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Over eight in ten Australians say they “need to find a way to make their next holiday more affordable” according to research commissioned by Melbourne-born luggage brand July.

In collaboration with Ground Truth Research, July’s Travel Report: Unpacking Australia uncovered various aspects of Australian travel, including cost-of-living impacts and the personal sacrifices made to fund holidays.

It found that 73% of people cite cost-related factors as the biggest impediment to realising their personal travel goals, with 35% of Australians having postponed a trip due to cost of living pressures. A further 23% have altered their trip significantly to make it more affordable, while 12% have cancelled a trip altogether.

1 in 5 Australians have extended a work trip to enjoy some leisure time over the past 12 months.

Over two-thirds (68%) of Australians say it’s important they travel for leisure within the next six months, however ‘general cost-of-living pressures’ (54%), a lack of available funds (43%) and the price of air travel (31%) are the biggest obstacles. This outweighs time-related factors, including getting time off (17%) and rising mortgage and rental payments (12%).

Personal sacrifices include forgoing food delivery and eating out (77%), cutting down on date nights (68%), cancelling streaming subscribtions like Netflix (52%) and giving up alcohol (67%) - for 18-24’s, this latter number rises to 76%.

According to the research, women are more likely to engage in these abstentions than men.

When it comes to altering holiday plans, 54% of Australians will consider travelling out of season to take advantage of lower accommodation and flight costs; 40% will consider low-cost airlines and budget accommodation; 30% will reduce the length of their stay, self-cater meals or choose a ‘cheap’ destination; and only 10% will take an indirect flight to their chosen destination.

“At July, we wanted to better understand the state of the nation,” July co-founder Athan Didaskalou said. “How Australians were feeling about travel and how they were committing to exploring with increasing pressures on daily life.

“These insights show that Aussies are willing to sacrifice daily life luxuries in order to make sure they see the world. Travel has never been more important and on the agenda for us.”

Ground Truth Research founder Helen Osborne said the findings show how integral travel is to Australian lifestyle.

“Despite growing cost of living pressures, Australians remain very committed to getting away over the next six months. But how people travel – where people go, how long they stay etc. – will change.”

The report also uncovered packing habits, finding that - on average - Australians will pack five pairs of underwear for a 3-day weekend trip.

R.M.Williams Special Projects Manager Daniel Aldridge offers ragtrader.com.au an insight into his position at the Australian fashion retailer.

What does your day-to-day role involve?

My average day at R.M.Williams starts with catching up on industry news to stay informed about the latest trends, developments, and happenings in the fashion and lifestyle industry. This helps me stay ahead and make informed decisions for the brand.

Collaboration is a significant part of my role as I work closely with design partners to create and develop new products. This involves brainstorming ideas, sharing concepts, and refining designs to ensure they align with R.M.Williams' brand identity and customer preferences.

Another crucial aspect of my day is ensuring key milestones for ongoing projects are on track and running according to schedule. This involves project management skills to coordinate various teams and departments involved in the production process.

What is your career highlight so far?

My most notable career highlights have been while working at R.M.Williams. Our recent collaboration with the Wallabies is a massive one. Seeing true Wallabies fans on their way to a game wearing our R.M.Williams x Wallabies jerseys, beanies and scarves brings a massive smile to my face.

Where do you see the opportunities in the market?

As sports are becoming more culturally relevant daily, I see opportunities to continue to partner and collaborate with various sports and sporting clubs, applying a new lens to the traditional fan merchandise which can be worn daily.

What is your biggest challenge currently?

One of the most significant challenges I'm currently facing is finding new craftspeople to continue creating unique Australian made products. In a fast-paced world dominated by mass-produced goods, convincing consumers of the value and authenticity of handcrafted products can be a complex endeavour. However, I believe that by effectively communicating the story behind our craftsmanship and highlighting the distinctiveness of Australian made items, we can overcome this challenge and attract a new generation of appreciators.

What projects or initiatives do you have in the pipeline at R.M.Williams?

Without giving too much away, we're currently working on a second project in collaboration with the Wallabies and continuing to explore new lifestyle categories.

Sending Megan Gale, Miranda Kerr, Jesinta Franklin and supermodels such as Linda Evangelista and Karlie Kloss down the runway was how David Jones once celebrated the arrival of new season collections.

This spring, instead of a champagne-fuelled event featuring the latest collections from Zimmermann, Aje and Alemais, the department store has reached the end of the runway, shelving plans for its traditional season launch.

“A lot of our designers are travelling and most have spent August in Europe,” says Bridget Veals, David Jones general manager of womenswear. “Everyone’s in Europe.”

“This time last year our customer was in party mode, now she’s travelling. With our top customers away we had to think of new ways to share our stories.”

Loyal customers can relax the grip on their pearl necklaces– the annual spring flower show, running since 1985, will proceed. “That’s sacred,” Veals says.

The once-sacred runway show will be replaced by an event in October, focusing on the store’s work with Indigenous Fashion Projects through the Pathways program, mentoring emerging First Nations labels.

“Designers, many of whom have been mentors, will be invited to that event,” Veals says. “We are trying to adapt to what’s going on in Australia currently and this seemed more important.”

The David Jones season launch was once one of the most important events on social calendars.

“The salon would be full of customers on the day of the David Jones launch and the invitations were coveted,” says Double Bay salon owner and blow dry maestro Joh Bailey, who was a regular guest.

“In the late eighties and nineties the front row was full of customers and they were there to shop. There was champagne and glamour but it was business. This was before Dior and other international labels became available directly in Australia. You could only get it at David Jones.”

“Later on the season launch morphed into something else, with designers sitting in the front row instead of putting the looks together backstage, which was bizarre. Then came the influencers and reality stars who have probably never bought anything from David Jones.”

“Now it’s completely off the radar.”

The fashion landscape has changed since David Jones flew Linda Evangelista to Australia to walk the runway in 2004, and spent an estimated $1.5 million on Karlie Kloss’s participation for the 2017 show and campaign.

These shows competed with equally extravagant productions from department store rival Myer starring former Miss Universe Jennifer Hawkins, when the stores competed for labels such as Toni Maticevski, Kym Ellery and Alex Perry. Myer’s last runway season launch was in March 2018.

Fashion brands now prefer to communicate directly to their customers through social media, exclusive trunk shows and private masterclasses. David Jones is planning smaller events to engage with their premium customers in the coming months.

“There are other ways than a runway show that brands can communicate their values,” says Carla Zampatti chief executive Alex Schuman, just back from Europe. “We host private events for our clients but also tell our story through the Carla Zampatti Foundation working in the areas of culture and multiculturalism.”

Rebecca Vallance, which is stocked in David Jones, also takes the direct approach.

“For our latest store at Melbourne’s Emporium we will be focusing on our customers by letting them know directly when new stock is delivered and by organising personalised styling sessions, as well as after hours appointments for our VIP clients,” Vallance says.

It’s more effective than the single runway look Vallance scored in last season’s dour autumn launch by David Jones, held beneath the unforgiving lights of Melbourne’s Bourke St store, enlivened only by the return of former store ambassador Megan Gale to the runway.

Last year’s spring launch was another low-key affair held in an intimate space on level eight of the Sydney flagship, above the once grand banquet area where Christian Dior held a couture show in the 1960s and Jesinta Franklin walked over tables for the lavish 2017 spring launch.

“The David Jones customer is changing,” Veals says. “She’s even changed since last year and we need to be nimble.”

Despite breaking the long-running tradition this season, Veals won’t rule out a return to the runway, should it return to relevance.

“I’m not saying that we won’t do another runway launch again. It’s not off the cards. I just think that if we do one again, it should probably be a good one.”

Retail giant Wesfarmers is unfazed by the softening consumer outlook, and is confident its stable of home-grown consumer brands, including Kmart and Bunnings, can keep shoppers interested in parting with their cash.

The ASX-listed $56 billion operator of Kmart, Target and Bunnings on Friday posted an 18.2 per cent jump in revenues for the year to $43.6 billion. Profits for the period were up 4.8 per cent to $2.47 billion, with Kmart and Officeworks delivering strong returns for the year.

Growth at DIY powerhouse Bunnings was slower for the 2023 full year, recording a 1.2 per cent jump in earnings to $2.2 billion for the year, with consumers more cautious about big-ticket purchases and renovations.

However, Wesfarmers chief executive Rob Scott was unconcerned about Bunnings’ trajectory, and told media the group had delivered a strong result after growing sales and earnings by about 40 per cent during the pandemic.

“The fact that they continue to move sales forward is a real credit to the team,” he said.

“Hopefully, it really demonstrates that the core of the Bunnings proposition is a lot of that repeatable, regular, essential spend.”

The performance of discount department store Kmart delivered the strongest evidence that Wesfarmers is meeting the demands of cash-strapped shoppers. Scott and Kmart Group boss Ian Bailey both said consumers were shopping across a broader range of categories within Kmart stores.

“As the quality of products improves, we’re attracting a lot of new shoppers,” Scott said.

Kmart has attracted a cult following on social media thanks to its low-cost lines of homewares, but Scott said customers had been branching out to spend in other areas at the retailer.

The products with solid growth include activewear, exercise equipment and health and beauty products, he said.

Bailey told analysts that shoppers in high, middle and lower income earning groups were all flocking to the brand.

“We are seeing all three groups growing with us – in terms of absolute numbers and average spend,” he said.

Kmart Group, which includes the Kmart and Target brands, recorded revenues up 16.5 per cent to $10.6 billion and earnings up 52.3 per cent for the year, to $769 million. Kmart Group had continued to benefit from “strong trading results” in the first weeks of the 2024 financial year, though this has moderated from the momentum during the six months to June.

The optimistic outlook for Kmart comes after other discount department store retailers flagged tougher conditions this week. Woolworths boss Brad Banducci said the company’s Big W brand faced challenging trading conditions as families cut back their spending on discretionary goods such as small appliances.

Wesfarmers’ technology and school supplies business Officeworks had revenues rise 5.9 per cent to $3.3 billion, while earnings were up 10.5 per cent to $200 million. Improved back-to-school sales results helped drive the growth amid an increased demand for stationery, art and office supplies, the retailer said.

Wesfarmers told investors that the group’s strong full-year result meant it was raising its dividend, with the final, fully franked payout coming in at $1.03 per share. This brings the full-year dividend payment to $1.91 per share, a 6.1 per cent increase on 2022.

Wesfarmers said cost pressures would continue to be elevated in the face of inflation and wage cost increases, but said its brands were able to leverage their scale and sourcing capabilities to offset some of this.

UBS, which has a buy on Wesfarmers, has kept its target price for the stock at $55 after the full-year numbers, noting that earnings at Bunnings, Kmart and Officeworks exceeded expectations, while its health and WesCEF divisions were just below market consensus.

Over more than a century, three generations of Bucherers built one of the most exclusive watch and jewellery retailers in the world, selling expensive time pieces and glittering gems to the global rich and famous.

Now, the secretive 87-year-old Swiss billionaire behind the eponymous luxury boutiques — Chairman Jöerg G. Bucherer — has agreed to sell Bucherer to Rolex in a move that has stunned the world of high-end watch retailing.

The companies didn’t disclose the terms of their deal and arriving at an estimate isn’t easy since neither Switzerland-based firm publishes financial results.

Jean-Philippe Bertschy, an analyst with Vontobel Holding AG, put annual sales at Bucherer’s more than 100 stores at about 2 billion Swiss francs ($4.1 billion), giving the firm an enterprise value of as much as 4 billion Swiss francs. He estimated Bucherer accounts for about 5 per cent of Rolex’s sales.

The octogenarian Bucherer’s decision to dispose of the closely held family business took the industry by surprise partly because of the intense secrecy surrounding himself and the two watchmakers, whose histories have been closely entwined for decades. In a statement about the agreement, Rolex said his choice was made “in the absence of direct descendants.”

By buying Bucherer, Rolex is giving itself a major presence in consumer sales for the first time, a strategic shift from reliance on external distributors. The only store in the world currently owned and operated by Rolex is in its home city of Geneva.

The deal, which still requires approval from authorities, comes amid what UBS has dubbed the greatest transfer of wealth in history over the next two decades as business founders and investors grow older. Yet it’s unclear where Bucherer plans to direct the proceeds from the sale. A spokesperson for the firm declined to provide any details beyond the Rolex statement, adding that Bucherer “has always been a very discreet company.”

What’s clear is that the move will put an end to dynastic control over the purveyor of pricey jewellery and watch brands including Rolex, its own Carl F. Bucherer, Chopard and Blancpain. The business traces its roots to 1888 when entrepreneur Carl-Friedrich Bucherer and his wife Luise opened a shop in Lucerne, according to the company’s website.

Their sons Ernst and Carl Eduard joined the business in the early 1920s, with Ernst reaching an agreement with Rolex founder Hans Wilsdorf in 1924 to add the brand to its product line. Third-generation Jöerg took over management in 1977, expanding into Austria in the 1980s and then Germany a decade later. Bucherer opened a flagship store in Paris in 2013 and has also moved into London, Copenhagen and the US.

Jöerg Bucherer has never been known to give a media interview and is mentioned only briefly on the company’s website. A French corporate filing lists him as a Swiss national.

German-born Rolex founder Wilsdorf created a Geneva-based foundation in his name in 1945 that took over the firm’s ownership, according to the company’s website. He died in 1960 and also didn’t have any direct descendants.

“Jöerg Bucherer is the last person still in activity to have known and worked with Hans Wilsdorf,” Rolex said in its statement announcing the deal, adding that Bucherer will remain the retailer’s honorary president.

Pureplay retailer Booktopia says a challenging economic climate coupled with the impacts of its transition to its new customer fulfilment centre (CFC) resulted in a loss of $29 million in FY23.

Sales for the year to June 30, fell 18 per cent to $197.6 million while underlying EBITDA declined 173 per cent to $4.6 million.

The average order value grew 4.9 per cent to $79.29 while the average units shipped fell 19.6 per cent to 6.83 million.

Earlier this year, the company implemented a number of cost rationalisation and margin optimisation measures to help manage economic headwinds in its cost base.

Meanwhile, the group’s new CFC – which is operational now – is expected to improve efficiencies, reduce operational costs and support growth.

Booktopia CEO David Nenke said in the next financial year, the business will focus on excelling in key areas that enable the group to stand out in the market.

“Our recent equity raise of $10.9 million, has provided further working capital, helping to increase available inventory for the important Christmas period as well as contribute to the successful transition to our new CFC.

“We are looking forward to launching a series of additional strategic initiatives in the coming months, which will expand the unique selection we offer to readers across ANZ, and improve personalisation and the user experience.”

The creep is back on at Myer!

Street Talk understands Solomon Lew’s Premier Investments was the buyer behind a line of 24.6 million shares in Myer traded shortly after market open on Wednesday. It represents 3 per cent of Myer and was worth about $16 million.

Premier used Brent Potts at Blue Ocean Equities, who has been at Lew’s service for his Myer shopping trips for at least the past six years. It follows a similar trade on February 27, which took Premier to 25.79 per cent ownership of Myer. Wednesday’s trade should put it just under 29 per cent.

Earlier this month, Myer shares dived after the department store told shareholders that second-half sales had ground to a halt as customers faced repeated interest rate rises. But it also tipped significantly higher profits for the year to the end of July, after preliminary sales figures showed growth despite deteriorating trade conditions as shoppers become more cautious.

Premier’s purchase comes shortly after it engaged UBS deal makers Kelvin Barry and Jon Mant to work through a potential split of the company into four ASX-listed groups, a move which would leave it holding the stake in the department store. That would create separate vehicles for Peter Alexander, which sells luxury sleepwear, and Smiggle in a deal that some brokers say could unlock more than $1 billion in value for shareholders.

The size of Premier’s holdings in Myer means it cannot buy more than 3 per cent of the company every six months without making a takeover bid for the company. Lew engaged in a long battle with the Myer board and management, a situation that has since stabilised when Premier’s representative, Terry McCartney, was finally appointed to the board.

Myer shares closed up 5.6 per cent yesterday at 66¢.

Bedding and homewares retailer Adairs has reported a 10 per cent lift in group sales in FY23 with the Focus on Furniture brand performing well.

For the year to June 25, group sales achieved $621.3 million, up 10.1 per cent while tax-paid profit reached $37.8 million and underlying EBIT fell 16.4 per cent to $63.9 million.

Adairs’ sales were up 2.9 per cent to $430.8 million driven by a 7 per cent increase in-store sales while online sales fell 6 per cent however accounted for 27.1 per cent of total sales.

A new Adairs brand website was launched in November last year and two stores were opened, four stores were upsized, two refurbished and three closed.

Focus on Furniture sales grew 5.3 per cent to $141.9 million despite industry-wide supply chain headwinds which prevailed for much of the year.

Mocka sales fell 24.1 per cent to $48.6 million as customers returned to in-store shopping and the brand moved on from FY22 operational issues and improved customer confidence by enhancing product design and quality.

Mark Ronan, MD and CEO of Adairs Limited, said this year’s sales performance “reflected” a strong product offering across all three brands.

“In a trend seen by virtually all retailers, sales slowed towards the end of the year as rising interest rates and broad cost of living pressures saw households tighten their budgets.

“In a tougher trading environment, the combination of exclusive products, engaged customers, attractive price points and strong service culture sees us well placed to maximise sales in the coming year.”

For the first seven weeks of FY24, group sales fell 8.9 per cent while the company has continued to implement material cost reduction initiatives that seek to manage the business amidst the anticipated trading environment.

Strand’s new luggage label Nere is set to open its first Australian bricks-and-mortar store at Melbourne Central. 

Nere first launched in Strand stores across Australia and New Zealand in July 2022. The brand is now expanding across multiple markets as a stand-alone venture, including the United Kingdom and United States. 

Nere will join eight fashion brands opening stores at Melbourne Central in the lead up to Christmas. 

Superdry, Stylerunner, Nude Lucy, Supre, LSKD, And Now This and Paper Kites will also open locations at the CBD shopping destination. 

Melbourne Central centre manager Denis Ryan said the openings come as the centre records its busiest month of foot traffic since the pandemic. 

“We’re very excited to be able to offer our customers Australian retail firsts like Jamba, Nere and Monopoly,” Ryan said. “Our diverse range of retail, dining, and entertainment offerings sets us apart from other CBD retail precincts, and we will continue to seek new and exciting retail opportunities to provide an unmatched experience for our customers.”

Melbourne Central attracts around 56 million visitors every year and over 300 stores.

Australian retailer Big W has recorded an 8% lift in sales in FY23 on FY22, but a 0.3% slip in the second half compared to the prior corresponding period.

Total sales for the low-price department store hit $4.78 billion in FY23 and $2.07 billion in just the second half. While earnings before interest and tax (EBIT) was up 165.3% for the year to $145 million, it slumped by 63.7% to $11 million in H2 FY23.

Parent company Woolworths Group noted sales were down 5.7% in the fourth quarter due to a notable softening in discretionary spending and, to a lesser extent, the timing of Easter.

Everyday essentials such as health, baby and pet care categories, and leisure products continued to see item growth but Woolworths noted discretionary areas including clothing and home were impacted by the rising cost of living on households.

eCommerce sales decreased 22.2% in FY23 to $482 million, with Woolworths citing a 31.4% decline in H1 as customers returned to shopping in-store for the decline and cycling of COVID-driven online purchasing behaviour.

eCommerce sales declined 3.3% in H2 with penetration of 10.1%.

Woolworths Group CEO Brad Banducci said the trading environment for Big W changed dramatically between the first half and the second half of FY23.

“After delivering a strong H1 result, we indicated in February that the H2 EBIT contribution would likely revert to more typical seasonal patterns,” Banducci said. “H2 ended up below our initial expectations as customers cut back on discretionary items, particularly in Q4, and the sector became extremely competitive with higher levels of promotions and discounts.

“While F23 EBIT of $145 million more than doubled on the prior year, H2 EBIT of $11 million was below H2 F22 due to flat sales, higher promotional activity across the market and rising unit costs driven by team wage investments.

“Pleasingly, our customer scores remained strong, including value for money metrics, and digital interactions continue to grow. We also launched Cartology in Big W during the year with 175 screens in-store by year end.”

Cartology is Big W’s exclusive retail media partner launched in June 2022, covering in-store and digital.

Woolworths also launched a select Big W range on MyDeal in August 2022, which it claimed has seen consistent sales growth on the platform since implementation

On current trading and outlook, Banducci said sales in the first eight weeks of FY24 have shown a similar trend to Q4 with growth in its food business but declines in Big W sales on the prior year.

“Big W sales momentum continues to be challenged with sales down approximately 6% in F24 to date,” Banducci said. “While Big W is being impacted by the broader discretionary spending slowdown in Australia, some categories like everyday essentials are performing strongly.

“Loyal customers are continuing to shop with Big W, and we are seeing some trading-in but customers are cautious, putting fewer items in their baskets.

“The outlook for the remainder of the year is uncertain and as always, trading in Q2 will be key to the full-year results.”

The Big W store network grew by one store during the year to 177 stores following the opening of a new space in Q1. Sales per square metre increased by 7.9% due to the strong sales growth in H1.

Pureplay online retailer Adore Beauty’s sales declined for the full year and the business says value remains a “key driver” for customers.

In its results for the year to June 30, revenue fell 9.6 per cent to $180.6 million with EBITDA of $600,000 reflecting lower operating leverage, cost inflation and reinvestment in key initiatives.

Active customers fell 8 per cent to 801,000 while returning customers increased by 4 per cent to 490,000 and contributed to 76 per cent of all revenue. The company also tripled its private label SKUs to 38 and plans to expand further.

Adore Beauty CEO, Tamalin Morton, said the business “returned to growth” in the second half despite challenging trading conditions.

“We have maintained sales momentum into FY24, up 5.9 per cent on the same period last year, and our proposition continues to resonate with customers.

“We enter the new financial year with a refined strategy, focus on customer centricity, increased brand awareness, and operational optimisation,” she said.

“New strategic initiatives already underway provide short and long-term growth levers, and include leveraging new data insights to enhance our product offering and loyalty program, real-life activations and audience expansion initiatives.”

Australian low-price accessories brand Lovisa has recorded a revenue lift of 33.1% in FY23 to $596.5 million.

Lovisa cited the implementation of price increases during the third quarter of FY22, which grew sales through the fourth quarter and continued through the first three quarters of FY23, with a reported minimal impact in sales volumes.

As the company cycled these price increases in the second half of FY23, it recorded a softening in comparable company analysis - a valuation that looks at ratios of similar public companies and uses them to derive the value of another business.

Lovisa recorded a gross margin of 80%, with a gross profit up 34.8% to $476.7 million. Net profit after tax was up 20.1% to $68.2 million, and its operating cash flow was at $188 million, up 24.8%.

Meanwhile, Lovisa expanded into 12 new markets during the financial year, opening 210 new stores totalling 801 altogether, with the accessories brand noting this as a major driver for total sales growth.

New markets include Hong Kong, Taiwan, Namibia, Botswana, Mexico, Italy, Romania, Hungary, and Spain and new franchise markets in Columbia, Peru and Morocco, following the opening of Poland and Canada at the end of FY22.

The USA market has overtaken Lovisa's Australian market as the largest store network, with 78 new stores opened in the US. The market now operates 190 stores at financial year end, above Australia's 168. Lovisa opened 17 in Australia in FY23. 

Despite this ongoing investment, the cost of doing business (CODB) was controlled according to Lovisa, helping mitigate inflationary pressures on labour and other costs. Lovisa noted it saw increased pressure on CODB as a percentage of sales as sales growth slowed in the second half.

For the first seven weeks of FY24, comparable store sales were down 5.8% on the same period in FY23.

Total sales for the same period are up 13.1%, with 21 new stores opened and eight closed.

Lovisa CEO Victor Herrero said the momentum in its global store rollout has delivered strong top-line sales growth.

“The company has been able to continue to deliver strong profit growth while investing in the structures to support our global expansion in the face of more difficult trading conditions in the second half, which leaves us well placed as we move forward with store rollout in both existing and new markets,” Herrero said.

“I want to again thank the entire global Lovisa team for their exceptional work to deliver these results.”

Australian fashion group Universal Store has recorded a 26.5% lift in total sales in FY23 compared to FY22 to $263.1 million, driven by growth across its three key brands - Thrills, Perfect Stranger and its eponymous label Universal.

Thrills recorded a revenue lift of 20.1% in FY23 to $41.8 million. Meanwhile, Perfect Stranger recorded a total sales increase of 187% to $8.9 million compared to FY22.

The company’s gross profit hit $155.3 million in FY23, up 28% on FY22. It also recorded a 23.8% lift in earnings before interest and tax to $40.4 million, and a net profit of $23.6 million, up 14.6% on the prior year.

First-half sales were up 34.5% - or 28.6% when excluding Thrills which was acquired by Universal on October 31, 2022.

However, trading in the second half of the year softened, with revenue growth of 17.8% - or 4.7% excluding Thrills.

Universal claimed this was influenced by consumer responses to the macro environment and the impact of rising living costs, exacerbated by interest rate increases. As a result, store traffic slowed but remained positive compared to the prior year.

Despite the challenges, the group achieved growth of 1.2% in like‑for‑like (LFL) sales compared to FY22, with store sales up 23.9% in FY23. Group online revenue grew 3.7% in FY23 and contributed 14.1% of total revenue.

Universal Store group CEO Alice Barbery said FY23 brought unique challenges and opportunities, transitioning from pandemic impacts to a now-dynamic and volatile consumer environment.

“During the year, we grew our store network, completed a strategically significant acquisition, moved to our new DC and Support office, and materially advanced the Perfect Stranger retail trial,” Barbery said.

“We now have three great retail brands that are well positioned for growth and a team that is excited to pursue these opportunities.”

Looking ahead, Universal will refine and expand Thrills’ direct-to-consumer (DTC) operations. The fashion label’s wholesale and DTC channels are reportedly performing well with wholesale order book indicating double-digit growth of the wholesale channel in the first half of FY24.

Despite the profit lifts overall, Universal Store’s cost of doing business (CODB) rose by 260 basis points to 33.5% of sales. The company cited an increase in employee costs, occupancy costs, and $8.6 million in expenses related to the Thrills acquisition.

The rise in employee costs was mostly driven by the Thrills acquisition, Universal noted, and having all stores trading during the period in contrast to the prior comparative period which saw lower spending due to mandated store closures.

Universal’s overall inventory increased by $6.3 million. The company cited strong demand, more appropriate stock levels held post-COVID, a larger distribution centre, new store openings and the integration of the Thrills business ($4.0 million).

Capex was at $10.2 million.

“Continuing to introduce fresh new products and brands that excite and meet our customers' ever-changing needs will be key to navigating successfully through the uncertain market conditions,” Barbery said.

“I am most pleased about the outstanding work my team is doing in refining our retail concepts, delighting our customers, approaching each challenge with a positive mindset, and readying our business for long-term growth.”

During FY23, Universal opened eight new stores, consisting of three Universal Store and five Perfect Stranger stores. When combined with the ten acquired Thrills stores, this totals 95 as of June 30, 2023.

Universal plans to open one or two new Thrills stores in FY24, four to six for Universal Store, and between five and eight new Perfect Stranger stores.

Online furniture retailer Temple & Webster is the latest brand to bear the brunt of slowing spending, posting a 30 per cent drop in full-year net profit.

However, company CEO Mark Coulter said on Tuesday sales had started to pick up in the new financial year as consumers switch to more affordable home goods.

Temple & Webster shares fell almost 13 per cent after it revealed its FY23 net profit after tax had declined by 30.6 per cent to $8.3 million, while revenues slipped 7.2 per cent to $395.5 million. They closed the session at $6.57 and are still ahead by more than 40 per cent year-to-date after a strong run-up since February.

Coulter said while consumers were under pressure, the retailer’s Millennial-focused customer base was trading down on purchases, seeking out furniture staples like budget-friendly couches.

“That’s our sense – and you can see it in our [demand for our] sofas, for example,” he said.

“Furniture and homewares is less discretionary than people think – there is always going to be a need for it. And we are seeing that customers and looking for more value.”

Temple & Webster’s trading update for the start of the 2024 financial year showed stronger momentum, with the company’s revenues up by 16 per cent compared with the same time last year.

Coulter said while trading conditions were tough, the business was sticking with its long-term value proposition and targeting $1 billion in annual sales in the next three to five years.

“I think it is tough out there – people are feeling the pinch, but they’ll still need items for the home, and they just look for more value options,” he said.

Global jewellery brand Pandora has continued its global rollout of lab-grown diamonds into the Australian market.

Australia will join Mexico and Brazil in the new initiative, with lab-grown diamonds already available in Pandora’s UK, US and Canadian markets, with a further rollout into all stores in North America.

The full rollout is expected to be completed in the first quarter of 2024, and will be available in 700 stores globally, including Australia, by August 31.

Pandora has been crafting lab-grown diamonds since August 2022.

“Consumers in North America and the UK have welcomed our lab-grown diamonds and we will continue to make them accessible to more people around the world by expanding our collections and distribution,” Pandora CEO Alexander Lacik said.

“We have big ambitions for this category, aligned to our mission of providing high-quality, affordable jewellery at a very high level of craftmanship.”

The move comes as Pandora expands its lab-grown diamonds assortment with three new collections, including original designs and the brand’s take on classic jewellery styles.

The new collections include Pandora Nova - which features various cut stones and will introduce a proprietary four-prong setting that reveals more of the diamond, alongside Pandora Era and Pandora Talisman.

All collections feature near colourless, VS+ clarity lab-grown diamonds available in 0.15 to 1-carat weights and set in 14k white gold, 14k yellow gold, or sterling silver.

The three new collections will be unveiled to consumers via a campaign revealed on August 29.

“The new collections and accompanying campaign bring our unique point-of-view on diamonds to life,” Pandora CMO Mary Carmen Gasco-Buisson said. “Our diamond jewellery is not only for special occasions, but something you can wear to add joyful sparkle every day and everywhere.

“This commitment to democratizing diamonds and the wonderful meaning they carry make lab-grown diamonds a perfect fit for Pandora.”

Meanwhile, Pandora's Australian market recorded a negative 5% like-for-like sales in the second quarter of 2023 compared to Q2 2022. Pandora noted this was driven by a continued weak consumer sentiment in the country.

Pandora noted its owned and operated concept stores in Australia are outperforming the wholesale channel, at 0% and negative 10% LFL respectively in Q2 2023, partly driven by tourism as well as high conversion rates in Pandora-owned and operated stores.

Bunnings will cut 100 jobs from its New Zealand head office in a bid to become more efficient at a time when consumers are slowing their spending and seeking lower prices.

The retailer plans to cut about 30 per cent of 340 staff in areas including finance, human resources, merchandise, marketing and retail operations.

Bunnings managing director Mike Schneider said the restructure would not impact more than 5000 employees at the company’s 50 stores, trade centres and distribution centres in New Zealand.

“We continue to be absolutely committed to the New Zealand business and its growth and success,” he told The Australian Financial Review.

“We have really thought about this, and it’s about improving the operating model and about leveraging scale and cost. We see this very much as helping drive more simplicity and more group alignment.”

The New Zealand business will still have localised buying and marketing.

Mr Schneider said the job cuts were considered to help drive greater alignment between the Australian and New Zealand business. Any cost savings are not material to the wider group, which will report its full-year financial results in a few weeks.

“The outcome of that is more investment into our store network, more investment into our frontline team and more investment in value for our customers as well,” he added.

Wesfarmers-owned Bunnings also recently restructured its middle management store ranks in Australia, moving from eight regional managers to four general managers. Bunnings posted $17.7 billion in sales and $2.2 billion in earnings before tax for the 12 months to the end of June 2022. The retailer remains the key contributor to Wesfarmers’ profits and cash flow.

Wesfarmers chief executive Rob Scott warned in May that consumers were finding it much tougher, and he was bracing for an even more difficult second half with rising costs continuing to pressure both consumers and businesses. Since then, interest rates have moved even higher.

Australia’s biggest department store Myer revealed its sales growth has almost ground to a halt over the past six months as trading conditions deteriorated after the RBA’s barrage of interest rate rises, sending its shares tumbling.

In one of the first trading updates by a major retailer this earnings season, Myer on Tuesday said sales edged up just 0.4 per cent in the six months to the end of July after double-digit growth in the preceding half, limiting its total sales growth for its financial year to 12.5 per cent.

While net profit for the year will come in at $69 million to $73 million, up as much as 21 per cent, only $4 million to $8 million was generated in the second half, it said in a statement to the ASX.

Myer’s stock plunged 14.1 per cent to 61 cents in mid-morning trade.

The company will release its audited financial results in September.

Chief executive John King said Myer had been able to secure solid sales and profit growth despite the macroeconomic headwinds that hit the retail sector in the June half.

“We continue to tightly manage costs, inventory and cash to ensure we have a strong balance sheet as we begin [the new financial year], where we expect the ongoing uncertainty around the macroeconomic environment to persist,” he said.

Retail analysts are expecting further signs of a spending slowdown during company earnings season this month, as national spending data reveals that households are continuing to reduce their expenditure to balance rising mortgage, energy and grocery costs.

There was further evidence on Tuesday that rising household expenses are having an impact on the outlook, with the Westpac-Melbourne consumer sentiment index showing confidence fell further into “deeply pessimistic” territory in August.

The index slipped 0.4 per cent for the month. Westpac senior economist Matthew Hassan said pressure on family finances continued to weigh on the outlook.

The department store sector appears particularly vulnerable to a spending slowdown; turnover at the nation’s department stores fell by 5 per cent in June, according to Australian Bureau of Statistics figures.

Retail analysts are continuing to prefer the supermarkets and discount department stores like Kmart over fashion retailers and businesses focused on “big ticket” purchases in the current trading environment.

“The consumer is reducing spending in aggregate and when they do spend they are trading down by price point in apparel and general merchandise,” UBS analysts said in a recent note to clients.

Myer competitor David Jones has recently conducted an efficiency review of its store operations, which will result in up to 100 redundancies as the business looks to streamline its operations under new owner Anchorage Capital.

But David Jones chief executive Scott Fyfe told this masthead last week that he expects the consumer outlook to improve in the lead-up to Christmas.

Myer has emerged from the pandemic with strong trading growth over the past two years, and the company reported its best profit result in close to ten years in 2022. Its shares are still ahead by more than 20 per cent over the past 12 months, despite plunging on Tuesday.

King, who has led the turnaround of the business, has confirmed he intends to resign from his role in 2024 and a global search is being conducted for his replacement.

Department store Myer says sales and profit are continuing to grow despite the challenging economic environment, with its online business continuing to strengthen.

In a trading update issued today based on unaudited accounts, the company said it expects to report a 12.5 per cent increase in sales to $3.4 billion for FY23 and a full-year tax-paid profit somewhere between $69 million and $73 million. While that projection marks an increase of up to 21 per cent year on year, it is less than a Refinitiv forecast of $88.5 million, leading to a decline in its share price in Tuesday trading.

Online sales accounted for 20.5 per cent of the company’s turnover. A 4.5 per cent fall in FY23 reflected increased online shopping when physical stores were closed due to Covid-related restrictions during the previous comparable period. Online sales in FY23 are up 163.2 per cent on FY19, the last full trading year prior to the advent of the pandemic.

Myer said overall second-half sales extended 0.4 per cent despite a “deteriorating” trading condition while tax-paid profit for the half is expected to range between $4 million and $8 million.

CEO John King said the business continues to “tightly” manage costs, inventory and cash to ensure a strong balance sheet as it begins its new calendar year.

“Myer’s Customer First Plan has continued to deliver both positive sales growth and positive profit growth in FY23, despite the prevailing macroeconomic headwinds that have buffeted the retail sector throughout the second half.”

King will retire in the second half of FY24 and return to the US. The company has engaged search firm Egon Zehnder to recruit his replacement.

Amazon has confirmed plans to build Australia’s largest warehouse, one which will put a fleet of robots to work in the Melbourne suburb of Craigieburn.

The automated fulfilment centre, which at 209,000 square metres will be the size of 11 MCGs, will be 830 square metres larger than Amazon’s robotic fulfilment centre in Kemps Creek, Western Sydney, which was its first such Australian centre. The new site is scheduled to open in 2025.

As with the Kemps Creek site, the Craigieburn facility will have robots working alongside humans. The robots will collect stock from around the warehouse and bring it to employees so they can prepare packages for shipment.

“Instead of the associate going to the items, the items are coming to the associate. That helps speed [up] order processing time,” Amazon Australia country manager Janet Menzies said.

The investment in the robotics site is another sign that the e-commerce giant, which has poured $8.4 billion into its Australian operations since its launch here, is taking a long-term view of the local retail market.

Amazon has been upbeat about its growth opportunities in Australia, despite a deluge of data that suggests household spending is contracting in the face of surging living costs.

Analysts from investment and advisory group Jarden predicted this year that the total value of merchandise sold on Amazon in Australia would hit $5 billion in 2024.

Menzies said last month that the company has experienced a jump in subscription orders for everyday grocery items. It was also upbeat about its July Prime Day sales event.

Amazon shares are up by about 12 per cent over the past month. The stock surged after the retailer surprised the market with stronger than expected quarterly earnings. The US-based company posted sales growth of 11 per cent year on year despite a global spending slowdown.

Menzies said the investment in the new Melbourne site would be a win for the retailer’s third-party sellers, who would be able to store products there.

Amazon will recruit for new types of warehouse jobs at the Craigieburn facility, including IT and engineering roles to maintain the robots. The site will employ 2000 staff once fully operational.

Increasing investment in automated warehouses across Australia’s retail sector has driven the need for a range of new logistics jobs over the past few years.

Supermarket giant Coles is also looking for a new generation of tech-savvy warehouse workers to help staff its automated grocery facility in Queensland. 

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.