News

14 Apr, 2021
Spell launches GlamCorner-backed rental service
SOURCE:
Ragtrader
Ragtrader

Spell has today taken another step in its sustainability journey, announcing a new partnership with fashion rental platform GlamCorner. 

The partnership will see Spell become one of Australia’s first designers to launch its own rental offering on the GlamCorner platform, and follows a similar partnership between GlamCorner and David Jones. 

The partnership will offer an online destination for customers to rent from a collection of 48 Spell garments, including archived pieces from previous collections.

Speaking on the partnership, Spell co-founder Elizabeth Abegg said that the partnership adds another layer to the brand's sustainability mission. 

"What started as an emboldened mission to trace our supply chain and introduce more ecologically responsible fibres into our collections, has become a business-wide quest to always operate with people and planet at the forefront of our minds.

"In a world where our resources are finite, we have long known that it is circular or bust.

"Spell is very excited to play our part when it comes to moving towards a circular economy with our Sister to Sister rental platform, powered by GlamCorner.

"Inspired by our community, who have always led us with their passion to buy, swap and sell our pieces, we are now offering a new solution to accessing our collections whilst decreasing the size of your wardrobe and your environmental impact on the planet," she said. 

Orders will be fulfilled by GlamCorner’s 'click to rent' process which allows pieces to be rented out for a short term, returned and cleaned.

The partnership will help Spell support the circular economy, helping to reduce the 6000kg of clothes that end up in Australian landfills every 10 minutes.* 

GlamCorner co-founder and COO Audrey Khaing Jones welcomed the partnership with Spell. 

"It’s always been our mission from when we first started in a wardrobe of 30 garments to reshape the fashion industry towards a more circular economy and make rental the norm.

"Now, almost 10 years on we are working with Spell, one of Australia’s leading designers that are taking their impact and sustainability journey seriously.

"We’re proud to partner with a brand that is aligned with our vision to drive this generational change in fast fashion consumption and waste.

"Last year we worked with leading retailer David Jones and now we are working directly with leading Australian designers, this is a huge milestone for us.

"This partnership is setting an industry benchmark on the commitment that we should be making to sustainability," she said. 

The Spell x GlamCorner rental platform is available online now. 

14 Apr, 2021
Quadrant pulls Grays.com float
Financial Review

Quadrant Private Equity has postponed plans to float its online auctions business Grays.com Ltd.

A Grays.com spokesperson said on Thursday morning that Quadrant and Grays management made the decision following a quick round of marketing conducted over the past fortnight.

“Having a deep understanding of the business, management and Quadrant have decided to delay an IPO having every confidence in its ability to continue to deliver expected GTV and earnings growth,” she said.

“While we have had strong local and offshore investor engagement throughout the PDIE process, we understand and respect that investors are keen to see more track record post the business transformation under Management/Quadrant ownership.”

Quadrant is expected to reconsider a float later in the year, once the business has another set of results under its belt.

Quadrant took control of Grays in 2019 and owns about a 90 per cent stake in the business. The company was formerly owned by listed leasing company Eclipx and had a short stint as a separately listed entity on the ASX-boards that ended in 2017.

Quadrant had brokers Jarden, Shaw and Partners and UBS pitch the business to Australian fund managers in the past fortnight.

A big part of the “investor education” was trying to get fund managers to take a fresh look at the business and consider changes that had occured under Quadrant’s watch.

The brokers told clients that the new Grays had been reshaped into a capital-light marketplace, that matched buyers and sellers in the same way as a Carsales.com or online real estate listings business, rather than an auction house with large inventory levels.

Investors were told Grays expected to report $132.9 million net revenue in the 2021 calendar year on a proforma basis, up from $124 million last year, and $28.8 million EBITDA.

The brokers had valued Grays at more than $300 million. Quadrant Growth Fund paid $60 million for Grays in July 2019.

7 Apr, 2021
US investor a.k.a Brands acquires stake in Culture King streetwear retailer in $600m deal
The Australian

A young Australian couple who started their streetwear brand from a single store on the Gold Coast have sold a majority stake in their business in a deal valuing the retailer at $600m.

Simon Beard, 36, and his 32-year-old wife Tah-nee will sell part of their Culture Kings brand to US-based online retailer a.k.a Brands, which has plans to expand the business to the huge North American market.

Brisbane-based Culture Kings, which operates an online business and eight physical stores around Australia, last month hosed down suggestions it was in talks with US investors about being acquired.

The company, founded by the Beards in 2008 on the Gold Coast, now employs 500 people with a focus on online sales.

Mr Beard, who began his retailing career selling products on Alibaba, claims to have pioneered ‘schoolies’ merchandise on the Gold Coast.

Culture Kings, which boasts Justin Bieber, Drake and Ronaldo as clients, sells a modern clothing range targeted to millennials and teenagers. Its stores feature in-house DJs and a basketball shooting competitions designed to attract the young.

Mr Beard said he would stay on as chief executive and retain a stake in the company that would remain based in Brisbane.

A.k.a, which is backed by Boston private equity firm Summit Partners, has a portfolio of online retailers that includes youth-focused brands Gold Coast-based Princess Polly, Brisbane-based Petal & Pup, and Rebdolls. Australian-born NBA star Ben Simmons is investing in a.k.a. in conjunction with the Culture Kings transaction.

A.k.a Brands chief executive Jill Ramsey said Culture Kings was one of the most sought-after streetwear retailers in the world with significant growth opportunities.

“We will work with Tah-nee and Simon to introduce and expand the Culture Kings experience in existing and new geographies,” said Ms Ramsey. ”We are thrilled to have them join our portfolio of high-growth brands.”

A.k.a did not disclose the financial terms of the deal. The company had initial talks in 2020 with potential partners about expanding in the US, but the outbreak of the COVID-19 pandemic had delayed any deal. It is understood the latest deal values Culture Kings at around $600m.

Mr Beard said the deal would allow Culture Kings to expand and become the “number one destination for streetwear across the globe” with a focus on expansion in the US with new physical stores.

“Our vision has always been to create the next global retail phenomenon,” said Mr Beard. “We couldn’t have found a better partner than a.k.a. The US market is very large.”

He said he always envisaged Culture Kings would become a global brand and credited his wife being a linchpin of the business’ success.

The couple live on the Gold Coast and last year unveiled plans to dramatically expand their mega mansion to create a giant Bali-style “pool zone”. They bought the resort-style property in May for $11.75m.

Culture Kings has successfully pivoted during the COVID-19 lockdowns with 75 per cent of its sales now transacted online.

According to the company’s latest financial statement lodged with the Australian Securities and Investments Commission (ASIC), Culture Kings reported a profit after tax of $19.4m last financial year on revenue of $183.7m.

Culture Kings is not the first Australian retail brand to be acquired by Hollywood-based a.k.a. Brands, which has been on the hunt for new digital businesses since it was founded in 2018.

Over the past two years, it has bought Princess Polly, which claims to be one of fastest growing brands in the US for women between 16 and 25, and Petal and Pup, founded in 2015 by Tiffany Henry.

Queensland Treasurer and Investment Minister Cameron Dick welcomed the investment by a.k.a. Brands which was expected to create new jobs in Queensland as Culture Kings expanded in the US market. Mr Dick said the growth would include expanding warehouse and ordering operations at its Archerfield base.

“I understand Culture Kings is likely to employ dozens more Queenslanders over the next 12 months as a result of this deal,” Mr Dick said.

24 Mar, 2021
Amazon moves closer to opening $500m robotics warehouse in western Sydney
SOURCE:
The Age
The Age

Internet giant Amazon Australia has moved closer to even greater domination in the local retail sector with the largest fulfilment centre in the southern hemisphere – the size of 24 rugby league fields – at the $150 million Goodman industrial estate in Sydney’s west.

It will be the first robotics-automated centre, covering 200,000 square metres over four levels, and will employ 1500 warehouse staff. And from this week 300 additional contractors will begin to arrive on site to start the fit out, including the installation of the conveyer belt and robotics equipment.

Once completed, the mammoth centre at the Goodman/Brickworks Oakdale West industrial estate, close to the future location of the western Sydney international airport at Badgerys Creek, will house up to 11 million items and will be equipped with the most advanced Amazon robotics technology.

Goodman is the largest landlord for Amazon globally and this new centre adds to its site at Moorebank in Sydney and the centre in Lytton, Brisbane. Amazon launched in Australia in December 2017.

Amazon Australia director of operation, Craig Fuller, said the new site, due to be operational at the end of 2021, will be the fifth fulfilment centre in the country and will carry smaller goods and items that will service metropolitan Sydney, the NSW central coast and up to Brisbane.

“This $500 million investment that Amazon’s making in western Sydney is a real commitment statement about Amazon and their future in Australia,” Mr Fuller said.

The group is also looking at smaller inner-city sites, such as Alexandria in Sydney’s south to cater for localised smaller deliveries.

“We took this template from a European model. But we had to make a couple of bespoke changes to reflect some of the logistics aspects that are adapted to Australian conditions,” Mr Fuller said, on a tour of the centre on Tuesday, which is still under construction.

“Once we get this building launched towards the end of the year 2021, it is about really consolidation and stabilisation for Amazon here.”

The property will also embrace high COVID safety standards that were introduced to the plans and fit-out last year when the global pandemic hit.

Goodman’s general manager Australia, Jason Little, said development of this fulfilment centre sees Goodman continue to deliver its global strategy of providing essential infrastructure to support the digital economy, and “to meet the increasing demand for strategically located logistics space with easy access to large consumer markets”.

“Our $150 million investment in roads and infrastructure will create road capacity and better access to services, building on outer-western Sydney as a key area for logistics and transportation,” Mr Little said.

Once operational, robots work collaboratively with employees by moving the pods of inventory to them, reducing the time and effort that would otherwise be required for the employee to stow items for sale or pick them for new customer orders.

They also save space, allowing for 50 per cent more items to be stowed per square metre which in turn allows for increased product selection.

15 Mar, 2021
February cashless retail sales suggest a return to normality: NAB
Inside Retail

Cashless retail sales for the month of February have stayed relatively flat, according to NAB’s most recent index, rising only 0.3 per cent month on month, from 18.9 per cent to 19.1 per cent.

However, given the volatility seen in the retail industry in the last year, NAB’s chief economist Alan Oster said the result was “fairly good” – though suggests some of the outsized growth seen during 2020 is returning to more “normal” levels.

“The onset of the pandemic has seen profound changes for Australian retail, with the sector in aggregate going from the weakest sector in the NAB Monthly Business Survey to one of the strongest,” Oster said.

“But as 2021 rolls on and the prospect of some kind of post-pandemic normality comes into view via vaccination, how will consumers respond? Early signs […] suggest that household goods and other retailing are returning closer to pre-pandemic growth, while food has now fallen to essentially pre-pandemic levels.

“Meanwhile, cafes, restaurants and takeaways continue to recover.”

The fastest growth was seen in Western Australia, according to NAB, with cashless retail sales up 22 per cent. Victoria, however, saw the slowest growth – largely a result of its impromptu five-day lockdown during the month.

10 Mar, 2021
Australians spent $45.6 billion online in 2020: NAB
Inside Retail

Online sales jumped in January after a dip in December, according to the latest NAB Online Retail Sales Index.

And it’s estimated that in the 12 months to January, Aussies spent $45.61 billion online.

The index found e-commerce rose 4 per cent during January following the 4.7 per cent fall a month prior, while year-on-year online sales grew 45.6 per cent. These figures differ slightly from the results released yesterday by the Australian Bureau of Statistics, which saw online grow 1.6 per cent and 62.8 per cent on a monthly and annual basis for the same period.

According to NAB chief economist Alan Oster, metro areas continued to outpace regional uptake of online sales, and takeaway food continued to see strong buy-in from Australian consumers.

“While [takeaway food] is still the smallest share of spend, with such high growth over the past year, its share of spend has increased from 4.1% a year ago to 5.3% in January,” Oster said.

“The largest contribution to growth for this category in January was from the two biggest sales states, NSW and VIC.”

February’s result is likely to feel the impact of the Western Australian and Victorian ‘circuit breaker’ lockdowns, which shuttered retailers for a number of days in an attempt to halt the spread of the virus.

 

4 Mar, 2021
Kogan triples net profit during December half, active customers pass 3 million
Inside Retail

Online marketplace Kogan has seen gross profit double to $112.9 million during the six months to 31 December, while net profit (excluding non-cash items) jumped 250 per cent to $36.5 million.

And, after months of continued growth due to the sustained shift online brought on by the Covid-19 pandemic, earnings per share tripled to 35c per share.

Active customers hit 3 million after achieving network growth of 76.8 per cent.

“We launched Kogan to change the retail industry nearly 15 years ago, and we would have been cheering if we helped 3,000 customers that year,” said founder and chief executive Ruslan Kogan.

“So even though well over three million customers used Kogan in the last 12 months, we feel like we’re just getting started.”

During the first four weeks of the second half the business saw gross sales up 45 per cent and gross profit up 102 per cent.

And, according to Kogan, the business plans to invest in its logistics network with the aim of improving speed of delivery, range, and competition across its platform, and will pay a fully-franked interim dividend of 16 cents per share – though won’t provide earnings guidance for the half ahead.

While the business has seen massive grown its active customer base, it was also fined over $300,000 in January for breaching Australian spam laws – sending those customers over 42 million marketing emails that didn’t include the ability to unsubscribe.

The online marketplace is no stranger to fines, having been forced to pay $350,000 by the ACCC in December after an investigation found it had made false and misleading marketing claims about a tax time promotion in 2018.

15 Feb, 2021
Amazon breaks through $1 billion revenue mark in Australia
The Sydney Morning Herald

Global e-commerce juggernaut Amazon has broken through the billion-dollar revenue mark in Australia after its sales doubled during 2020 as the COVID-19 pandemic fuelled a surge in online buying.

Financial records posted for the business late on Friday evening revealed Amazon Australia’s retailing arm, Amazon Commercial Services, reported $1.12 billion in net sales for the 2020 calendar year, a 99.4 per cent jump from the year prior.

Of this, $511 million is directly related to sales of goods from Amazon’s online store, more than double the $218 million recorded in 2019. This shows the online retailer has also seen a similar boost in customer numbers as other major Australian e-commerce sellers such as Catch and Kogan as locked-down shoppers took their spending online.

Investment from the retailer’s US parent company, labelled as ‘related party revenue’, grew 50 per cent to $371 million. This funded things such as Amazon’s new distribution centres in Sydney, Brisbane and Melbourne along with broader expansion expenses.

However, the level of investment has dropped on last year, where related party revenues comprised half of Amazon Australia’s total revenue, showing the local business is beginning to rely less on its parent company’s income.

Revenue from third-party sellers, which refers to Amazon’s marketplace business, jumped to $126 million. The retailer has also seen a successful uptake of its Prime subscription service, which provides free shipping along with access to various TV shows and movies, with revenue nearly tripling to $90 million for the year.

However, despite the surge in sales, the business still reported a loss for the year as expenses rose in tandem with sales. Amazon Australia’s net loss for the year came in at $3.8 million, a minor improvement on 2019’s $4.7 million loss. The company paid $18.3 million in income taxes.

Amazon spent more on marketing in 2020 and also spent nearly $100 million on short-term employee benefits. The cost of professional fees paid by the business also nearly tripled to $60 million.

The company’s status as a billion-dollar company will likely ruffle the feathers of other major Australian online retailers who have been dismissive of the business’ slow start in the region.

The retailer has been slowly but steadily improving its foothold in the local retail industry, announcing last year it was building a mammoth 200,000 square metre robotic fulfilment centre in Sydney’s west, which the company said would double its fulfilment capacity in Australia.

Last year also marked the first full year at the helm for Amazon’s new country manager Matt Furlong. Total executive remuneration for the year came in at $1.8 million.

In a statement, Amazon Australia confirmed its US parent was still investing significantly in the local offshoot and noted COVID-19’s impact on the business and the broader retail environment.

“Over the past year, our focus has remained on the health and safety of our people, helping customers stay home and safe by delivering products directly to their door, and supporting local communities and selling partners during this challenging time,” a spokesperson said.

Amazon’s US parent entity recently reported its fourth-quarter sales of $US125.6 billion ($163 billion), a 44 per cent rise on the same quarter in 2019. It also announced that founder and chief executive Jeff Bezos would be stepping down, handing the reins over to long-term executive Andy Jassy.

5 Feb, 2021
Topshop, Topman join Asos’ stable of brands
Inside Retail

Online marketplace Asos has picked up the Topshop, Topman, Miss Selfridge and HIIT brands from the collapsing Arcadia Group.

The £265m deal sees the business pick up the four brands, which it sees as complementary to its own brand portfolio, and will be completed on the 4th February. The cost was paid entirely from Asos’ cash reserves.

“We’re extremely proud to be the new owners of the Topshop, Topman, Miss Selfridge and HIIT brands,” said Asos chief executive Nick Beighton.

“We have been central to driving their recent growth online and, under our ownership, we will develop them further using our design, marketing, technology and logistics expertise.”

The deal allows Asos to further boost its own-brand offer with “strong labels that resonate” with their core customers of 20-somethings, while also being able to reach a different market than its current offer.

The plan, according to Asos, is to integrate the four new brands into the business quickly, transitioning 300 workers from the brands across, and review the supply chain of each to ensure they comply with their own principles.

“Beyond this, we will work to maximise the opportunity for the brands’ global distribution,” Asos said.

For example, while the four brands’ main market is in the UK, Asos sees the opportunity for more international partnerships, such as a potential partnership with Nordstrom in the US in order to accelerate the wider group’s rollout in that region.

While these opportunities exist, Asos is expecting incremental sales in FY22 to be flat to FY20 acquired brand sales, as it focuses more on driving growth on its main marketplace platform.

The business is, however, expecting a double-digit post-tax return on capital in the first full year the brands are within its wheelhouse.

5 Feb, 2021
Temple & Webster chiefs confident of high growth as profits surge
The Sydney Morning Herald

The heads of online furniture and homewares retailer Temple & Webster are confident the business can maintain its high growth rates throughout 2021 after the company reported a six-fold increase in profit for the half-year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 556 per cent to $14.8 million for the six months to the end of December, the company said on Tuesday, as it continues to ride a COVID-induced surge in sales.

The number of active customers shopping at the e-tailer doubled over the half to 687,000 as did sales, up 118 per cent to $161.6 million, though this signified a slowdown from earlier in the half where revenue was up as much as 160 per cent.

However, chief financial officer Mark Tayler said he could see no obvious headwinds for the business through 2021, remaining optimistic that growth rates could stay high despite a cooling of COVID shopping appetites.

“There’s not a lot in front of us at the moment that’s telling us the year’s going to be really tricky,” he said. “Housing market data and some of the restrictions around travel should mean there’s a lot of demand locally.”

The business’ selection of homewares and furniture, especially office furniture, has been popular during the pandemic as many Australians spent most of their time at home and opted to shop largely online.

Shares in the retailer have boomed nearly 300 per cent since February last year thanks to its rapid growth. However, they fell 3.4 per cent on Tuesday as investors reacted to the slightly worse-than-expected figures.

Chief executive Mark Coulter said the business was now putting a focus on turning its revenue growth into more significant earnings that would allow Temple & Webster to invest more into areas of its business such as data, technology and further marketing.

The company is also looking out for future acquisition opportunities, though Mr Coulter said the company had no immediate plans to snap up any other companies.

Temple & Webster currently ships 75 per cent of its product from international suppliers, but it is looking to expand its higher-margin private-label range, investing $13 million in the segment over the half.

“At the moment private label is 25 per cent of sales and it could get to 30 per cent,” Mr Coulter said. “But the actual percentage will be determined at a subcategory level.”

Growth at the business has continued into the new year, with January revenue up over 100 per cent. Mr Coulter said the business would look to use some of its $85 million in cash to reinvest in the business to cement the company’s gains in market share.

RBC Markets analyst Tim Piper said the overall result was slightly below market expectations but noted the business’ investment into private label products seemed sensible. “We think Temple and Webster will continue to benefit from the significant acceleration in online penetration rates in the category,” he said.

Shares were down more than 4 per cent to $10.57 in late afternoon trading.

1 Dec, 2020
Black Friday delivers record breaking results for retail
Inside Retail

Black Friday has once again cemented itself as the e-commerce sales holiday of the year, with retailers on multiple sides of the industry seeing sales erupt.

According to data from e-commerce business Shopify, its merchant’s trade on Black Friday this year grew by 80 per cent compared to the year prior, with 65 per cent of sales made on mobile and Australia taking the fourth spot in global sales volumes.

Australia Post said trade more widely had improved 45 per cent, and that it had delivered more than 3 million parcels since Friday Morning, and expects a further 3.1 million parcels to be delivered on Monday. If it does, it will be the biggest day in Australia Post’s history.

“We’ve made the right investments in our network and stand ready today to set a new record – the busiest day in our 210-year history – as we head towards our biggest peak in history,” said Australia Post executive general manager of deliveries Rod Barnes.

Department store Myer also saw trade explode, with chief customer officer Geoff Ikin stating the holiday was “massive” and that it had broken its own online records each hour.

And Myer isn’t alone, according to National Retail Association chief executive Dominique Lamb.

“We don’t have figures yet, but anecdotally there has certainly been quite a surge in terms of foot traffic and people taking advantage of sales,” Lamb told AFR.

Last week the NRA predicted Australians would cough up over $5 billion over the Cyber Week spending period, with online sales having been accelerated by the COvid-19 pandemic.

And, with many Australians having seen limited spending opportunities this year, Lamb is confident retail will get the strong showing the association expects.

“We’re not spending money on travel, which is typically what we do at this time of year. In Victoria, the fact that you’ve had limited time to go to bricks-and-mortar stores means it is about the experience, actually touching and feeling things, because you haven’t been able to do it for so long,“ Lamb told the AFR.

1 Dec, 2020
Squarespace could be next US tech giant to list after COVID-19 boost
SOURCE:
The Age
The Age

US company Squarespace could be the next big tech giant to go public after the group which enables businesses to build websites received a huge boost from the coronavirus pandemic.

Founder and chief executive Anthony Casalena said while he would rather the pandemic had not happened it had brought plenty of new customers to Squarespace, including from Australia.

"What ended up happening is a lot of businesses that were mostly offline, started needing and really relying on their online component, to either communicate with their customers or to adapt their business model, or to do anything else," he told The Age and The Sydney Morning Herald. "So starting around mid March we've seen just unprecedented growth in the business, it's had two of the best quarters we've had in half a decade."

Mr Casalena started Squarespace from his university dorm room in 2004 and was the sole employee at the startup until 2006 when it reached $US1 million ($1.36 million) in revenue.

The startup offers website hosting and enables customers to build websites without having to code by using pre-built templates.

It grew its revenue to about $US500 million last year and has employees around the world.

Squarespace's latest hire of a new chief financial officer with public company experience, Marcela Martin, has been viewed as indicating the startup is following in the footsteps of Australian founded competitor BigCommerce this year and preparing for an initial public offering.

Mr Casalena said Squarespace was "late stage private" and had been profitable for a number of years so was not under pressure to list.

"We don't have any distinct plans, but we like to keep our options open," he said. "We're always just increasing our sophistication and making sure that if that's the path, we want to go down at some point that it will be available to us."

Any listing would be expected to value Squarespace at above the $US1.7 billion valuation when General Atlantic Partners invested $US200 million in 2017.

"We don't talk about the current valuation, it's still private," Mr Casalena said. "We've grown significantly since then."

Mr Casalena said Australia played an important part in Squarespace's growth with new commerce subscriptions which allow customers to sell goods up 75 per cent in Australia compared to the same time last year, monthly active sellers up 64 per cent and the total value of merchandise sold up 119 per cent.

"Alongside the United States market, really UK, Canada, and Australia are our next three biggest markets and 30 per cent of our customers come from outside the US and have for some time," he said. "[There are] a lot of great entrepreneurs in Australia, a lot of demand for what we're doing there."

He said despite the increasing dominance of social media networks websites were still important particularly for businesses which want to collect customer information and enable transactions.

"It's more important than ever, for people to maintain a place online that they own right," he said. "I think that people who just constrain themselves to one social presence, no matter what that network is are sort of at the whims of that provider when it comes to what they could put online."

26 Nov, 2020
Redbubble names new chief executive
Inside Retail

 

Art marketplace Redbubble has announced Michael Ilczynski will take up the role of the business’ chief executive effective 27 January 2021.

Ilczynski formerly worked as CEO of employment site Seek, and will bring his years of experience turning that site into a global force to Redbubble.

“That track-record, including the successful development of his team, evolution of the product and scaling of the business, are the right combination to continue Redbubble’s transition from a niche to mainstream global consumer marketplace,” Redbubble chair Anne Ward said.

“Seek is one of the few companies in Australia to have been down this path before Redbubble, and we are delighted to be able to attract a proven, senior leader of Michael’s calibre to join Redbubble.”

Ilczynski said he is very thankful for having been given the opportunity, and that he sees opportunities to build on Redbubble’s three-sided marketplace offer.

Interim CEO and founder Martin Hosking said the appointment is the next milestone in Redbubble’s ambition to pursue the growing global e-commerce opportunity.

“As founder and as a director, like the rest of the board I was determined that our next CEO had the experience, skills and passion for growing our global community of independent artists and customers, plus the leadership track record and spark to inspire and develop our incredible global team,” Hosking said.

“Michael is that person.”

The search for a new CEO came about when former CEO Barry Newstead was ousted by the board in February, after it decided a change of leadership was necessary.

20 Nov, 2020
Amazon US launches online pharmacy in new contest with drug retail
Inside Retail

Amazon.com has launched an online pharmacy for delivering prescription medications in the US, increasing competition with drug retailers such as Walgreens, CVS Health and Walmart.

Called Amazon Pharmacy, the new store lets customers price-compare as they buy drugs on the company’s website or app. Shoppers can toggle at checkout between their co-pay and a non-insurance option, heavily discounted for members of its loyalty club Prime.

The move builds on the web retailer’s 2018 acquisition of PillPack, which Amazon said will remain separate for customers needing pre-sorted doses of multiple drugs.

Shares of pharmacy chains, drug wholesalers and grocers fell in afternoon trading. Amazon’s shares were up nearly 1 per cent.

Over the past two years, Amazon has worked to secure more state licenses for shipping prescriptions across the country, which had been an obstacle to its expansion into the drug supply chain, according to analyst notes from Jefferies Equity Research.

The company founded as an online bookseller has disrupted industries including retail, computing and now potentially pharmaceuticals, drawing criticism of its size and power from labor groups and lawmakers along the way.

TJ Parker, PillPack’s CEO and vice president of Amazon Pharmacy, said in a statement the retailer aimed to bring “customer obsession to an industry that can be inconvenient and confusing.”

The company faces entrenched competition from Walgreens Boots Alliance Inc, CVS Health, Walmart, Rite Aid, Kroger and others. Take-up of online ordering of drugs has been low, according to market research from JD Power.

“Amazon’s launch of an online pharmacy is a meaningful threat to brick and mortar pharmacies,” Northwestern University’s Kellogg School of Management professor Craig Garthwaite said.

“These retail pharmacies must now offer more than just easy access to a prescription.”

Shares of Walgreens Boots Alliance, Rite Aid and CVS tumbled between 8 and 15 per cent, while those of drug distributors McKesson, Cardinal Health and AmerisourceBergen were down 3 to 7 per cent.

Amazon injects a new look and feel into a space that has been dominated by a few large mail order pharmacies like CVS, Cigna and UnitedHealth’s Optum, analysts from brokerage Evercore ISI said in a note.

“New entrants to the highly competitive pharmacy market come as no surprise to us,” CVS Health said in a statement. “While pharmacy is a core component of our business, CVS Health is so much more than your corner drug store.”

Walgreens said in a statement it already provides a full and growing range of pharmacy, health and wellness solutions to its customers and patients, and offers free same-day and next-day delivery options.

Should Prime members prefer buying in person, Amazon said its discounts on non-insurance purchases apply at more than 50,000 brick-and-mortar pharmacies – including those run by rivals. Inside Rx, a subsidiary of Cigna’s Evernorth, administers that benefit, Amazon said.

Still, the pandemic may help bring drug orders online. E-commerce has surged this year as governments told people to stay home to stave off infections of Covid-19, and Prime members – more than 150 million globally – may be receptive to buying medication online now that it’s from Amazon.

The company said Prime subscribers get up to 80 per cent off generic and up to 40 per cent off brand drugs when they pay without insurance, as well as two-day delivery.

Amazon’s online pharmacy is not yet available in Illinois, Minnesota, Louisiana, Kentucky, and Hawaii, a spokeswoman said.

18 Nov, 2020
Gen Z is set to take over the economy in a decade, despite potentially losing $10 trillion in earnings because of the pandemic
Business Insider Australia

In a little over a decade, Gen Z will be taking over the economy.

Gen Z currently earns $US7 trillion across its 2.5 billion-person cohort, according to a Bank of America Research primer on the generation, called “OK Zoomer.” By 2025, that income will grow to $US17 trillion, and by 2030, it will reach $US33 trillion, representing 27% of the world’s income and surpassing that of millennials the following year.

The report defines Gen Z as those born between 1996 and 2016. The oldest of Gen Z turn 23 in 2020, and the oldest millennials turn 39 this year. The youngest generation has the fastest-growing income, per the report, led by the US, closely followed by China.

This earnings growth is short of what it would be without the pandemic, of course. Gen Z students could lose $US10 trillion of lifecycle earnings due to Covid lockdowns, the World Bank has estimated.

Repeating millennials’ rocky career paths

American Gen Zers and millennials have been financially hardest hit in the coronavirus recession, suffering from unemployment rates greater than those during the peak of the Great Recession. But Gen Z is repeating the same rocky start to their careers as the oldest millennials: graduating into a recession.

Stanford research shows that recession graduates typically see stagnant wages, lasting for up to 15 years. The author behind this research, Hannes Schwandt, assistant professor at Northwestern University’s School of Education and Social Policy, previously told Business Insider that this the delay in wealth accumulation isn’t necessarily due to lack of jobs, but that recession graduates typically start at “lower quality” jobs.

A potential upside to this, Schwandt said, is that graduates job-hop to play financial catch-up, which can make them more flexible and help advance their career.

“Over time, what you see in these cohorts is a higher degree of mobility from one employer to the next,” Schwandt said. “It helps them climb up the quality ladder.”

Gen Z may want to look to millennials for an idea of what’s to come, as the so-called “job-hopping generation” graduated into the 2008 financial crisis, then entered the 2020 recession before their oldest members turned 40 years old. Now, before the economy has even recovered from the effects of the pandemic, millennials have just another decade left as the major driving force of the economy.

18 Nov, 2020
Ruslan Kogan lobbies shareholders for $90m options bonanza
Financial Review

Online retailer Kogan.com holds its annual general meeting on Friday and its founder Ruslan Kogan has been working the phones in the lead-up to the deadline for proxy votes, lobbying shareholders to support the package of 6 million options being granted to him and CFO David Shafer.

The grant is worth $90 million at Tuesday’s closing price. These are spring-loaded options, in that the $5.29 strike price was announced on May 12 but was based on the volume weighted average price of Kogan.com shares in the previous three months (to April 30), which just so happened to incorporate most of the ASX’s worst quarter in 33 years. And the only vesting requirement is Kogan’s and Shafer’s continued service until 2023.

The board excluding Kogan and Shafer – which leaves only chairman Greg Ridder and non-executive director Harry Debney – “believes it is in the best interests of the company and shareholders to incentivise Mr Kogan and Mr Shafer to remain in their positions for the next three years”. As if already owning 20.8 per cent of the company between them and Ruslan having his name emblazoned on the door wasn’t incentive enough.

Since the IPO four years ago, Kogan and Shafer have trousered more than $350 million selling their shares in the company. Why the hell should shareholders be diluted to hand them even more?

All three proxy houses – ISS, CGI Glass Lewis and Ownership Matters – are recommending shareholders vote against the resolution to approve the options package. Kogan and Shafer cannot vote their shares.

If on Friday shareholders disagree that the lavish options grant is in the best interests of the company and they vote it down, Ridder and Debney have already committed to paying the equivalent value in cash or using a loophole in the ASX Listing Rules to give Kogan and Shafer 6 million shares anyway, by buying them on-market.

Having disregarded in advance the verdict of their shareholders it takes a special kind of monomaniac to then seek their validation. But Kogan’s persuasive efforts, like the man himself, are irrepressible.

He starts with charm, then tries reassurance (there’s nothing new in the options bonanza – everyone else is doing it), a little gaslighting (“many other shareholders” support the grant) and then progresses to anger, haughtily invoking the inviolability of contracts (funny given his contract cannot constructively be invalidated by direction of the company’s owners). Finally, Kogan concludes his polemic with the threat of resignation. Which would save everyone $60 million.

Pity the junior analysts at major value funds now second-guessing themselves after copping such a symphony.

It is so telling that Kogan himself, not Kogan.com’s chairman, conducted this 11th hour round of investor engagement. That Rusty even deemed it necessary suggests the proxy votes have been tracking badly for him.

If the resolution is defeated, this will be a genuine test for the Australian Securities and Investments Commission. Section 211 of the Corporations Act deals with paying “reasonable remuneration” to executives without shareholder approval. Why is the statutory provision even there if a board can hand their CEO and CFO the equivalent of two years’ earnings after investors have expressly repudiated the proposal? We can only hope ASIC dusts off its rule book rather than being another study in inaction.

12 Nov, 2020
Uber delivers a miss in third-quarter earnings as it slowly recovers from the pandemic
Business Insider Australia

Uber’s pandemic recovery isn’t happening as quickly as investors would like.

The ride-hailing giant on Thursday revealed third-quarter financials that fell below analyst expectations and sent shares lower in late trading.

Overall losses for the quarter ended Sept. 31 totaled $US1.09 billion, on adjusted revenues of $US2.81 billion. Analysts polled by Bloomberg had expected an adjusted net loss of $US876 million on revenues of $US2.82 billion. Losses not including taxes and depreciation were smaller than last quarter, but greater than a year ago.

Uber’s stock price sank as much as 5% following the announcement, paring sharp gains from earlier in the week after the company got a pivotal victory in California. Voters there approved Prop. 22 on Tuesday, a controversial measure that allows gig-work companies to classify workers as contractors rather than employees, while also guaranteeing some benefits like minimum earnings and healthcare stipends.

“Despite an uneven pandemic response and broader economic uncertainty, our global scope, diversification, and the team’s tireless execution delivered steadily improving results,” chief executive Dara Khosrowshahi said in a press release.

Deliveries continue to be a bright spot for Uber during the pandemic, with revenues from that segment more than doubling compared to last year.

Uber has yet to turn a profit in its more than 10-year history, though executives have said it will be able to in 2021 on an adjusted basis despite the pandemic, though that milestone was not included in Thursday’s release. Executives are likely to be pushed for clarification on that timeline during a conference call with investors later Thursday.

“Rome was not built in a day … and neither will the ridesharing recovery,” Dan Ives, an analyst at Wedbush, told clients earlier this week. “The overall environment is starting to considerably improve for Uber over the coming quarters with 2Q marking a clear trough in volumes and fundamentals in our opinion.”

Lyft, Uber’s largest competitor, will report results next week.

4 Nov, 2020
Marley Spoon in snap $56m raising
Financial Review

ASX-listed meal kit service Marley Spoon was getting in front of funds after market on Thursday evening with a capital raising to finance its growth.

The company was on the hunt for $56 million via a placement of new shares.

Canaccord Genuity – which was at hand for Marley Spoon's raising in May and helped float it in 2018 – was lead manager and underwriter on the deal, while Wilsons was chipping in as co-manager.

The placement was priced at $3.22 a share, which represented a 5 per cent discount to Marley Spoon's one-day volume weighted average price.

The capital raising coincided with the release of Marley Spoon's results for the September quarter.

The company was expected to unveil big growth in its US business, including a 163 per cent rise in revenue compared to the September 2019 quarter.

At the end of the September quarter Marley Spoon had 362,000 active customers and quarterly revenue hit €69.3 million ($115.8 million), a 109 per cent increase on the September quarter last year.

The bulk of Marley Spoon's revenue come from the United States and the company upgraded and expanded its capacity at its east coast facility during the quarter.

4 Nov, 2020
E-commerce darlings slide as pandemic gloom lifts
Financial Review

A brutal sell-off in e-commerce and retail shares continued on Tuesday as investors questioned their lofty valuations ahead of Melbourne's staged release from physical lockdown restrictions.

Other risks and uncertainties around the US election outcome, the potential for the Reserve Bank to cut rates on Melbourne Cup Day, and ballooning COVID-19 case numbers in the US and Europe combined to drag the S&P/ASX 200 1.9 per cent lower on Tuesday afternoon.

"I don't think it's just e-commerce," said Ben Clark, portfolio manager at TMS Capital. "I think there's a growing view out there that the businesses that had a big earnings sugar hit from COVID and ran very hard on the back of it are declining."

Market darlings in the home delivery and retail space such as Temple & Webster, Kogan, Redbubble, Breville, and Marley Spoon all added to recent losses, as investors bet the worst of Australia's movement restrictions were over.

"It's unlikely we'll see another lockdown in Australia," said Mr Clark. "Never say never, but the market looks a year or two forward, and what it's saying is that in 2021 and 2022 these trends we've seen in the last six months are going to normalise.

"Yesterday [Monday], Nick Scali had a profit upgrade and got sold down 7 per cent. It's a combination of the good news is well and truly factored into the share prices and the market's kind of saying 'you're over-earning at the moment' and as consumer behaviour normalises over the next couple of years the benefit isn't going to last."

Fund managers also have booked profits on the winners that have benefited from coronavirus-induced restrictions or government cash handouts as cash rotates into travel and infrastructure stocks, according to Mr Clark.

On Tuesday it was announced NSW residents can travel to Tasmania without quarantine from November 6. Quarantine-free travel between South Australia and other states (except Victoria) has been allowed since October 24.

"What we're seeing is the fundies and maybe the long-short funds starting to look at getting out of the 'COVID winners' and pick up stocks that've been hammered by COVID," Mr Clark said.

"So I think there's more of a rotation going on. We're getting close to vaccine announcements, and that's probably going to be the catalyst for that trade to keep going."

IPO rush

After an initial public offer (IPO) priced at $6.75 and listing last Thursday, online-only retailer Adore Beauty has swung between a low of $5.51 and a high of $7.42 over four volatile trading days.

Another e-commerce retailer that listed last week, MyDeal, plunged 13.7 per cent to $1.33 on Tuesday, after posting an intra-day high of $2.20 on its October 22 ASX debut.

Dean Fergie, a portfolio manager at Cyan Investment Management, questioned Adore's $635 million valuation on 181 times estimated profits, when an omni-channel retailer trades on 10 to 20 times estimated profits.

"It was crazy, you've got a business making 1 million or 2 million bucks," Mr Cyan said of Adore. "[It's] selling third-party cosmetics through a website. There's no large barriers to entry for that. No way. You've got reputation, customer experience, brand, but they're reselling products.

"MyDeal we thought was a second-rate Kogan and it started trading at a 100 per cent premium, again with no profitability.

"There's starting to be a reality check. Investors are like, maybe we don't need a portfolio full of these things on ridiculous valuations. We've had a good time of it, maybe it's time to take a few chips off the table."

Mr Fergie noted, though, that some IPOs had impressed, including Credit Clear and protective equipment manufacturer CleanSpace. Last week CleanSpace raised $131.4 million at an IPO price of $4.41 and traded at $6.90 on Tuesday.

The lockdown-leveraged buy now, pay later sector also plunged on Tuesday. Market leader Afterpay shed 4.3 per cent and Zip Co fell 6 per cent to $5.99 – its lowest since September 25.

30 Oct, 2020
'It's really magical when you give kids opportunity to make their own decisions': Finance app Spriggy helps parents manage their kids' money in a cashless world
Business Insider Australia

Spriggy founders Mario Hasanakos and Alex Badran never set out to make a financial app for kids.

A physicist and mathematician respectively, the duo could have gone down very different paths before a serendipitous meeting at Citibank led them to strike out on their own.

“Banking was a crash course in how money works and we realised there’s so much complexity that separates people from their money,” Hasanakos told Business Insider Australia. “We initially wanted to help adults be better with their money, but quickly realised that we had to start a lot younger.”

The concept for Spriggy was born, which essentially attaches training wheels to personal finance. For $30 a year, kids are issued with prepaid debit cards that can be topped up and controlled via the Spriggy app.

“They can set up chores for the kids to complete in order to earn pocket money, and kids get a version of the app that teaches them about spending and saving,” Badran said.

It’s an idea that has found a groundswell of interest in Australia, amassing more than 430,000 users since it was launched in 2016, and garnered investment from the likes of Grok Ventures, Atlassian founder Mike Cannon-Brookes’ private investment fund.

“What we try to do is provide the kind of functionality so that parents with their kids can make their own decisions,” Badran said, noting the “sweet spot” is with kids between eight and 14 years of age. “It’s really magical when you give kids as much opportunity to make their own decisions and at the same time make it safe.”

“You see all the different family personalities and types of parenting coming through. It’s very cool to see how the hoarders, the spenders, the shufflers, the parents who are accountants, how they all use the app.”

The card blocks all types of transactions that would be deemed inappropriate and allows instant transfers to help out families who find themselves in a pickle.

“I can’t tell you the number of times we’ve had just really grateful parents messaging to us and say this really was an absolute lifesaver for them because a child was in soccer practice and something happened and they couldn’t get a lift,” Hasanakos said.

“Instead, the child was able to grab a taxi and pay with a Spriggy card with money that parents sent to them in real-time. You just can’t do with cash.”

Therein lies perhaps one of the key drivers behind the app’s success. While cash was already in decline prior to COVID-19, it has completely disappeared from many households during the pandemic

It has taken the tangibility of money with it. Instead of being armed with dollars and cents to remind their kids of the value of money and how to use it, parents are in desperate need of a way to teach the fundamentals of money in an increasingly cashless world.

“Anecdotally, we’re hearing families who are dropping cash for the first time and finding a way to pay their pocket money to kids digitally, and giving Spriggy a try.” said.

“I think the impact of COVID like it has in so many sectors has only accelerated our uptake and got people used to what is really going to be the future of money.”

The appetite has both looking to spread Spriggy further afield and taking financial education global.

“Some of the things we’ve learned are central to making a difference around the world and that’s definitely one of our goals, to take this show on the road and reach more young families,” Hasanakos said.

While the change is propelling the app forward, many things remain the same.

“One of the most controversial subjects we come across is families trying to figure out whether they should pay kids for doing jobs around the house or whether the kids should do their chores simply as part of being part of the household,” Hasanakos said.

“We don’t pick a side. We just allow families to make those decisions on their own.”

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