News

Large-scale retailers such as JB Hi-Fi, Chemist Warehouse, Bunnings, IKEA and Harvey Norman have been given the green light to collectively negotiate cheaper energy prices from suppliers.

The Australian Competition and Consumer Commission (ACCC) today announced a draft determination permitting members of the Large Format Retail Association (LFRA) to begin accepting tenders.

Big box retailers have long been pushing for the ability to collectively bargain for cheaper electricity in response to increasing energy costs, arguing a pooling of demand would allow the group to tender for more competitive deals from suppliers.

Members of the group span across 4096 retail locations across Australia and collectively spent more than $200 million on electricity in 2018. The association claims benefits of the move include potential cost savings for consumers, along with increased competitiveness for both members and energy companies.

''Members of the buyers group could potentially pass on the electricity cost reduction in the form of lower prices.''

LFRA chief executive Philippa Kelly

While the competition watchdog's final assessment is still to come, ACCC Commissioner Stephen Ridgeway gave the retailers permission to start negotiations, believing it will lead to greater competition in the energy market.

"We propose to allow this joint tendering because we expect it will lead to more competition between suppliers for the group’s combined electricity demand," Mr Ridgeway said.

"Collectively tendering is also likely to save the retailers time and money compared to individual negotiations for electricity supply."

Allowing the retailers to negotiate would be unlikely to cause "significantly public detriment" as the LFRA's members electricity demand makes up a small proportion of demand across Australia.

However, additional members joining the group must not result in the LRFA's annual consumption of electricity in any state or territory exceeding 1 per cent.

LFRA’s chief executive Philippa Kelly welcomed the interim decision from the ACCC, saying it brought the group closer to finalising the first nationwide collective bargaining and joint purchasing arrangement for retailers.

"Energy is usually the third largest expense for Australian businesses. Now, the businesses in this submission will get on a more sustainable financial footing as their cost of electricity is reduced," Ms Kelly said.

"Members of the buyers group could potentially pass on the electricity cost reduction in the form of lower prices, invest in improved product offerings, expanding their product range or employ additional customer service staff with the expected savings."

The ACCC will issue its final determination in November.

Latitude Financial has forecast a cash net profit of $278.1 million for this year in broker reports which have been presented to potential investors as Australia's largest non-bank lender prepares to float as early as next month.

The confidential Goldman Sachs report said Latitude's board was targeting a dividend payout ratio of 55 per cent to 75 per cent of cash net profit "and management expects future dividends to be franked".

People involved in the initial public offering (IPO) preparations, who are not authorised to speak about it ahead of a final decision on the float plans, have said a decision is expected within days. It means a prospectus for the float could be available by next week ahead of a listing date in October.

Latitude Financial has forecast a cash net profit of $278.1 million for this year in broker reports which have been presented to potential investors as Australia's largest non-bank lender prepares to float as early as next month.

The confidential Goldman Sachs report said Latitude's board was targeting a dividend payout ratio of 55 per cent to 75 per cent of cash net profit "and management expects future dividends to be franked".

People involved in the initial public offering (IPO) preparations, who are not authorised to speak about it ahead of a final decision on the float plans, have said a decision is expected within days. It means a prospectus for the float could be available by next week ahead of a listing date in October.

In a further sign the consumer finance business is gearing up for another potential float after it pulled the plug on a listing plan last year, investment bankers have started to contact fund managers, and analysts are set to hold briefings with potential investors next week.

The activity comes after Latitude, in a deal with Harvey Norman this month, announced a plan to slash costs for retailers in the buy now, pay later market, and it is likely investors will take the company's push into the fast-growing segment into account when considering the company's value.

The Goldman report said peer companies for Latitude's "traditional" lending businesses traded on a price to earnings ratio of between 9 to 15 times, which would equate to a valuation of between $2.5 billion and $4.2 billion. The report also highlighted Latitude's push into the buy now, pay later sector, where stock valuations are much higher.

Fund managers who did not want to be named because float preparations are still confidential said they expected Latitude management to arrange meetings with the market shortly, to gather feedback on the potential pricing of the stock.

Latitude, which did not comment, is owned by private equity firm KKR, Deutsche Bank, and Varde Partners, an alternative asset adviser.

The firm cancelled IPO plans last year, which would have valued the company at $5 billion and raised $2 billion from the market, while it changed chief executives and awaited the final fallout from the bank royal commission.

Ahmed Fahour, a former Australia Post chief executive and senior banker who took the top job in October last year, declined to talk about the prospect of a float earlier this month.

“As I’ve said before, it's really not my decision, it is a shareholder decision," he said.

"My job is to make this company IPO ready.”

The broker research said Latitude was a capital-light business and benefited from having low funding costs, no branch network to support, and low customer acquisition costs in its payments and instalments business.

The key risks cited were regulatory factors, including a "step change" in compliance standards in Australia in recent years and economic factors including the level of unemployment and interest rates.

Retail powerhouse Premier Investments has joined Myer and David Jones in taking action against landlords over unfair and "unrealistic" lease terms as the Brexit uncertainty affects its expansion plans in the UK.

The Australian-based retailer, whose brands include Just Jeans, Smiggle, Peter Alexander, Jay Jays and Dotti, told investors at its full-year results on Friday it had no qualms about walking away from leases, even in high-profile locations.

Chief executive Mark McInnes said while Premier was not in the business of closing stores, it wouldn't hesitate to do so in cases where landlords refuse to give the company the same rent deals offered to competitors or international retailers.

"Many landlords have offered capital incentives and lower rent to attract international fashion companies and we have been asking for exactly those same capital deals and rental deals," he said.

"It's not our objective to close stores, but if landlords don't provide realistic rents ... we will."

Premier's stance follows similar threats from department store giants Myer and David Jones, which are currently renegotiating leases to shrink store sizes and cut costs.

''It's not our objective to close stores, but if landlords don't provide realistic rents...we will.''

Chief executive Mark McInnes

Mr McInnes was also confident the company's burgeoning online division would pick up the slack for any sales lost through its lease exits, saying not only were online sales up 31.7% to $148.2 million, but they were "much more" profitable than brick and mortar sales.

Premier's strict action on leases has resulted in 35 store closures over the last financial year but has also helped the company achieve its eighth straight year of earnings growth, with net profit after tax (NPAT) for the year up 27.7 per cent to $106.8 million.

Overall sales were up 7.5 per cent to a record high of $1.27 billion, and like-for-like sales improved 4.2 per cent. Premier shares soared 16.2 per cent, closing at $18.26.

Brexit and Boris bite

Economic and political instability from Brexit has forced the company to re-assess its retail leases across its 145 Smiggle stores and concession stands in the UK, with Premier ending a number of lease agreements early in order to renegotiate cheaper rents.

This incurred a one-off cost of $25.9 million, with directors saying the UK retail environment was "distressed".

Mr McInnes said while it was difficult to predict when conditions might improve, he was confident the UK's economy would recover in due course.

"Great Britain has been through many, many trials and tribulations in the last hundred years, including a couple of wars," he said.

"I'm sure when all this mess is over it will bounce back."

Despite the Brexit-induced issues, Smiggle achieved record global sales for the year of $306.5 million. Sleepwear brand Peter Alexander also reported record sales, up 13.3 per cent to $247.8 million.

Premier chairman Solomon Lew dismissed claims Australian retail was recessionary, saying the company was outperforming in a "failing or struggling" market despite closing 35 stores.

"If you look at our sales growth, closing stores is not hurting us," he said. "Obviously we're doing something right. Our recipe is a lot better than the competitions."

However, the company said it had still seen no indication of consumers spending their income tax cuts, despite economists' predictions Australians were opening their wallets.

Despite his 10 per cent stake and historical opposition to Myer's operations, Mr Lew remained largely quiet on the department store, saying only he was "not sure" on the company's strategy and could not see any "green shoots" despite the company's profitable year.

Macquarie analyst Shaun Weick labelled the result as "strong", backing up Lew's claim Premier's brands had been outperforming a challenging retail market.

Premier will deliver shareholders a record final dividend of 37 cents, taking the full-year dividend up 12.9 per cent to 70 cents.

Retail veterans Solomon Lew and Mark McInnes have put to bed doubts about Premier Investments' strategic shift for its valuable Smiggle brand, flagging a surge in sales this year as Smiggle lunchboxes and pencil cases start selling in 180 more stores overseas.

Premier shares posted their strongest gains for more than 12 years, rising as much as 23 per cent to a 12-month high of $19.30 on Friday, after Mr Lew and Mr McInnes said Smiggle's "capital-light" global expansion plan, unveiled last September, was beating their expectations and was likely to be more profitable than the previous strategy of opening hundreds of standalone stores.

Premier is setting up Smiggle concessions in United Kingdom and European department stores such as Selfridges and Harrods, selling Smiggle products on websites such as Amazon in Europe, and selling a wholesale range to retailers in Canada, South Korea, Thailand, Indonesia, the Philippines and the United Arab Emirates.

While Smiggle sales rose only 4.6 per cent to $306.5 million in 2019, a fraction of the growth in past years, Premier said $17 million of recent wholesale orders from retail partners in these six countries would boost sales as much as 25 per cent in the first half of next year and there was scope to double the number of wholesale outlets from 180 to 350 in one to two years.

Smiggle sales in the first six weeks of the new financial year rose 5.2 per cent, up from 4.4 per cent in the July half, despite Brexit chaos in the UK and tough retail conditions in Australia.

Premier remains confident the new strategy will lift Smiggle sales to $450 million in calendar 2021 or calendar 2022.

"Smart investors really understand this wholesale business and the value that can be created," Mr McInnes told the Weekend AFR after unveiling a better-than-expected 11.5 per cent increase in underlying retail earnings to $167.3 million for the year ending July.

"They know the EBIT margin for wholesale sales is greater than the EBIT margin of [retail sales] ... we've kept the brand and [the retail partners] have taken all the distribution risk," he said.

"When you add that to a record Peter Alexander result and record apparel result and add the fact we've been negotiating well with landlords –  it's all those things, not one," he said.

While most clothing retailers are struggling to maintain sales, Premier's clothing brands posted 7.8 per cent same-store sales growth, offsetting the effect of 35 store closures to lift retail sales by 7.5 per cent to $1.27 billion.

"[There's] a lot to like in this result with Peter Alexander, the core brands, and online sales outperforming," said Airlie Funds Management portfolio manager Matt Williams.

"Smiggle sales consolidated in Australia and the UK but growth from Asia was fantastic [and] management seem very excited about the Smiggle wholesale strategy, and if the longer term sales target is met then I think Premier will continue to be a very good investment," he said.

Mr McInnes said the results reflected better products, strong cost control and marketing rather than a recovery in consumer spending in Australia, where recent stimulus in the form of tax and interest rate cuts had yet to boost sales.

"Macro conditions are still quite difficult – it doesn't feel there's buoyancy," he said.

"But you'd have to say at some point in time people will stop saving and start spending – we haven't seen that yet but hopefully that will be a future tailwind for us."

One of Premier's strongest performers was Peter Alexander, where sales rose 13.3 per cent, bolstered by nine new stores and expanded plus-size and children's sleepwear ranges. The sleepwear chain plans to open between 20 and 30 stores in the next two years.

At 49-year-old denim chain Just Jeans, sales rose 13.7 per cent, despite a net two store closures, and Jay Jays sales were up 6.7 per cent even though a net three stores closed.

In women's fashion, Portmans' sales rose 3.5 per cent and Jacqui E's 3.3 per cent, but Dotti's sales slipped 0.1 per cent as a net six stores closed.

Credit Suisse analyst Grant Saligari said the Smiggle growth plan was well ahead of market expectations and Premier had managed to increase profits strongly without investing additional capital.

"You're getting growth without putting capital into the business – that's valuation accretive," he said.

Analysts also believe there is potential for Premier to cut rents in Australia and the UK, where Smiggle leases have break clauses enabling the retailer to renegotiate 10-year leases after five years. Premier booked $25.8 million in one-off costs to clear the way to break leases early on about 134 Smiggle stores.

Mr McInnes said Premier was loath to close profitable stores but, now that it had other options including online, concessions and wholesale, it would do so unless landlords came to the party.

"We just want landlords to offer us a level playing field," he said.

Online sales rose almost 32 per cent to $148 million after growing 65 per cent last year and further growth is expected this year. Premier is in talks with Alibaba to sell Smiggle products in China.

"Importantly, that opportunity isn’t included in our $450 million [Smiggle sales target], it’d be in addition to that," Mr McInnes said.

Premier's bottom-line net profit rose 27.7 per cent to $106.8 million, compared with $83.6 million in 2018, when the company wrote down the value of Just Jeans, Jay Jays and Dotti by $30 million.

The bottom-line result included a $18.9 million profit from Premier's 28 per cent stake in appliance maker Breville, which is worth $239 million on the books but has a market value of $692 million. Premier also owns a 10.8 per cent stake in Myer worth $48 million, half what it paid two years ago.

Premier increased its final dividend 12.1 per cent to 37¢, payable on November 15, taking the full-year payout to 70¢ a share compared with 62¢ in 2018.

Struggling discount retailer The Reject Shop has appointed Michael Freier as company secretary, effective immediately. Freier is a lawyer who has been general counsel of The Reject Shop since August 2016 and assistant company secretary since April 2018.

Darren Briggs has resigned as company secretary but will remain chief financial officer. 

The company is still without a chief executive officer. CEO Ross Sudano resigned in May of this year, and general manager of the supply chain, strategy and innovation Dani Aquilina was appointed acting CEO. 

Chairman Bill Stevens will retire in October after the annual meeting.

For FY19, The Reject Shop booked a $1.5 million trading loss compared with a $16.6 million profit for the previous full financial year, as well as an after-tax $15.4 million writedown on assets and goodwill.

It has breached fixed-charge cover covenants in June and will do so again in September notwithstanding modest gearing and a net cash position of $6.8 million at June 30.

It has undergone a financial review by KPMG and is closing or selling off a  number of underperforming stores.

Vicinity finds chief people officer

Vicinity Centres has announced the appointment of Tanya Southey as chief people and culture officer following an international search. She will begin with Vicinity in late October.

Southey joins Vicinity with more than 20 years’ executive experience across human resources and culture transformation, including as human resources director at Carlton United Breweries, group general manager, people, at Jetstar and vice-president, human resources, at GE Money.

She will report to CEO and managing director Grant Kelley and be part of Vicinity’s executive committee. 

Southey has also had an extensive career in executive coaching. She lives in Melbourne with her family and will be based at Vicinity’s national office in Chadstone.

Vicinity is a real estate investment trust company specialising in ownership and management of Australian shopping centres, with approximately $6.9 billion of shopping centres under management.

As well as a number of regional centres, it owns premium malls like Chadstone in Melbourne and The Strand Arcade in Sydney. It reported a net profit after tax of $346.1 million for the year to June 30, a 72 per cent slump from the previous year’s $1.218 billion profit.

Cash Converters CFO resigns

Cash Converters International has announced that chief financial officer Martyn Jenkins has resigned, effective immediately. He joined the company in 2013 and during that time held a number of roles in the UK and Australia.

Katrina Grose will assume the CFO role on an interim basis while the company undertakes an internal and external search for a permanent appointee to the role.

Grose is a chartered accountant and a chartered secretary and has held the role of group financial controller for the company since 2015.

Cash Converters International is an Australian retail pawnbroking company which also provides payday loans. It has international franchise operations in many areas such as the US and Canada, the Middle East, Western Europe, Southeast Asia and New Zealand.

Vicinity Centres (Vicinity) today announced the appointment of Tanya Southey as Chief People & Culture Officer (CPCO) following an international search. Ms Southey will begin with Vicinity in late October 2019.

Ms Southey joins Vicinity with more than 20 years’ executive experience across human resources and culture transformation, including as Human Resources Director at Carlton United Breweries, Group General Manager, People at Jetstar and Vice President, Human Resources at GE Money.

In her new role, Ms Southey will report to CEO and Managing Director, Mr Grant Kelley and be part of Vicinity’s Executive Committee. “We are thrilled to have attracted someone of Tanya’s calibre to Vicinity, her passion for supporting people and teams to achieve their full potential will be of enormous benefit to our people and to the execution of our strategy,” Mr Kelley said.

Mr Kelley said Ms Southey also brought with her an extensive career in executive coaching and was passionate about creating strong organisations that can achieve high performance not only through their products and services, but through creating collective mindsets, values and attitudes.

“Tanya’s deep experience in human resources and transformation combined with her expertise leading and coaching people, uniquely qualifies her to continue our transformation into a high-performance culture.

“I know that Tanya is looking forward to joining our team and supporting our people during a dynamic and transitional time for our business and the retail property industry,” Mr Kelley said.

Mr Kelley said that Ms Southey’s appointment formed part of the new Executive Committee structure to advance Vicinity’s strategy to create a portfolio of market-leading destinations, realise mixed-use opportunities and expand our wholesale funds platform.

Ms Southey lives in Melbourne with her family and will be based at Vicinity’s national office in Chadstone.

Pioneering online beauty retailer Adore Beauty is expanding in Australia and overseas after founder and Young Rich lister Kate Morris sold a 60 per cent stake to Quadrant Private Equity.

Ms Morris started selling beauty products from the garage of her Melbourne home 20 years ago, when e-commerce was in its infancy, and with the help of husband James Height has built Adore into Australia's leading online beauty platform.

Sales have grown six-fold in four years - from $16 million in 2016 to an annual run rate of more than $100 million in 2020 - as Adore took share from bricks-and-mortar retailers such as Myer and David Jones.

But for Adore to achieve its ambitious growth plans the company needed to bring in external investors after buying back a 25 per cent stake acquired by Woolworths four years ago.

After six months of talks led by KPMG, Ms Morris and Mr Height have agreed to sell a 60 per cent stake in Adore to Quadrant's new $400 million growth fund.

Ms Morris, 40, was understandably apprehensive about selling control of her baby to private equity investors.

"I've had this business 19 years and I don't think I could have parted with any of it for someone I didn't really trust," Ms Morris told The Australian Financial Review on Monday.

Before agreeing to the deal, Ms Morris spoke to other business owners who have teamed up with Quadrant, whose previous investments have included Kathmandu, Burson, QSR Holdings, Amart and Barbecues Galore.

"Finding a partner who was going to respect the culture and values that have enabled Adore to deliver the results that it's delivered and is part of what makes us special ... was super important," she said.

"All the founders I spoke to had had a positive experience and said it was something they would do again and if we had the opportunity to work with Quadrant we should do it."

Ms Morris and Mr Height are selling down a portion of their 100 per cent interest, and Quadrant is investing additional capital to accelerate the company's growth.

Adore, which sells more than 220 beauty brands, plans to expand into new verticals such as fragrance, ramp up marketing to attract new customers and invest in technology and content to improve customer engagement.

"Consumers are more engaged with the category than they have ever been and looking for more information and education - the information we've been able to provide as a brand-agnostic retailer seems to be really resonating with consumers," Ms Morris said.

"We're acquiring more and more customers, and the customers we have are spending more with us every year."

After entering the New Zealand market two months ago, Adore plans to take advantage of strong interest from international customers, which accounts for about 45 per cent of site traffic, and explore expansion into Asia, adapting its site to include localised content, brands and currencies.

"We have so many international consumers coming to our site for the content it kind of makes sense to sell them something at some point," she said.

The sale price was not disclosed. But based on average valuations for e-commerce businesses of about 1.1 to 1.2 times revenues, Adore is estimated to be worth more than $110 million, valuing Quadrant's 60 per cent stake at more than $60 million.

Quadrant managing director Justin Ryan, partner Simon Pither and investment associate Youngsoo Kim will join the Adore Board.

The Adore stake is Quadrant's first pure-play online retail investment and the third this month founded by a woman.

"It's different to what we've done in the past - we've done a lot of consumer work and in bricks and mortar - but we all agree the future is in e-commerce and we really like what Kate and James have done," Mr Ryan said.

"They've built an unbelievable culture, it's a big market and they've carved out a nice niche - I think it has a very exciting future," he said.

Earlier this month Quadrant agreed to buy majority stakes in Love To Dream, which designs baby swaddles and sleepwear, and ModiBodi, which makes leak-proof apparel, underwear and swimwear.

Quadrant's exit options include an initial public offering, trade sale or sale to another private equity fund.

Ms Morris, who debuted on The Financial Review Young Rich List last year with an estimated wealth of $30 million, has not ruled out selling her entire stake in the future.

"Every business at some point is either sold or wound down so that's a potential outcome at some point ... right now I'm super excited about the growth that we have ahead of us - it's so much fun at the moment."

Department store Myer has bolstered its management team, appointing a new head of media and general manager of marketing.

Gemma Hunter will take up the role of leading Myer’s marketing team, bringing more than twenty years of experience to the role. 

Hunter comes from almost ten years as executive creative director at advertising firm MediaCom, where she led content strategy, creative, production, SEO, social, and data analytics teams. 

“Myer is a loved and respected brand, and I can’t wait to join the inspiring team,” Hunter said. 

“To be a driving force in the work that is underway, reigniting passion in the brand by focusing on customer experience and emotive storytelling is a once in a lifetime opportunity.”

Additionally, Aaron Achurch joins the Myer team has its new head of media, bringing 15 years of experience in media teams at businesses such as Diageo, Bankwest, Vodafone, and the Australian Rugby Union.

Both Achurch and Hunter will report to Myer chief customer officer Geoff Ikin. 

“I can’t wait to be part of the journey that Myer is on, and I believe there is enormous potential through their advertising and communications to show to the Australian community the positive changes that are underway with the addition of new brands, offers and experiences that you will only get at Myer,” Achurch said.

The department store chain has been rebuilding its management team since it axed around eighty store management and support teams earlier in the year – including Hunter’s predecessor Andrew Egan. 

“With the key appointments of Gemma and Aaron to these roles we are bolstering our marketing and communications capability,” Ikin said. 

“The experience that Gemma and Aaron will bring to these roles will be instrumental in delivering the work that is underway to re-engage with our customer, putting them firmly at the heart of all that we do.”

Zara-owner Inditex saw record revenue and profits during the first half of FY19, though flat gross margin caused share prices to dip.

Net sales rose 7 per cent year on year to €12.82 billion ($20.6 billion), while net profit rose 10 per cent to €1.55 billion ($2.5 billion).

According to Inditex executive chairman Pablo Isla, the results reflected strong first half performance, with like-for-like growth across all brands and geographies.

“The investments we have made in the stores as well as in logistics and technology have been key elements in the development of our customer focused integrated online and offline store platform,” Isla said. 

However, gross margin stayed steady at 56.8 per cent, up from 56.7 per cent. As a result, shares fell from a high of €28.59 per share ($46 per share) on the 10th, to a low of €26.97 ($43.48 per share) per share on the 12th.

According to Isla, the business works to maintain gross margin, rather than maximise it.

“We are always thinking about the medium and the long-term evolution of the company,” Isla told analysts. 

“Gross margin is a combination of many different things. You have, of course, the like-for-likes as growth. You have the product mix. You have the fashion trends. You have currencies. You have raw material costs. There are many, many elements involved.”

The business noted it opened, enlarged and refurbished stores across all geographies during the half, and continued to expand its online platform into new markets – seeing 7,420 stores open across 96 markets, with 62 sporting the group’s online platform.

During the beginning of its second half, Inditex has seen sales in local currencies increase 8 per cent for the period between 1 August and 8 September. 

The business expects like-for-like sales growth of between four and six per cent in FY19. 

NEW YORK (AP) — Nordstrom opened a new store in Manhattan on Thursday — without any merchandise.

Instead, the store offers services like tailoring and allows customers to pick up or return items, including online orders from any retailer.

The push to open these local hubs comes as Nordstrom, like many department stores, is trying to reinvent itself as it sees customers shopping more online.

“We believe this is our model for the future,” said Erik Nordstrom, the retailer’s co-president. “So we have to figure it out and tweak it. The more we engage our customers, the better it is.”

The Upper East Side location is the first Nordstrom “mini store” in New York. The company opened three others in Los Angeles and plans another one in New York’s West Village later this month. The company’s co-president declined to say how many Nordstrom will open in total.

Last month, retailer trimmed its earnings and sales outlook for the current fiscal year after it reported profit and sales declines in the second quarter. Sales at its full-priced stores dropped 6.5%.

At the Nordstrom mini stores, which average about 2,000 square feet, customers can get fittings and alterations from tailors on the premise, even if they buy their clothes elsewhere. The stores will also accept not only returns of items purchased at Nordstrom but from any online retailer. Customers bring the packaged items, with or without the pre-printed labels, and a salesperson will ship them out. There is no service fee.

Each local store is tailored to the neighborhood it’s in. For example, the Los Angeles stores offer manicures while the Manhattan Upper East Side store has an area where parents can drop off their baby strollers to be cleaned for a fee.

Nordstrom told The Associated Press that the local strategy focuses on gaining share in the company’s most important markets by making its customers more engaged through the services it offers. The retailer has said its business is highly concentrated in its top markets, with the top 10 accounting for 60% of its overall sales.

So far, Nordstrom is seeing success with its local stores in Los Angeles. Customers spend two and a half times more on average. In addition, product returns are coming in eight days faster than usual, giving Nordstrom a better chance at reselling them.

Heritage boot brand RM Williams has revealed plans to open 18 new stores in the US and UK, more than doubling its current international store footprint amidst ongoing talks of a sale.

The expansion, reported in the Financial Times on Tuesday, is expected to help the Australian brand double its sales to $300 million within the next five years. 

As part of this push, RM Williams in March appointed Hugh Jackman as its first global boot ambassador. The A-list celebrity, who also holds a 5 per cent stake in the company, was the face of the brand's Undeniable Character campaign that launched globally in April and focused on the craftsmanship of RM Williams’ $600 boots. 

Founded in 1932 in South Australia by Reginald Murray Williams, RM Williams still makes its boots by hand from a single piece of leather in a factory in Adelaide. 

According to Queensland University of Technology professor Gary Mortimer, this heritage presents a strong point of difference for the company, especially as its owner L Catterton Asia pursues a sale through Goldman Sachs. 

“Having a strong brand — the intellectual and intangible property of a company — is of great value to businesses today,” he told the Financial Times.. 

L Catterton Asia, a private equity firm associated with the luxury conglomerate LVMH, acquired a majority stake in RM Williams in 2014 and has invested in growing the brand both in Australia, where it launched an e-commerce site, and overseas. 

“While everyone else is restructuring and laying off people, we are hiring,” Raju Vuppalapati, RM Williams’ CEO, told the Financial Times. “The brand is ready to take its next big leap.” 

RM Williams declined to provide further comment on its expansion plans. 

RM Williams has bricks-and-mortar stores in Australia, New Zealand, the US, the UK and Denmark, and sells through retail partners in these and other countries. 

It reportedly saw revenue growth of 11 per cent to $155 million in FY19, and earnings before interest, tax, depreciation and amortisation growth of 46 per cent to $23 million, according to the Financial Times.

Melbourne-based online furniture brand Brosa has opened its first bricks-and-mortar showroom to the public, following in the footsteps of e-commerce pioneers, such as Warby Parker and Bonobos, that have gone offline to grow their business and allow customers to touch and feel the product. 

The showroom, located amidst a cluster of furniture retailers including Great Dane and Matt Blatt on Johnston Street in Melbourne’s Fitzroy neighbourhood, features a curated range of living room, dining, bedroom and outdoor furniture sourced from the brand’s network of global ‘makers’. 

Each piece is tagged with a QR code, so customers can look up specific details about the product on their smartphone, and so Brosa can keep track of which items are trending in-store and swap out less popular products. There is also a touchscreen showing a live feed of the products people are looking at online, and digital ‘mood boards’ where customers can see what different products look like together. 

Interior designers are on hand to guide customers through the showroom, give styling advice and, for those who opt-in, provide value-add services, such as 3D visualisations of redecorated rooms in their home. 

“It’s a culmination of retail as it should be,” Ivan Lim, Brosa’s founder and CEO, told Inside Retail Weekly. 

Brosa has tested this concept over the past two years with appointment-only showrooms in Melbourne, where the business is based, and Alexandria in Sydney. 

But the new showroom, called Studio+, allows the retailer to scale up the experience and reach a new demographic of offline shoppers who have never heard of the brand before. 

“The other showroom was hard because people were getting in each other’s way [and] you could only take one or two appointments,” Lim said. 

“I think there’s a real opportunity here for us to make it a hub for customers to experience the brand,” he said about Studio+. 

“We’ve talked about doing workshops and collaborating with other brands.” 

Tapping into industry experience 

Lim started Brosa, which means ‘smile’ in Icelandic, in 2014 to provide designer furniture at an affordable price point. The business works directly with manufacturers – whose faces and stories are featured across its website and showroom – cutting out the middleman and associated markup. 

Over the past five years, Brosa has raised $8 million from investors including AirTree Ventures and Bailador, which it has put into its underlying technology, building up a team of delivery trucks and drivers and making several key hires. 

The business last February appointed Flipkart’s former head of private label Rushabh Sanghavi as its chief merchandising officer. While at Flipkart, Sanghavi was responsible for building up the company’s entire furniture private label supply chain from scratch. 

And in July, Anna Stockley, former head of marketing and online at cosmetics retailer Mecca, joined Brosa as COO. Before Mecca, Stockley worked at US online fashion brand Bonobos, where she was responsible for rolling out its bricks-and-mortar showroom strategy. 

At the same time, Brosa has been improving its backend technology and operations to enable many of the digital integrations in the new showroom, and to handle the growth it is anticipating off the back of it. 

As a ‘digital-first’ business, Brosa builds its technology in-house, a key differentiator between Brosa and most other furniture players in Australia, according to Stockley. 

“Coming from a bricks-and-mortar business, it’s just jaw-dropping to me what we can do; the ease with which you can then respond to the customer’s needs,” she told Inside Retail Weekly. 

“Other categories have been disrupted. We’ve got fantastic apparel players like The Iconic. But the furniture sector hasn’t had that player. We’re it.” 

Mr Gutman who founded Assembly after Westfield was taken over by Unibail Rodamco last year has hired ex-Invesco and Corval's Tim Meurer to head up the search for investment opportunities for the fund.

After this initial round of capital raising, the fund will raise another $150 million from local and foreign high net worth family offices and institutional investors in the next one to two years to reach $300 million, demonstrating there is plenty of liquidity in the market for real estate deals.

With a planned leverage of 40 per cent, the fund will have a total of $450 million to allocate.

It had already struck a preferential equity and senior debt deal for two mixed-use residential projects in Sydney and Melbourne, and was prepared to look at emerging and alternative investment opportunities such as repurposing retail properties or empty offices, Mr Gutman added.

Alceon, headed by Trevor Loewensohn and Phil Green, will provide back office support, fundraising and pipeline opportunities to AFM.

Kathmandu on Tuesday announced it has become a certified B Corporation, making it the biggest B Corp in Australia and New Zealand. 

B Corps are for-profit businesses that meet the highest standards of social and environmental performance, public transparency and legal accountability.  

Started in the US in 2006 as a way to raise awareness of purpose-driven businesses by giving them a recognisable seal of approval, there are now more than 3000 B Corps worldwide, and more than 300 in Australia and New Zealand, which is the fastest growing region per capita for B Corps. 

Local retailers with B Corp certification include Outland Denim, Etiko, Koala, GlamCorner, Bellroy, Flora & Fauna, KeepCup, Good Day Girl, Koskela, Arndsorf and Kester Black. 

The addition of Kathmandu to this list reflects a shift in the way many large companies view sustainability – no longer as a niche topic confined to the CSR team, but rather a core value that permeates every part of the business. 

“Sustainability is part of Kathmandu’s DNA  and is integral to our entire operation, from our supply chain, to our materials and products and our operational footprint,” Xavier Simonet, Kathmandu’s CEO, said in a statement. 

Online tool tracks impact

To receive B Corp certification, organisations need to earn a certain number of points on the B Impact Assessment, an online tool that asks around 200 questions in five key areas: governance, workers, community, environment and customers. 

The tool is administered by B Lab, a nonprofit with locations in 26 countries, which sets the global standards, awards B Corp certification and advocates for the adoption of ‘benefit company’ status at a state level. 

In the US and other countries, businesses can register as a ‘benefit company’, which means they are legally required to consider the impact of their decisions on all stakeholders, such as employees, suppliers and the planet, not just shareholders. This locks in their purpose, no matter who owns or runs the company. 

Benefit companies currently have no legal status in Australia, though B Lab Australia and New Zealand is actively campaigning for an opt-in legal form to be introduced through a minor amendment to the Corporations Act. 

This issue will become more critical as publicly listed companies like Kathmandu join the B Corp movement. 

T2, which is owned by Unilever, is also in the process of becoming a B Corp, and B Lab Australia and New Zealand is taking the opportunity to encourage other big businesses to get on board.

“Kathmandu’s announcement as New Zealand’s first B Corp-certified multinational retail business, and Australasia’s biggest B Corp, is a significant milestone for Australia, New Zealand and the wider B Corp movement,” Andrew Davies, CEO of B Lab Australia and New Zealand, said in a statement.

“Certification is open to all sizes of business, and we are seeing increasing interest from large corporations across the world, Kathmandu’s certification sends an important signal for other big businesses to follow in their lead.”

Standards Australia has today announced the appointment of Adrian O’Connell as Standards Australia’s new Chief Executive Officer.
 
Adrian has been Standards Australia’s Deputy CEO since 2014 and Acting CEO since March 2019.
 
Adrian’s appointment follows a detailed and considered Board process of CEO selection undertaken over the last few months.
 
Announcing Adrian’s appointment, Standards Australia’s Chairman Richard Brooks said “The Board is delighted to confirm Adrian as our Chief Executive Officer. Since joining Standards Australia in 2006, Adrian has been instrumental in driving innovation and change to deliver greater value for stakeholders and the end users of Australian Standards.
 
Leading departments across the business including stakeholder engagement, standards development, corporate services, and international engagement has given Adrian a deep understanding of all the functions of the organisation, and importantly how we work with our network of thousands of stakeholders on a daily basis. Through the selection process, the Board found Adrian's experience, commitment and vision for Standards Australia compelling.”
 
Adrian also has diverse and extensive experience representing Australia internationally and is widely respected and recognised for his contributions in international governance positions and regional leadership roles.
 
In responding to his appointment, Adrian O’Connell said “This will be one of the most demanding periods in the history of Standards Australia as we continue to adapt to market and community expectations in the digital age. To be leading the team through this next period of change is a tremendous honour. I look forward to working with all of our stakeholders in Australia and internationally as we strive to deliver even more value to the Australian community.”

CEDA is delighted to announce the appointment of Melinda Cilento as CEO, effective from Tuesday, 3 October, 2017.

CEDA National Chairman Paul McClintock AO said Melinda was chosen after an extensive and extremely competitive selection process.

“Melinda is an outstanding choice, bringing a wealth of experience from both an economics and business background,” he said.

Ms Cilento is currently a Commissioner with the Productivity Commission and holds several non-executive roles including with Reconciliation Australia, Woodside Petroleum and Australian Unity.

Previously Ms Cilento was the Deputy CEO and Chief Economist with the Business Council of Australia and has also held senior roles with the Federal Department of Treasury, Invesco and the International Monetary Fund.

“This appointment marks an exciting new chapter for CEDA and the Board is looking forward to working with Melinda to ensure CEDA continues to deliver on its remit to produce rigorous research and policy discussion to influence good public policy,” Mr McClintock said.

Commenting on the appointment, Ms Cilento said she was excited to be taking on the role.

“CEDA holds a special place as one of the few independent bodies contributing to discussion and debate around national economic and social policy,” she said.

“I look forward to working with members to ensure CEDA continues to deliver high calibre speakers and quality discussion on the CEDA stage.

“Priorities when I begin will be to meet with members, many of whom I already know through my previous roles, and begin planning CEDA’s 2018 research agenda.

“CEDA is in great shape and I’m looking forward to exploring how we can expand the reach and influence even further of CEDA’s robust research agenda and events program.”

Ms Cilento takes over the position from Professor the Hon. Stephen Martin, who led CEDA from 2011 to 2017.

Woolworths kicks off its garden collectables campaign today at stores across the country and online, with an extensive marketing campaign and website to draw in consumers 

The green campaign is designed to encourage shoppers to grow their own fresh produce, with 24 varieties of vegetable, herb and flower seeds available to collect including thyme, basil, spinach, carrots and pansies. 

Customers have the option to collect a seedling kit with every $30 they spend in store or online, while stocks last. 

Woolworths is also using the opportunity to encourage more fruit and vegetable purchases, with a bonus seedling kit offered when customers spend $15 on fresh fruit and veg in a $30 shop in-store. 

The retailer has launched an aggressive marketing campaign to support Discovery Garden across TV, radio, press and digital, alongside social media influencers and out of home advertising including street furniture. 

Woolworths has even integrated Google Home into the program to provide tips throughout the growing process. 

A Discovery Garden website is now live to advise shoppers on growing the seedlings, and with recipes that incorporate the fresh produce, and there is a free interactive growth chart and learning book offered in-store and online. 

“As the fresh food people, we have a role to play to engage families and empower Aussies of all ages to understand how their food grows,” Woolworths Group chief marketing officer Andrew Hicks said.

Hicks said the team at Woolworths have been working on this “community campaign” for the last 12 months. 

“Providing solutions, helpful tips and content as well as driving community and school engagement to deliver on fresh food educational outcomes is also incredibly important to us,” he said.

NEW YORK (AP) — Nordstrom opened a new store in Manhattan on Thursday — without any merchandise.

Instead, the store offers services like tailoring and allows customers to pick up or return items, including online orders from any retailer.

The push to open these local hubs comes as Nordstrom, like many department stores, is trying to reinvent itself as it sees customers shopping more online.

“We believe this is our model for the future,” said Erik Nordstrom, the retailer’s co-president. “So we have to figure it out and tweak it. The more we engage our customers, the better it is.”

The Upper East Side location is the first Nordstrom “mini store” in New York. The company opened three others in Los Angeles and plans another one in New York’s West Village later this month. The company’s co-president declined to say how many Nordstrom will open in total.

Last month, retailer trimmed its earnings and sales outlook for the current fiscal year after it reported profit and sales declines in the second quarter. Sales at its full-priced stores dropped 6.5%.

At the Nordstrom mini stores, which average about 2,000 square feet, customers can get fittings and alterations from tailors on the premise, even if they buy their clothes elsewhere. The stores will also accept not only returns of items purchased at Nordstrom but from any online retailer. Customers bring the packaged items, with or without the pre-printed labels, and a salesperson will ship them out. There is no service fee.

Each local store is tailored to the neighborhood it’s in. For example, the Los Angeles stores offer manicures while the Manhattan Upper East Side store has an area where parents can drop off their baby strollers to be cleaned for a fee.

Nordstrom told The Associated Press that the local strategy focuses on gaining share in the company’s most important markets by making its customers more engaged through the services it offers. The retailer has said its business is highly concentrated in its top markets, with the top 10 accounting for 60% of its overall sales.

So far, Nordstrom is seeing success with its local stores in Los Angeles. Customers spend two and a half times more on average. In addition, product returns are coming in eight days faster than usual, giving Nordstrom a better chance at reselling them.

Gender equality among Australia's top chief executive ranks could be 80 years away, with the latest survey showing female appointments are going backwards and some companies have no women at all in their leadership teams.

Key points:

• Women hold 6 per cent of ASX 200 CEO roles, down from 7 per cent last year
• 17 companies have no women in executive leadership teams
• 114 companies have no women in "line" roles reporting to leadership team

Of the 25 chief executives appointed to lead Australia's top 200 companies in 2019, only two were women, with the percentage of women in the top role slipping to 6 per cent from 7 per cent a year earlier.

The annual census by Chief Executive Women (CEW), which represents 560 of Australia's most senior female corporate leaders, slams "slow progress" in achieving gender balance with 17 companies still having no women in their executive leadership teams.

CEW president Sue Morphet, a former Pacific Brands chief executive, said the latest gender reading was disappointing, lamenting that gender equality at the CEO level could be generations away.

"There are some figures saying that we'll be waiting about 80 years for it to be equal, which means my granddaughter will be 84 by the time we have equal representation," Ms Morphet told the ABC.

"It is nonsense that in 2019 there are two female appointments as CEO out of 25 because there is such good talent in our organisations.

The two female CEO appointments in 2019 include Shemara Wikramanayake at Macquarie Group, who replaced Nicholas Moore, and Jolie Hodson at Spark New Zealand Limited, who took over from Simon Moutter.

Male CEO appointments include Brett Redman at AGL Energy, Francesco De Ferrari at AMP, Rob Adams at Perpetual and Renato Mota at IOOF.

The appointment of women to chief financial officer (CFO) roles has improved to 16 per cent of ASX 200 companies, from 12 per cent in 2018.

However, 114 companies still have no women in "line" roles answering to executive leadership teams, although that is a slight improvement from 119 in 2018.

Ms Morphet said company boards are short-sighted, thinking they can check a box by appointing women to roles outside the top leadership team.

"We have to be mindful that boards just don't bring women in and say 'we've got one women and we're going to pop her in human resources and then we've done the job'," she said.

Ms Morphet said many women with CEO potential were giving up because of the attitude of male-dominated boards.

"We will lose generations of really, really talented women," Ms Morphet said.

"They do give up because they just can't see that women make it to the top.

"So they get to a certain point and they leave corporations. The talent pool is being depleted."

But Ms Morphet does not agree quotas for female CEOs is the answer in the quest for equality.

"It's more than quotas," she said.

"Society has been for so many centuries the case that the man goes to work and the woman stays at home.

"But I do think it is nonsense now that we are not being treated equally when it comes to opportunity in corporate Australia."

Ms Morphet said company boards should review selection criteria for CEO roles and direct head-hunting firms to properly consider the pool of available female candidates.

The 17 companies with no women in their executive leadership teams include Evolution Mining, Afterpay Touch, Soul Pattinson and Whitehaven Coal.

Luggage and handbag retailer Strandbags launched a new concept flagship store in Chadstone Shopping Centre over the weekend – the first step in a new bricks-and-mortar strategy which will see some stores triple in size over the next three to five years.

With handheld payment devices freeing up staff and digital screens showing video and digital content, the Chadstone flagship store is Strandbags’ effort to deliver a world-class shopping experience.

Strandbags managing director Felicity McGahan told Inside Retail the store was fitted to be unique and engaging, but also to give customers the freedom to shop for what they want, how they want, when they want. 

“Digitisation is giving the customers complete control. They’re in control of us, they’re savvy,” McGahan said. 

“Sixty-four per cent of our customers have already researched online before they walk into our stores. So, how do we create a space that supports that? Where they can come in and really engage with the brand?

“We’ve got to give them a reason to get off the couch and come in-store, and not let them down when they get in there. Trying to find that balance has been really important.”

Fixing what isn’t broken

According to McGahan, the Chadstone flagship is the first in a new line of Strandbags stores, underpinning a complete redesign and refresh of the core brand.

Contrary to many of its peers, this refresh is not part of a turnaround strategy, or an effort to stave off slowing sales – with the business selling a handbag every five seconds, a wallet sold every six seconds, and a suitcase every 12 seconds.

“There’s a saying: The time to fix the roof is when the sun’s shining,” MacGahan said. 

“It’s not a broken business, and I’ve spent a lot of time understanding what makes it successful. This is about evolution. We’ve got to keep moving, keep changing. Retail is changing, and the experience is very important.”

The luggage retail market is growing at a rate of five per cent year-on-year, according to McGahan, which has enabled the brand to quietly grow its footprint.

In the last year, Strandbags has up-sized 25 of its stores, and is looking to do the same across many more over the next three to five years with the improvements seen in the Chadstone flagship to be rolled out across its store fleet.

“We see a mega-store opportunity. We see large stores as well, and then obviously core stores as well. Chadstone is just another proof point to say that this is the right strategy,” McGahan said.