rush to cut its overall workforce down to size.

“Overall, our team continues to grow as we actively recruit roles across our store network to ensure we are offering customers the best experience,” Schneider said.

Less than 10 roles will be affected by the changes, with all affected staff offered the opportunity to be deployed to other roles.

The move comes as Bunnings doubles down on projects to boost efficiency and use tech to help staff spend less time on tasks like locating stock and refreshing price tickets.

“We’re continuing to work really hard to find innovative ways to boost productivity and efficiency across our business,” Schneider said.

“We’ve invested in a number of tech-based projects that are helping us achieve this, aimed at reducing the number of hours our team spend on task[s] and reinvesting them into customer service.”

“This investment, coupled with the small changes we’ve made to our operations team, all comes down to simplifying our business. Our goal is to help our store and support teams become more efficient, productive and streamlined, leading to an even better experience for customers.

“We know that simplicity can be a really powerful asset in retail, which is why it’s a real focus for us moving forward.”

Schneider gave some examples of the retailer’s investments in tech at Wesfarmers’ strategy day in May, when he told investors that the group had used technology to remove or redeploy 2.4 million hours of “task time” since 2020.

Bunnings has been trialling electronic shelf labels to save hours spent updating paper tickets, and has also recently run trials using robots in store to scan aisles overnight and work out what stock needs replenishing.

“What we’re aiming to do here is reduce team member hours spent locating hand stock to be filled or completing gap and price checks,” Schneider said in his presentation to the investor day.

Retail analysts have been optimistic that Wesfarmers’ stable of low-cost brands, which include Bunnings, Kmart and Target, will be well-placed to benefit from the trends of consumers trading down their purchases to budget varieties.

News last week of Wesfarmers’ plans to merge the back-end and technology processes of Kmart and Target into one system further suggests the retail giant is looking to streamline its operations as it looks to capture budget-focused shoppers.

Wesfarmers boss Rob Scott said back in May that the focus on essentials at Bunnings, Kmart and Target positioned the retailer well for tougher trading conditions.

Nick Scali boss Anthony Scali says he is bracing for a tougher year ahead, warning that consumers are “very cautious” and spending on big-ticket items such as sofas is coming under pressure.

He did not provide any firm full-year guidance for the new financial year but flagged that July orders fell 8.1 per cent from strong sales in July last year to $39.7 million.

Shares rocketed up 14.5 per cent to $12.26 at lunchtime after the early update to the year was not as bad as the market had feared.

“Consumers are very cautious and looking at the CBA result this week, they talked about savings going up, so that confirms that,” Mr Scali told The Australian Financial Review.

“We have seen the volatility month by month because the consumer is going through interest rate increases. But unemployment is low. Foot traffic is down, but June was a surprise, so it is all over the place.

“We’re certainly a very highly discretionary product, particularly lounges, [they are] a big-ticket item, so you’ll see that volatility as people get concerned about things like interest rates and inflation.”

His comments came as the retailer topped expectations with sales for the 12-month period rising 15.1 per cent to $507.7 million, pushing net profit after tax to a record $101.1 million.

The double-digit gain in top-line sales was underpinned by increased deliveries, helping to reduce the order book wait time. The year also was boosted by 12 months of revenue contribution from Plush-Think Sofas, which Nick Scali acquired in November 2021.

“We are pleased with the Plush aquisition and integration is complete, and now we are focused on improving sales,” Mr Scali added.

Mr Scali called May a really tough month, with shoppers opting to wait until June for the end-of-financial-year sales when foot traffic jumped.

He said July sales were OK and he did not expect to have to discount to move stock this year.

Statutory net profit after tax (NPAT) rose 34.9 per cent to $101.1 million over 2023, ahead of market expectations of $96.3 million. Underlying NPAT climbed 4.6 per cent.

Group earnings before interest and taxes reached $154.3 million, a 23.8 per cent gain on the year before. The purchase of Plush also helped expand profit margins.

Nick Scali flagged a final dividend of 35¢ per share, in line with a year ago, to be paid on October 18.

However, sales orders in the six months to June 30 were down 16.2 per cent on the prior period amid volatile trading over the half, although they improved in June, when written sales orders totalled $51.5 million – up 4.5 per cent on the prior year.

Mr Scali has returned from a trip to the UK where he was checking out other retailers. Longer term he would like to have a presence, flagging possible acquisitions in future.

“We’d like to be in the UK, but it’s more than likely going to be an acquisition. So, I was there to make sure we understand the market,” he said.

There are 64 Nick Scali stores and 43 Plush stores around the country, with the group planning to open three new Plush stores and one new Nick Scali store by December. The group’s long-term target is to have at least 86 Nick Scali stores and up to 100 Plush stores.

In a note to clients, Citi analyst Sam Teeger said conditions were more difficult in the sector, and it was unsurprising the market expected a 37 per cent fall in NPAT for Nick Scali in the 2024 financial year.

“We expect the stock to be supported today after delivering a better-than-expected FY23 result and July 2023 not being as bad as feared,” he said.

Private equity firm L Catterton is set to launch an initial public offering of Birkenstock as soon as September that may value the iconic footwear maker at more than $8 billion ($11.9 billion), people with knowledge of the matter said.

The firm, backed by luxury French fashion house LVMH, is working with Goldman Sachs and JPMorgan Chase & Co. on a potential listing of Birkenstock in the US.

A listing could value the German sandal maker at as much as $US10 billion, according to one of the people. The company’s sales have been boosted of late by the blockbuster Barbie movie, which stars Margot Robbie in the title role donning a pair of Birkenstocks in one scene, which retail for $US130 a pair.

Deliberations are ongoing and no final decisions on the size or timing of an IPO have been taken, the people said, asking not to be identified discussing confidential information. Representatives for Birkenstock and L Catterton declined to comment.

The world seems awash in Barbie pink at the moment. For Mattel, the company behind the iconic doll, there is much riding on the movie — primarily reviving sales of Barbie dolls and accessories. Demand for all toys boomed during the pandemic, but the industry cooled as lockdown rules were lifted and inflation and economic malaise set in.

The movie has helped lift Mattel’s shares by more than a third from their recent March low as the company looks to capitalise on Barbie’s success. The toymaker is already exploring a sequel and planning to turn more of its brands, like Hot Wheels and Barney, into major Hollywood franchises.

The movie will generate more demand for Mattel’s dolls as well as movie-related merchandise, with some product lines already selling out. Mattel also delayed some Barbie-related promotions until after the release of the film, which will benefit the brand in the third quarter.

The movie has been a big international hit, grossing more than $US500 million globally in its first week, including the year’s biggest opening weekend. More than half of the box office take so far has been outside of the US.

How well the movie does also matters more broadly to the consumer sector. Along with Birkenstock, Mattel has struck around 100 brand partnerships with the likes of Gap.

A German giant

Founded nearly 250 years ago, Birkenstock has become a high-fashion brand, launching collaborations with luxury names such as Dior, Manolo Blahnik and Valentino, and spawning variants from labels including Celine and Givenchy. Its sandals have been sold in the US since 1966.

Birkenstock saw revenue rise 29 per cent to roughly €1.2 billion ($2 billion) last year, leading to adjusted earnings of €394 million, according to a lender presentation seen by Bloomberg News. It’s been investing heavily in building out its production sites in Germany, including a new €120 million factory in Pasewalk, a town north of Berlin.

An IPO of Birkenstock would come more than two years after the L Catterton and the family investment company of billionaire Bernard Arnault acquired a majority stake in the business, valuing it at about €4 billion ($6.6 billion).

Arnault, who is one of the world’s richest people, is the French tycoon behind luxury-goods powerhouse LVMH, which operates brands such as Louis Vuitton, Moet Hennessy, Tag Heuer and Dior.

The US market for IPOs looks like it’s finally coming back to life after 18 months in the doldrums, boosted by the recent success of restaurant chain Cava Group’s debut. Back in June, Cava almost doubled on its trading debut, surging 99 per cent from the IPO price to give the company a market value of $US4.9 billion.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rescue plan

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bigger sales and better discounts are on the way between now and Christmas, as retail experts predict brands will have to work harder to court shoppers as spending continues to slow.

National retail turnover jumped by 0.7 per cent in May, according to Australian Bureau of Statistics figures released last week, though much of that spending growth came from consumers taking advantage of larger-than-usual sales before the end of the financial year.

Spending on household goods peaked last November and has been in decline since, dropping by 4.4 per cent over the past year.

Industry experts say there are plenty more sales and promotional campaigns to come over the next few months as retailers fight for a shrinking pool of discretionary income.

Retailers say there is evidence consumers are “trading down” to more budget-friendly options in the face of surging inflation in essential categories such as food, while the 12 interest rate rises since May last year have left families grappling with rising mortgage repayments.

Australian Retailers Association chief executive Paul Zahra said he expected more promotional activity across the sector given the current conditions.

“You can expect, when sales are in decline, retailers will have to sharpen their pencils,” he said.

“It’s a good story for consumers ... It’s a great time for shoppers, if you’ve got the money.”

Pessimism about the outlook for non-essential spending grew further last week after consumer electronics giant Harvey Norman flagged a profit slump of as much as 25 per cent for the 2023 financial year.

Mid-market retailers including Best & Less, Baby Bunting and Michael Hill International have also updated the market over the past month to reveal that they are facing a softening spending environment.

The director of retail strategy consultancy Retail Oasis, Trent Rigby, said many retailers appeared to be preparing to ramp up discounting towards the latter half of this year.

“Smaller wallets mean that retailers have to work harder to take an increased share of this spend, which often results in a lot of short-term sales promotion activity,” he said.

This means shoppers can expect big sales well before the Christmas trading season, which these days kicks off as early as October.

Customer experience expert and founder of data consultancy Fifth Dimension, Lyndall Spooner, said the rising costs for business would also play a role in the frequency of sales for the rest of the 2023 calendar year.

“The cost of warehousing is increasing, so businesses are moving to try and reduce their stock volumes to cut expenses. As a result of ongoing and more regular sales, consumers know they can wait for a sale before they need to buy.”

Analysts believe that consumers’ increasing focus on price in these conditions could deliver further advantages to the company many believe is the biggest threat to legacy retailers: Amazon Australia.

In a note to clients on Harvey Norman’s sales update last week, Morningstar retail analyst Johannes Faul noted that electronics retailers were facing increasing competition on price from overseas competitors.

“Consumers show little distributor loyalty as they seek the lowest price. Over time, we think a few major online distributor channels, such as Amazon Australia, could take the largest share of the Australian online retail market,” he said.

Amazon is upbeat about the role of sales in the current environment and will kick off its Prime Day event for members later this month.

“Aussies are a bargain-oriented bunch,” Amazon Australia country manager Janet Menzies said in June. “That adrenaline feeling that you get from treating yourself to something at a price that you perhaps didn’t imagine is definitely part of making sure that people receive our offer as valuable.”

Household spending may be under serious pressure, but the boss of online retailer Pet Circle says consumers aren’t trading down when it comes to meeting the needs of their four-legged friends.

“With most of our customers, it looks like they try very hard not to downgrade the quality of food for their animals,” said Mike Frizell, the company’s co-founder and chief executive.

Pets are hot property in Australian retail, with giants like Bunnings and Woolworths making significant investments into pet supplies over the past year despite fears of a broader discretionary spending slowdown.

Woolworths made a $586 million investment to take a majority stake in Ballarat-founded pet supplies business PETStock last December, while Bunnings executed a major expansion of its pet goods category in March.

Frizell says it’s no surprise that the retail conglomerates want exposure to the sector, which was growing strongly even before the pandemic prompted a puppy boom.

“It’s a great sector. They are seeing the same macro dynamics that I do – it’s still early in its evolution,” he said.

Pet Circle, which was founded in Sydney in 2011, has started the new financial year with a fresh $75 million funding boost from existing investor, Prysm Capital, helping Pet Circle maintain its billion-dollar valuation.

Prysm’s co-founder and partner Matt Roberts says the Australian market is still in the early stages of the “humanisation of pets” trend.

“The investment and entry by other players are evidence of this trend and a signal of the health and growth potential of the pet vertical,” he said.

Frizell says two thirds of Pet Circle’s consumer base use its subscription model and have set up regular automatic deliveries of supplies for their animals. “They rely on us month in, month out,” he says.

Other pet services businesses have also been bullish over the past month. ASX-listed pet services firm Mad Paws has seen its shares jump by 11 per cent over the past five days after telling investors the company is edging towards profitability.

Mad Paws is expecting revenue growth of up to 147 per cent for the 2023 financial year. Chief executive Justus Hammer said the company was adding thousands of new customers every quarter, despite tough economic conditions.

Retail analysts are forecasting a further slowdown in spending over the next six months, but everyday household spending like groceries and pet goods are not predicted to be at the front of the firing line.

Instead, electronics, home goods and fashion are predicted to bear the brunt of the slowdown.

Frizell said Pet Circle has been able to perform strongly during periods of strong economic growth as well as during turbulent conditions.

“That is what makes the pet industry so attractive and why you’re seeing a lot of interest,” he said.

Pureplay books retailer Booktopia has raised $8.1 million in capital raising to fund the completion of its Next Gen customer fulfilment centre and enhance its capital position.

The raise comprises a $6.5 million two-tranche placement – which is subject to the board’s discretion – and a $1.6 million debt-to-equity conversion, subject to shareholder approval. The loan facility ($5 million) was secured from AFSG Asset Management.

Booktopia chairman Peter George said: “After two years of losses, completing the Next Gen CFC and with the other business improvement initiatives already announced will reset the cost base of the business.

“The raise will enable BKG to complete the Next Gen CFC by late August this year. With the benefits of these initiatives, we expect a return to EBITDA growth from the next financial year.”

In a trading update, the retailer said “challenging” trading conditions were observed throughout the second half of the financial year compounded by increased labour costs and other disruptions associated with the transition to the CFC.

“Looking ahead to FY24, with the annualising benefits of the initiatives previously announced, and the realisation of the operating efficiencies and increased capacities of the Next Gen CFC, BKG forecasts an underlying EBITDA profit of $13.5 million,” the business said in a statement.

For this financial year, the business expects an unaudited underlying loss of about $5 million.

Meanwhile, the company has advised that the short-term consultancy agreement between BKG and Tachyon Ventures, an entity associated with founder and former CEO Tony Nash, will end on August 31.

Nash will reman a non-executive director of Booktopia.