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A consumer spending slowdown is setting the scene for a fierce battle on price in the department store sector after a strong start to 2023 by Myer and David Jones.

Analysts warn that while the iconic big two department stores are heading into this year with strong foundations, their discount peers – chains such as Kmart and Big W – may be better placed to capture budget-conscious shoppers as households “trade down” purchases over the next three months.

Australian Bureau of Statistics retail figures for December 2022 showed department store sales took the biggest month-on-month hit of any category, down 14.3 per cent compared with November.

However, recent trading updates from Myer show the company’s sales were up by close to 25 per cent in the first five months to December, while David Jones’ turnover was up 31 per cent.

Morningstar analyst Johannes Faul said the ABS figures needed to be viewed in context of the incredibly strong November for the sector as shoppers flocked to the Black Friday sales.

“It was a decline in December, but on an amazing November,” he said. “Year-on-year, department store sales are up.” The sector generated $1.7 billion in December 2022 – up from $1.5 billion in 2021.

Despite a COVID rebound, overall retail sales growth is slowing, and Faul said he expected shoppers to “dial back” discretionary purchases over the next six months.

That trend could spell trouble for department stores such as Myer and DJs, which sit in the middle of the market, said co-director of RetailOasis, Trent Rigby.

He said as consumer confidence fell and spending slowed, speciality retailers such as The Reject Shop and discount department stores such as Kmart tended to benefit while mid-market operators found it tough to maintain momentum.

“Expecting consumer confidence and spending to continue to trend the way they are for the rest of 2023, then big players within that middle market [like] Myer, Target and DJs will be the worst impacted.”

Director of valuations at global advisory firm Gordon Brothers Brendan Smyth agrees that discount players could see an advantage when shoppers “trade down” discretionary purchases as they search for the lowest price.

“There is going to be more consumers being more conscious about where their dollars are being spent and how they’re spending,” he said.

“Maybe it’s a bit more affordable to go to Myer than it is to DJs, it’s a bit more affordable to go to Kmart than it is to Myer, maybe Big W is even more affordable than Kmart is.”

But Smyth says the discount end of the market will also have its own challenges this year even if they pick up more customers as higher supply chain costs eat into margins.

“Where it’s going to be hard for those discount players is that they sell a lower-margin product, but they need to make margins themselves.”

Kmart and Big W are yet to release trading updates for the past few months, though Big W’s owner, Woolworths, confirmed last November that the store had a 30 per cent jump in sales in the three months to September.

Myer investor Wilson Asset Management is upbeat about the department store’s position going into a slowdown, with portfolio manager Oscar Oberg saying the company’s turnaround plan is on track.

“Over the next six to12 months we will start to see more inbound tourism and more people coming into the city which will be very positive for Myer’s CBD stores. There’s a long way to go [in terms of growth] here and we think the business can generate profit over $100 million per annum very soon.” Oberg said.

Rigby says his team is viewing a bounce-back in the department store model as somewhat temporary, however, warning that the broader challenges facing the entire sector have not gone anywhere.

“The biggest challenge for department stores will be how they attract and maintain a younger digital consumer,” he said.

Smyth believes it will be the brands that match their offers best to budget-savvy shoppers that will have the edge this year.

“Pricing, relevance to the customer and customer experience are all going to be the key things,” he said.

Grill’d founder Simon Crowe is confident the premium burger chain will scoop up price-conscious customers who choose to trade down from more expensive restaurants as they tighten their spending.

Crowe said Grill’d was an “aspirational and premium” brand but also affordable for diners seeking to reduce their discretionary spending as they adjust to rising interest rates and high inflation.

“We obviously don’t want for people to be doing it tougher out there, but in an economic environment that becomes challenging, Grill’d is actually better placed than anybody,” Crowe told this masthead.

He pointed to the global financial crisis, during which he said the burger chain saw a “significant uplift in volumes”.

“We see people who decide to tighten their belts a little migrate from premium casual dining to fresh or fast casual dining, exactly where our brand sits ... We gain a net influx of guests coming to us from above because they still want quality and service, but they want more affordability, and we provide all of those.”

Grill’d’s range starts at $12.50 and increases to $16.90 for a single burger. A ‘snack’-sized side of chips and a 600ml Pepsi Max would bring the meal to $21.90 for the cheapest burger.

The burger chain was among several foodservice brands that raised their prices last year amid mounting supply chain pressure and rising ingredient costs, but Crowe said he was not expecting to pass through any further price increases to customers in 2023.

“A lot of the pricing pressure in the supply chain have already been brought to the fore, and I don’t expect there to be significant pressure going forward.”

Crowe also owns premium chocolate brand Koko Black, which he said had just seen off the “strongest Christmas we’ve ever had”. Like Grill’d, the business owner is similarly unconcerned that cost-of-living pressures will stop Australians reaching for sweet treats.

“The macro environment or economic challenges won’t be disruptive to those businesses that are focused on long-term brand building and product quality,” he said.

Grill’d last week launched its Gamechanger burger patty made from black angus cattle that produce 67 per cent less methane, a sustainability-driven initiative that Crowe said took lessons learned from the short-lived conversion of two high-performing stores into plant-based-only restaurants. Grill’d Surry Hills and Collingwood were temporary renamed ‘Impossibly Grill’d’ and served a full plant-based menu for just 21 days before fierce customer pushback reinstated the original menus.

The Gamechanger patty was a partnership with Sea Forest, a Tasmanian producer of asparagopsis, an edible red seaweed that, when fed to cattle, results in the animals producing less methane. Customers pay $1 to swap their patty, which is offered at 61 Grill’d stores in a national network of 160.

The initiative has cost the burger chain $2 million. The take-up of the new patty has outstripped demand so far, said Crowe, who was looking to prove that demand existed for more sustainable options.

“We know that the dollar is at least what it will cost us. We’re trying not to put more costs in because we want to make the hurdle for consumers to jump as low as possible,” he said.

“The step change for us is enormous and we’re happy to do it. But yes, it needs to be the demand remains high.”

Despite inflationary pressures and rising living costs, retail spending increased 1.7 per cent in December, according to the Mastercard SpendingPulse report, released by the Australian Retailers Association.

Consumers spending on apparel rose by 6.7 per cent, on groceries by 6.6 per cent, lodging 4.1 per cent, electronics 3.5 per cent, jewellery 2 per cent, and at restaurants by 1.8 per cent last month.

Year-on-year sales were down for fuel and convenience at 4.1 per cent and home furnishings at 2.4 per cent.

ARA CEO Paul Zahra welcomed the figures and said achieving spending growth in December was “encouraging” for retailers.

“These December results are a testament to the resilience of the retail industry and set a good foundation as we anticipate a period of uncertainty this year with inflationary pressures and the rising cost of living,” he said.

Although Zahra flagged inflation as a factor in the increased sales, he forecast a “challenging environment” for businesses as rising operating costs will tighten margins moving forward.

Walt Disney boss Bob Iger announced plans for a dramatic restructuring of the world’s largest entertainment company that includes cutting 7000 jobs and $US5.5 billion ($7.9 billion) in cost savings.

The reductions include lower spending on programming and $US2.5 billion in non-content related cuts. About $US1 billion of the savings are already underway, Iger said on a conference call with investors on Wednesday. The job cuts amount to about 3 per cent of Disney’s global workforce.

As part of the change, Disney’s CEO also announced that the company will be reorganised into three divisions: an entertainment unit that includes its main TV and film businesses, the ESPN sports networks, and the theme-park unit, which includes cruise ships and consumer products.

The reorganisation is intended to improve profit margins, Iger said, and represents his third major transformation of the business following efforts to beef up its film franchises through acquisitions and the development of its online business.

Iger, who returned to the lead the company in November after his successor Bob Chapek was fired, has been under pressure to improve results. Activist investor Nelson Peltz is seeking a board seat at the April 3 annual meeting, arguing in part that Disney shares have underperformed and the company needs better cost controls.

Earlier on Wednesday, Disney announced upbeat financial results, led by big gains at its theme parks.

Profit came to 99 US cents a share in the period ended December. 31, Disney said, above the 74-US-cent average of analysts’ estimates. Revenue grew 7.8 per cent to $US23.5 billion, slightly above projections.

Subscribers to the Disney+ streaming business declined 1 per cent in the quarter to 161.8 million, the first such decline, amid cancellations of the Hotstar service in India after Disney lost streaming rights to cricket there.

Losses in the streaming business more than doubled to $US1.05 billion from a year earlier, but that was better than management had forecast three months ago.

“The work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders,” Iger said in a statement.

Outsized losses in streaming contributed to the ouster of Chief Executive Officer Bob Chapek late last year and the return of Iger, who led the company from 2005 to 2020. The Burbank, California-based entertainment giant is seeking to achieve profitability in its streaming division next year and fend off Peltz, who holds a stake worth about $US1 billion.

After years of focusing on subscriber growth in streaming, Wall Street’s attention in recent months has turned to when the media industry’s staggering investments in online film and TV shows will begin earning a return.

To help counter the losses in streaming, Iger is considering licensing more of Disney’s films and TV series to rivals after years of keeping the vast majority of the titles exclusive to its own platforms.

Disney’s parks continued to shine, with revenue in that division increasing 21 per cent to $US8.74 billion and earnings climbing 25 per cent to $US3.05 billion. The results included sales and earnings from consumer products that were little changed.

Revenue from Disney’s traditional broadcast and cable TV business, such as ESPN, fell 5 per cent to $US7.29 billion, while operating income slumped 16 per cent to $US1.26 billion, hurt by weakness outside the US.

A “growing appetite” for luxury brands is driving demand for space in prime Sydney CBD retail locations, according to research from Ray White.

Sydney CBD’s prime retail real estate comprises Martin Place, Castlereagh Street, Park Street and George Street, along with Pitt Street Mall.

According to Vanessa Rader, head of research at Ray White Commercial, an increase in the personal and household goods retailing segment due to an influx of jewellery retailers, which now account for 21.5 per cent of stores, not far behind clothing and soft goods, which account for 31.2 per cent. Services such as banks, communications, beauty and medical contribute 16.1 per cent.

Rader said an increasing number of international luxury brands have converged on the Sydney CBD retail areas during the past two years.

“The growing emphasis on these establishments within our CBD brings a new level of quality and activity back to the city after a difficult few years and now represents 23.4 per cent of our street-fronted shops within our prime retail core.”

Despite rising interest rates, Rader says there is strong demand for luxury brands by consumers, both domestically and from overseas visitors.

The redevelopment of MLC has added brands like Valentino and Messini to Castlereagh Street which has been home to Chanel, Bvlgari, Hermes, Gucci and Prada. Dior has relocated to this precinct area while Cartier secured a new flagship location on George Street.

King Street now features Hublot, Panerai, Tiffany & Co and Chaumet.

The results from Myer and a week ago JB Hi-Fi tell us a lot about the two individual companies themselves, the broader retail dynamics, and the post-Covid post-rate hikes economy.

The core point to bear in mind is that JB and Myer sit at opposite ends of the 21st century retail reality.

JB has been one of the outstanding successes, very effectively riding and indeed exploiting and conquering the wired - and indeed, unwired: read Wi-Fi - world of today.

Myer in contrast looked like being confined to the dustbin of sprawling 20th century bricks and mortar department store history. What worked, so brilliantly, for Harry Selfridge and Sydney Myer, worked no more a century later.

Well, no surprise, JB keeps ‘hitting it out of the park’. Sales up 8.6 per cent, profit up 14 per cent. Whatever CEO Terry Smart is putting in the morning coffee, it’s kicking butt.

With apologies to Terry, even more impressive though were the numbers unveiled by Myer CEO John King.

I might add that King is the very model of my perfect CEO: just getting on with delivering results. No bombast, no pontificating. So, please Sol, even if grudgingly, give him a tick.

Myer reported sales up a stunning 25 per cent in the five months to December 31; including an even more mind-boggling 38 per cent actually in its stores. As a consequence online sales actually dropped 9 per cent.

The explanation of both, up to a point, was a certain premier named Dan Andrews, and to a lesser extent one named Dominic Perrottet. That’s to say, those lockdowns in the 2021 base comparative period.

But it wasn’t just about springing back from closed stores. Myer sales were actually up 19 per cent on the last, December half 2019, pre-Covid period.

That’s to say, there is – seemingly rather vibrant – life in the old blended bricks and mortar and online girl after all.

That’s the key point about Myer and King. He’s succeeded in keeping the stores vibrant – albeit, where necessary, closing them – while developing an online business which is now of serious and more critically sufficient scale.

Yes, online sales dropped from the 2021 lockdown comparative period. But they were still way up on the pre-Covid period and now comprise one in every five dollars spent at Myer.

In short, the Myer growth future is online, and it’s got the business to go there, while rebalancing the bricks and mortar to a sustainable, profitable future.

In short, Myer and JB combine to tell us there is a retail future both in stores and online.

The key to success is balancing the two, while precisely locating the physical locations and making the online offer seductive and seamless and indeed connected to the core stores’ physical reality.

Now, there is good and bad news in the broader message delivered by both Myer and JB.

That message is, simply, that despite rate rises, the consumer has disposable money and the consumer is prepared to spend.

The good news should be obvious: the economy ain’t going over any sort of cliff anytime soon.

Further, again both good and bad news, the consumer is spending that money locally.

The ‘bad news’ part is of course what it says about inflation and interest rates.

Simply, that inflation ain’t going to miraculously and conveniently, disappear; and rates aren’t going to go back to the fabulous ‘free money’ levels of 2020 and 2021.

That said, as 2023 unfolds, I suggest that China is going to throw a – positive, broadly unexpected – curve ball into everything.

We are going to see China ‘get back to work’ – simply, delivering cheap product to the world.

I can see a very, very positive global dynamics – if politicians and activists don’t cruel it.

Tattarang has announced a significant investment in Camilla Australia Pty Ltd (CAMILLA), the Australian fashion brand owned and creatively directed by Camilla Franks.

The brand has now grown into a global group since its launch in 2004, sold across 65 countries.

Tattarang Director Nicola Forrest AO confirmed the investment makes Tattarang a minority shareholder. 

“We are delighted to back Camilla Franks, an extraordinary entrepreneur leading a cutting-edge fashion brand doing amazing things in the creative space,” Forrest said.

Forrest said Tattarang would also focus on female founders at an earlier stage in their entrepreneurship journey and she aimed to assist more businesswomen to develop successful enterprises at the scale of CAMILLA.

“Camilla is a brilliant example of a passionate and committed entrepreneur who truly cares about her brand and her customers and has put Australian fashion on the global stage, as well as being a role model to other female founders,” she said.

Franks said that she was delighted to welcome Tattarang as an investor and partner in CAMILLA, marking the first investment partnership the business has made since it was founded 18 years ago.

“I’ve finally found the perfect partner to help us colour the world. Partnering with Nicola and the Tattarang family is the perfect brand fit for our future vision.

“Through purposeful storytelling, creative and conscious empowerment and shared values and dreams we can take the business to a wider world stage.

“Together, we can elevate women on a global scale, harnessing the amazing artistic talent Australia has to offer, and lead with passion. It brings me great joy and pride to announce I will be joining forces with Tattarang to grow and share this beautiful brand,” Franks said.

Forrest said she is actively working to level the playing field for female entrepreneurs and woman-led or founded businesses, with Tattarang allocating capital both directly and via early-stage female-focused funds.

“It’s time for change: I believe that equal is greater and that having gender as a focus will deliver results for both women and men,” Forrest said.

“This is good for business because there is a strong correlation between gender equality and organisational success across profitability, attraction and retention of best talent and business reputation.

“We will support the next generation of women entrepreneurs who are willing to take a risk and back their dreams — Australia needs more entrepreneurs like Camilla Franks,” she said.

The investment priorities for CAMILLA include additional stand-alone boutiques – particularly in the United States.

International sales now represent ~40% of business sales, with the United States representing the most successful international market overall.

CAMILLA has also transitioned into a global omnichannel brand – more than doubling its digital mix over the last three years, growing from 18% in 2018 to 47% online sales today.

The growth in online sales is complementary to an experiential bricks-and-mortar presence which consists of 25 retail boutiques across Australia and the United States, and 264 wholesale stockists across the globe spanning 65 countries.

Australians sharply reined in Christmas shopping in December, in the first sign that runaway inflation and surging interest rates are weighing on household budgets.

Retail sales dropped by 3.9 per cent to record the first monthly fall for 2022, according to seasonally adjusted figures from the Australian Bureau of Statistics.

ABS head of retail statistics Ben Dorber said “the large fall in ­December suggests that retail spending is slowing due to high cost-of-living pressures”.

“Retail businesses reported that many consumers had ­responded to these pressures by doing more Christmas shopping in November to take advantage of heavy promotional activity and discounting as part of the Black Friday sales event,” he added.

Inflation reached 7.8 per cent in December and economists predict a collapse in consumption through 2023 as high prices and higher mortgage repayments bite.

Analysts, however, said they still expected the Reserve Bank board would deliver its ninth straight rate hike next Tuesday, taking the key cash rate from 3.1 per cent to 3.35 per cent.

Citi chief economist Josh Williamson calculated that spending on discretionary items fell by 5.4 per cent in December – the biggest drop since lockdowns in April 2020.

“The fall in nominal retail trade at the end of 2022 may be a signal that monetary policy is starting to work via the channel of discretionary spending. But the RBA can’t take this as a signal to stop tightening next week,” he said.

Mr Williamson said he ­expected a further cash rate increase next week, following by two more to a peak of 3.85 per cent.

The retail sales figures exclude spending on services such as travel and accommodation and which economists believe boomed over summer as Australians enjoyed the first Christmas holidays free of Covid restrictions.

Taking this into account, Capital Economics senior economist Marcel Theriault said “a solid ­increase in services spending means overall consumption should still have risen at a decent clip”. “But the engine of Australia’s reopening rebound has shifted down a gear,” Mr Theriault said.

Despite the surprisingly large fall in spending in December – ­analysts had forecast only a 0.2 per cent decline – retail sales remained elevated following a booming 2022 in which Australians continued to spend freely despite steadily higher interest rates, soaring inflation and plunging real wages.

Retail spending was up 7.5 per cent over the year to December, the ABS data showed.

Economists also noted the difficulty in accounting for seasonal factors thanks to the ever-growing popularity of the Black Friday and Cyber Monday sales, which are timed around the American Thanksgiving holiday.

The retail industries that suffered the largest falls in sales in ­December were those which ­experienced the biggest boosts during the November sales events, the ABS said. Department store sales collapsed 14 per cent, followed by a 13 per cent drop in spending on clothing and footwear, and an 8 per cent decline in household goods, according to the seasonally adjusted figures.

“Seasonal spending patterns continue to change and evolve around Black Friday and the holiday period,” Mr Dorber said.

“While there was a strong rise in original terms for December, as is expected in the lead up to Christmas, this year’s rise in original terms was smaller than those typically seen in past December months. This has led to the large seasonally adjusted fall.”

Food retailing was the only ­segment to record an increase in December – up a slight 0.3 per cent, while cafes and restaurants spending was flat. Shoppers spent less than usual across the states and territories, with 4.7 per cent declines in Victoria and Western Australia leading the falls. Retail sales in NSW fell by 3.4 per cent.

Early data on retail spending over Christmas indicates Australians bucked the burden of higher interest rates to spend freely, but economists are questioning how much of that increased spending is just higher prices versus a resilient consumer.

Data from Westpac shows that between November 1 and December 24, retail sales were up 8.6 per cent compared with the same period in 2021, while Boxing Day sales jumped 15.3 per cent to surpass $1.2 billion.

Rival bank NAB is yet to crunch the numbers on retail spending for the full month of December, but chief economist Alan Oster is highly sceptical of claims about a bumper Christmas season for retail, given weaker spending data in the first weeks of December after Black Friday sales.

“My suspicions are that it’s not great – not because they haven’t spent a lot of money, they have, but whether it’s more than they would normally spend,” Mr Oster said.

“There have been big increases in prices, so in real terms I think [consumer spending] has almost certainly going backwards.”

After the November Black Friday sales, NAB’s data showed that spending was soft in the second and third weeks of December.

“What we know is a lot of the money that probably got spent for Christmas was spent in Black Friday,” Mr Oster said.

Lower savings

NAB will release its retail spending figures in the middle of next week and Mr Oster expects the impact of rising interest rate rises will be “quite aggressive” this year.

His comments mirror those of economist Frank Shostak, who previously told AFR Weekend the 2023 Christmas shopper had lower savings after central banks’ money printing, and would be shopping at the expense of the future. He tipped retail sales would fail to match previous years.

The economists are joined by retail analysts, who have issued downgrades on retail stocks like JB Hi-Fi and Harvey Norman and grown wary of discretionary retail as cost-of-living pressures force shoppers to tighten their belts. Investors are also expecting retailers’ margins to be squeezed as input costs go up, especially for businesses that fail to exercise pricing power – their ability to increase prices in line with costs, to protect profits.

The Australian Retailers Association, which also uses Westpac data, has said pre-Christmas trading was $74.5 billion this year – a record, and 8.6 per cent higher than 2021. It has predicted post-Christmas retail spending to tally up to $23.5 billion, also a record and 7.9 per cent higher than the previous year.

However, its chief executive Paul Zahra acknowledged price increases were hidden in the headline numbers and that cost-of-living pressures and potentially slimmer margins for retailers could emerge in the interim reporting season.

“Some analysts have said, and I broadly agree, that up to two-thirds of increase [in Christmas retail spending] was due to increase in prices and a third was the increase in volume. The sales increase may not be what RBA would like to see, but people have continued to spend and celebrate December as a season of indulgence,” he said.

Retails report strong sales

Mr Zahra said it was too early to say if retail spending data for November, December and January put together (to eliminate skews such as Australia’s newfound love for shopping early for Christmas) would surpass previous years.

However, he expected it would come out higher. This would be followed by a slowdown in spending at some point in 2023, he said.

Anecdotally, retailers have reported strong sales.

Barbeques Galore chief executive Angus McDonald said summer was outperforming the same period 12 months ago, driven by a combination of price increases and higher volumes thanks to new product launches.

“Since Black Friday we have continued to see double-digit growth. That has continued all the way through December and into early January,” Mr McDonald told the Financial Review.

He noted that while the supply challenges of 2021 have largely eased, consumers are more discerning.

“Last year if you could get stock then you would be doing well,” he said. “This year it’s actually now back to delivering a good retail experience and delivering good value to customers.”

Mr McDonald noted that with the jobless rate steady at a 48-year low of 3.4 per cent, consumers still had money to spend.

“Even though there’s obviously uncertainty in terms of consumer sentiment, people still have jobs. “If they’re passionate about something and they’re excited about the product and excited about what that means for them and their lives, there’s still plenty of opportunity for retailers.”

‘Older demographic remains strong’

Chris Kahi, the owner of Sunshine Coast-based apparel retailer Old Man Strength, was surprised by the strength of sales during the festive season.

“We’ve seen amazing sales over the Christmas period. We had originally forecast that the period would be soft due to interest rate rises and uncertainty. This has not been the case,” Mr Kahi said.

“Customer feedback and sales analysis suggests that the older (over 40) demographic remains strong. We are expecting to see Q1 2023 maintain this growth.”

Data from payment technology business Square found that both the number of transactions and the overall spend at Australian retailers using its technology increased during the Christmas period of 2022, compared with the previous year. The number of transactions grew by 29.4 per cent, while the total dollar amount spent was up 23.6 per cent.

Square does not disclose how many retailers it has in Australia, and the data is also influenced by an increase in the number of customers the company added in 2022.

“A lot of analysts expected consumers to dampen their spending this Christmas period, but based on our data it looks as though Aussies have continued shopping during this critical time of year for retailers,” said Ara Kharazian, research and data lead at Square.

“When looking at the data across all industries during the Christmas period, we saw record-breaking sales and growth that suggests continued strong consumer spending.”

Luxury fashion conglomerate LVMH has appointed Pietro Beccari and Bernard Arnault’s daughter Delphine Arnault as new CEOs for its two flagship fashion houses, Louis Vuitton and Christian Dior Couture, respectively.

The appointments mark the luxury empire’s most significant organisational changes in its history. 

Pietro Beccari, who has led Christian Dior Couture since 2018, will succeed Michael Burke to become chairman and CEO of Louis Vuitton. Subsequently, Delphine Arnault will head Christian Dior Couture as the brand’s new chairman and CEO after having served at Louis Vuitton as executive vice president since 2013.

Beccari joined LVMH as executive vice president of marketing and communications for Louis Vuitton before being appointed as chairman and CEO of Fendi in 2012. 

“Pietro Beccari has done an exceptional job at Christian Dior over the past five years. His leadership has accelerated the appeal and success of this iconic Maison,” said Bernard Arnault, chairman and CEO of LVMH.

Meanwhile, Delphine Arnault has been executive vice president of Louis Vuitton since 2013, overseeing all of the house’s product-related activities. The French businesswoman is also a member of the LVMH Board of Directors and the Executive Committee. 

“Under her leadership, the desirability of Louis Vuitton products advanced significantly, enabling the brand to regularly set new sales records. Her keen insights and incomparable experience will be decisive assets in driving the ongoing development of Christian Dior,” Arnault added.  

Meanwhile, Michael Burke will take up new responsibilities, reporting to the LVMH’s chairman. 

“He has extended Louis Vuitton’s lead over competitors and promoted the heritage of Louis Vuitton while anchoring it in modernity,” the chairman said. “I am delighted that Michael will continue by my side to share his experience and talent for the benefit of our companies.” 

In addition to the two major executive appointments, executive VP of Christian Dior Couture Charles Delapalme will take on new role as the label’s new MD and work closely with Delphine Arnault. 

Meanwhile, Stephane Bianchi, chairman and CEO of the Watches & Jewellery Division, will now also oversee Tiffany and Repossi. 

The management reshuffle follows the latest appointment of Bernard Arnault’s eldest son Antoine Arnault as CEO of family holding company Christian Dior SE a month ago. 

Last month, Italian fashion group Prada named former Luxottica chief Andrea Guerra as its new CEO to ease a transition at the helm to the next generation of the founding family.

Specialist baby goods retailer Baby Bunting says softer than expected sales in the key December trading period led to its 59 per cent slump in half-year profits, despite core nursery categories doing well.

In a statement to the ASX on Monday, the company booked a 6.6 per cent growth in sales for the half to $254.9 million, but net profit after tax came in at $5.1 million, compared with $12.5 million last year.

Chief executive Matt Spencer had flagged in October that Baby Bunting’s gross margin had declined in the first quarter of 2023 for reasons including moving more of its products to its “every day low price” policy, as well as higher input costs like freight fees increasing.

The group’s loyalty program had also affected margins in the first quarter as customers redeemed rewards at a higher rate than the company had expected. The business has since tweaked the terms of the program.

On Monday, Spencer told investors that reductions in international shipping rates would help margins in the second half. However, he noted that the company’s overall half-year result was affected by “the combination of lower gross profit margin for the half and softer than anticipated sales in December”.

The company said in its announcement lodged with the ASX that the group’s sales growth in the second quarter was “below Baby Bunting’s expectations towards the end of the quarter”.

Spencer said must-have baby goods had continued to perform well over the half.

“Our core nursery categories, which are less discretionary such as car safety, prams and feeding, continued to perform well through the half and are an important part of Baby Bunting’s future growth,” he said.

The retailer’s profit numbers were also impacted by costs related to setting up its New Zealand business, where Baby Bunting is working towards opening 10 stores.

The company is expecting conditions to improve in the second half, and is guiding to full-year net profits of between $21.5 million and $24 million.

A UBS consumer spending survey released on Monday showed very young and older shoppers were best placed for spending in the current environment. Those in the middle with large mortgages and dependents were under the most pressure, the data suggested.

“Middle-aged consumers have the greatest spending burden and are more exposed to household debt,” analyst Shaun Cousins said in a note.

Baby Bunting declined by close to 12 per cent during Monday’s sesssion to sit at $2.67 just after 2pm.

Other retail brands fared better, with Supercheap Auto and Rebel owner Super Retail Group sales had jumping by 15 per cent across its brands for the first half.

Chief executive Anthony Heraghty said the business had delivered an outstanding first-half result, led by camping gear brand Macpac, where sales were up by 55 per cent.

Heraghty said the strong trading over the Black Friday and Christmas sales periods had driven the company to a record sales performance in the first six months of 2023.

The group will report its audited half-year numbers in February. Super Retail Group shares hit highs of $12.60 during Monday’s session, a gain of 10 per cent.

Asia-based omnichannel brand operator Bluebell Group has expanded its reach into Australia, initially with brand partners Gentle Monster and Pinko.

The retail group marked its market debut with the opening of Italian fashion label Pinko in Sydney’s Westfield mall in November, followed by the launch of South Korean luxury eyewear brand Gentle Monster’s first store in Australia at Sydney Airport before Christmas. 

Bluebell Group said it has a larger plan for Australia this year, aiming to expand the current in-market brand partners’ presence in the country and introduce other brands as well. 

Australia marks Bluebell Group’s first market outside Asia and its 10th market after Japan, South Korea, Mainland China, Hong Kong, Taiwan, Macau, Singapore, Malaysia and Cambodia. 

Brands the company partners with around the region include AllSaints, Anya Hindmarch, Bally, Celine, Christian Dior, Davidoff, Fendi, Furla, Givenchy, Jimmy Choo, Kenzo, Loewe, Louis Vuitton, Love Moschino, Marc Jacobs, Moschino, MSGM, Owndays, Paul Smith, Rimowa, Sergio Rossi, Tod’s and Ugg.

“Opening the Australian market is a milestone for us, completing our Asia Pacific footprint from Japan all the way down to the Southern hemisphere,” said Nelly Ngadiman, MD of Bluebell Southeast Asia & Australia. 

Gentle Monster joined Sydney Airport’s new luxury retail tenant lineup in the T1 International terminal disclosed last August, which also includes Balenciaga, Prada, Bottega Veneta, Burberry, Bulgari, Moncler, Hermes, Loewe, Rolex and Saint Laurent.

The Australia launch follows Bluebell Group’s recent full acquisition of China’s Hainan-based travel retail operator Star Brands Travel Retail. 

Founded in 1954, the family-owned group has more than 3800 employees, 600 points of sale and US$2 billion in turnover. 

The Australian shopping spree has continued with retail spending surging in November, a sign the Reserve Bank is likely to continue raising interest rates in coming months in a bid to rein in inflation as the global economic outlook deteriorates.

The spending was despite high costs for building supplies and labour and larger bills for dining out lifting inflation back up to a 32-year high in the lead-up to Christmas, and as forecasts show the global economy is on the brink of recession.

Monthly data from the Australian Bureau of Statistics showed inflation rose to 7.3 per cent in the year to November, back to September’s level after dipping to 6.9 per cent in October.

Treasurer Jim Chalmers said November’s inflation data highlighted the economic pressure being felt by all Australians.

“Even after inflation peaks in our economy, we need to remain vigilant to the global economic pressures that will continue to impact us for some time,” he said.

New forecasts from the World Bank paint a gloomy picture for the global economy, with growth around the world for 2023 now expected to be just 1.7 per cent, down from the 3 per cent predicted six months ago.

The bank warned the global economy was so fragile, events including a COVID resurgence or increased geopolitical tensions could push it into recession.

Chalmers said Australia’s economy was also facing threats from ongoing natural disasters, as well as shocks including the war in Ukraine.

“We should be optimistic about the future of our economy and our country but realistic about what the deteriorating international outlook means for us in Australia,” he said.

Opposition finance spokeswoman Jane Hume said households were paying the price for the government’s inaction on tackling cost of living pressures.

“This government was elected on a promise to lower the cost of living, and they assured Australians, time and time again, that they had a plan. Instead, we’ve seen inflation continue to rise and no plan from the government to tackle it,” she said.

ABS head of price statistics Michelle Marquardt said November’s increase in inflation was mainly driven by housing, food, transport and furniture. Housing inflation, at 9.6 per cent, was affected by higher labour and building material costs, while increased prices for takeaway and restaurant meals drove food inflation up by 9.4 per cent.

That high and rising inflation has not stalled retail spending. Australians eager for shopping deals in the Black Friday sales helped drive retail spending to a new high, increasing by 1.4 per cent over November, separate ABS data showed. It’s the 11th consecutive monthly rise in retail spending, taking the annual growth to 7.7 per cent.

But spending on categories not included in the sales slumped. Turnover in food retail, cafes, restaurants and takeaway food recorded just a 0.1 per cent rise over November, the weakest increase for those categories for 2022.

Indeed’s Asia-Pacific economist Callam Pickering said while November may prove to be the last hurrah for shopping, household spending has proven more resilient than the Reserve Bank had anticipated.

“In response, the RBA will have little choice but to hike rates, with a further 50 basis points likely in the first half of the year,” he said.

The bank lifted rates from a record low of 0.1 per cent to 3.1 per cent last year, and the board has been considering a pause in rate hikes in coming months as previous increases take effect.

EY chief economist Cherelle Murphy said there were factors affecting the inflation data including the return of the full fuel excise, and the figure was still below the Reserve Bank’s expectation of 8 per cent by the end of 2022. But a tight labour market could put more pressure on wage growth, and China’s reopening could stoke global inflation.

“The RBA’s 2022 rate hikes were designed to tame inflationary pressure, but there are too many upside risks that will force the RBA’s hand further. It will continue to raise interest rates to cool the economy in the first months of 2023,” she said.

Riding a wave of momentum of the back of this year’s “Freedom Christmas”, retailers are now facing a nervous wait for the tide to turn.  

You don’t need to be a clairvoyant to gauge that a period of uncertainty lies ahead for households and businesses as the inflationary pressures increase in 2023.  

Retailers have done a phenomenal job fortifying ahead of the metaphorical long winter. Our forecasts for the all-important Christmas trading period had sales at a record and the new year’s transition certainly hasn’t dampened the appetite for shopping- most celebrating their new-found liberties after three challenging years living with a pandemic.   

Post-Christmas sales are projected to notch another record of $23.5 billion, up 7.9 per cent.  

But the adage of calm before the storm may ring true here – with many economists flagging a widespread economic slowdown at some point in 2023.  

Tumultuous economic conditions certainly aren’t unchartered waters for retailers. They have been in a permanent state of disruption and rolling with the punches particularly through the pandemic.  

Pleasingly, CBD retailers who were hardest hit are saying weekends are back to pre-pandemic levels and some weekdays are slowly recovering – predominantly suffering from the segue to working from home. 

The CBD retail machine has been permanently disrupted – now requiring a new strategy to attract shoppers who are not workers.  

The key is in the ideation of a 24-hour economy and shifting focus from day to night. Twilight hours are important to ensure it’s a full experience. Indulging the five senses is key. Go for lunch, shop, stop to recharge with a coffee and top it all off with a live performance or show onto dinner and possibly a club or bar afterwards. Take in the sights and sounds that only a city can provide.  

Shopping remains Australia’s favourite sport and the resilience of travel retail in particular, is a great modern-day Rocky tale. Some experts declared travel agencies, holidaymakers and the like would be down for the count. But slowly and surely, they’re getting back up.  

There are still challenges; holiday costs are at a premium and some travellers are wary of a COVID-derailed itinerary – but for the most part, the sector has slipped the jabs thrown their way with prowess.  

The playing field for hairdressers and beauty therapists has also changed. They’re running a team relay race, but the fourth runner is nowhere to be seen. The biggest hurdle for this sector is a crippling shortage of talent, exacerbated by the lack of foreign workers- labour shortages lingering from the pandemic.  

The Australian Retailers Association (ARA) has been sounding the alarm on labour shortages throughout 2022 and we must see this addressed in 2023 to allow a true economic recovery.  

The ARA has championed change in this area – successfully advocating for the extension of extended international student working hours, the introduction of the mature worker tax incentives and a national approach to minimum age workers. There isn’t necessarily one silver bullet fix for labour shortages, but rather the need for a multifaceted approach.  

We are calling on the government to diversify the workforce by removing barriers to participation, streamline immigration processes, invest in skills and connect jobseekers to employers through vocational training and pathways to secure jobs and simplify and modernise the award system, creating flexibility to benefit both employees and employers. 

The reality in our own Back to the Future, in 2023, is very different from that of which we would have anticipated even just four years ago.  

We can’t hit the Flux Capacitor and turn back the clock. We need to adapt to change.  

The pandemic accelerated trends that were already occurring in the industry. The move to online shopping and the need for the shopping experience to both be seamless and contactless have been profound. It’s a known fact that crises drives innovation- the adoption of click and collect, the creation of direct to boot and the love of shopping cashless continued to be embraced by shoppers.   

The pandemic also reversed some trends. The move from globalisation to localisation with more manufacturing being considered locally to sure up supply chains. Buying and shopping local has rarely been more coveted.  

The stars may have fortuitously aligned during the pandemic, but much like astronomers, the industry is staring down a vast of the unknown. 

We are working and hoping as an industry that the universe will provide, but the word on the street is ‘batten down the hatches’.  

Winter is coming – but another Spring will be just on the horizon.  

Australians could be nursing a new year hangover from frenetic Christmas spending at department stores, cafes and restaurants, with some analysts viewing the big increase in retail spending as the last hurrah before the reality of higher interest rates and spiking energy bills hits households.

While the Reserve Bank will not be meeting in January, back-to-school costs, rising mortgage payments and higher energy bills will start to flow through to household budgets soon, likely bringing to an end the run of pre-Christmas consumer spending.

The latest data collected by the Australian Retailers Association and Westpac shows a festive season spending splurge that defied all expectations, reaching a record-breaking $74.5bn – up 8.6 per cent on last year.According to figures from the ARA in partnership with Westpac DataX, Boxing Day trading also recorded unprecedented growth – up 15.3 per cent from last year – to a massive $1.23bn spend for the day.

While economists believe that about two thirds of that higher spending can be explained by rising inflation – meaning we paid more for the same goods and services – there was also a lift in the volume of purchases by consumers heading in to the new year.

“This is without a doubt the biggest festive season spend on record – it is unprecedented,” said ARA chief executive Paul Mr Zahra.

“It is remarkable that in this ­period of economic turbulence, traders have well and truly smashed it out of the ballpark as consumers revelled in ‘freedom’ spending,” he said.

“An unrivalled $74.5bn spend leading up to Christmas still didn’t diminish the spending appetite of Aussies leading into the year’s marquee retail savings event.

“The past three years have been incredibly challenging for everybody – and retail traders were certainly no exception. The resilience and agility of the industry has been remarkable.“The success shared by department stores, in particular, is truly outstanding, defying many predictions by commentators.”

Mr Zahra said according to the data collected by Westpac, department stores drove the greatest sales growth on Boxing Day – up 23.6 per cent on last year – to reap $149.4m. Cafes, restaurants and takeaway food services were up 22.8 per cent, and clothing and ­apparel were up 19.8 per cent.

Mr Zahra said Boxing Day in particular was about “saving money” and could reflect a growing concern among households as they enter the new year and face tightening budgets due to interest rates, energy and the cost of living.

“Boxing Day has different dynamics; Boxing Day is about saving money,” he said.

“So if you think about it, people under household budget pressure are saying well actually, what do I need that I can buy at a discount now and save some money.”

Jade Clarke, the head of Westpac DataX, said spending remained strong despite the rising cost of living: “The data shows that despite a year of increasing living costs, Australian retail sales have remained strong over the holiday period, improving on last year.”

Sydney’s Pitt Street Mall was bustling on Thursday with shoppers eager to snap up discounts in festive season sales, hoping to beat the inflation crunch.

Psychology student Anne Hollerich said she had splashed some Christmas cash, but admitted she had not paid much attention to inflation until she looked to book flights home to see her family in Luxembourg for Christmas.

“It cost so much – thousands and thousands – to get home; it was just too expensive,” she said, so she is now spending new year in Sydney and her first festive season away from home.

New shoes, pyjamas, and beauty products were popular items snapped up by shoppers, with some saying they were getting their shopping done now before they face higher prices back home.

But for mother Chantelle Potgieter, shopping with her daughter Megan, 16, she can already feel the inflation crunch. “Every time I go to shop for groceries it costs 30 per cent more, no matter how I try to plan it,” she said. “I might not be thinking about it while we’re out spending Christmas money now, but you can tell it (inflation) does already have an impact.”

When Vivienne Westwood, who created the torn tartan coattails the Sex Pistols rode to punk stardom in the seventies, accepted an OBE from Queen Elizabeth in 1992, her ability to confound expectations peaked.

To be fair, it wasn’t a complete curtsy to the establishment. She wasn’t wearing knickers (Westwood, not the Queen) for the ceremony, or to collect her damehood in 2006.

Westwood’s legacy as a designer and trend oracle is much clearer, following her death, aged 81.

The daughter of a factory worker and cotton weaver, she rose to notoriety clothing punks in torn T-shirts with pictures of the Queen with her lips safety-pinned, swastikas and bare breasts from her store on London’s Kings Road provocatively called Sex, later renamed Seditionaries, before becoming World’s End. Strangely enough, what followed was far more interesting.

Focusing on fashion in her forties, following her disillusionment with punk, Westwood mined galleries and literature for trends that continue to infiltrate the collections of her peers, evident from her first runway show in 1981 for the Pirates collection.

Those conical bras that made Jean Paul Gaultier a star in 1987 and became the uniform of Madonna’s Blonde Ambition tour, are pointedly apparent in Westwood’s Buffalo collection of 1982.

Controversial designers Dolce & Gabbana built an empire and Kardashian client base on corsets, revived by Westwood in 1991. Mini-crini’s from a 1985 runway show packed with dishevelled Marie Antoinettes turned up the volume for the pouf skirts that followed from Christian Lacroix.

“Vivienne Westwood’s contribution to fashion is unique, perhaps unparalleled,” British fashion journalist Alexander Fury writes in Vivienne Westwood: Catwalk. “She is certainly the most important fashion designer of the latter quarter of the 20th century.”“Our appreciation of every fashion designer today, how the fashion world is today, how we view fashion, is different because of Vivienne Westwood,” milliner Stephen Jones told Another Magazine in 2017. “And that goes for John Galliano, Alexander McQueen, Rei Kawakubo, Martin Margiela – everybody has been influenced by her.”

Westwood’s talent was often obscured by a love of stunts, almost greater than that of her ex-partner, Sex Pistols promoter Malcolm McLaren. There was her 1989 Tatler magazine cover as a disturbingly convincing Margaret Thatcher, sending Naomi Campbell down the runway in 1993 in platform shoes that toppled the supermodel like a wounded giraffe and that confident twirl outside Buckingham Palace in 1996 that amply revealed her disdain for underwear.

Often these stunts were staged to promote causes, such as her commitment to climate change and nuclear disarmament. Westwood also took the counterintuitive move of encouraging customers to buy fewer clothes.

The protests didn’t get in the way of a push for profits by the independent business, with Westwood designing the cabin uniforms for Virgin Atlantic airlines, collaborating with Burberry in 2018 and more recently Asics sneakers. Westwood also designed the extravagant dress worn by Sarah Jessica Parker as Carrie Bradshaw for her aborted wedding in the Sex and the City movie.

Since Paris Fashion Week Autumn-Winter 2016, Westwood’s creative partner and husband since 1993, Andreas Kronthaler, designed the runway collections, refining the label’s language of tartans, pirate paraphernalia, corsets, platforms, heart-shaped lapels and meringue silhouettes.

Kronthaler, 56, who met Westwood as a student, also picked up on Westwood’s rebel spirit. The brand was accused of plagiarism in the autumn/winter 2017/18 collection. T-shirts with the slogan “We do big sizes! 2XL 3XL 4XL 5XL!!!! We do very small sizes!!” had been lifted from designers Louise Gray and Rottingdean Bazaar.

A statement appeared on the brand’s social media in 2018 saying: “We are sorry. The use of your graphics on our T-shirt was only ever meant to be a celebration of your work. We got caught up in a last-minute frenzy and did not contact you to ask for your permission. We are truly sorry about this mistake and want to make it up to you.”

The apology only deepened Westwood’s reputation as a responsible rebel.

In a statement, Kronthaler made it clear that he will continue Westwood’s work.

“I will continue with Vivienne in my heart,” Kronthaler said. “We have been working until the end and she has given me plenty of things to get on with.”

Westwood also maintained her contradictions until the end.

“I don’t even like fashion,” she said in an interview with NME in May. “Well, sometimes I do.”

Department stores and the foodservice sector drove “unprecedented” Boxing Day sales growth across Australia according to data from the Australian Retailers Association and Westpac DataX. 

And the ARA says the data shows pre-Christmas spending hit a record $74.5 billion – 8.6 per cent ahead of last year, a figure that “defied all expectations”. 

“This is without a doubt, the biggest festive season spend on record – it is unprecedented,” said ARA chief Paul Zahra.

On Boxing Day, Australians splurged $1.23 billion – up 15.3 per cent on 2021, with department-store sales of $149 million up by 23.6 per cent and the restaurants, cafes and takeaway food sector accounting for $124 million, up by 22.8 per cent year on year. 

Spending on household goods accounted for the highest share on Boxing Day, reaching $314.76 million, up by 14.3 per cent, followed by food and grocery retailing, up by a more modest 7.6 per cent to $264.52 million. 

Spending on apparel and accessories surged 19.8 per cent to $217.59 million. 

Prior to Boxing Day, there were some concerns in the retail community that higher-than-expected pre-Christmas spending combined with the impact of inflation and interest rates onc consumers’ discretionary spending might mute the traditional Boxing Day splurge-fest. 

But Zahra said the unprecedented pre-Christmas spending did not diminish the spending appetite of Aussies leading into what he described as the year’s “marquee retail savings event”.

“It is remarkable that in this period of economic turbulence, traders have well and truly smashed it out of the ball park as consumers reveled in ‘freedom’ spending. The last three years have been incredibly challenging for everybody – and retail traders were certainly no exception. The resilience and agility of the industry has been remarkable,” he said.

“Boxing Day has once again cemented its status as the Grand Final of Australia’s favorite sport, shopping.”

He said multiple elements drove the record spend, including a sense of ‘reward’ after the challenging period brought by Covid-19 and restrictions on movement and shopping. He also believes many Australians were motivated to buy now ahead of price rises driven by inflation – “and leverage savings during the sales events”. 

Westpac DataX used de-identified card-spend data to calculate the spending figures and provide insights during the key trading time.

“The data shows that despite a year of increasing living costs, Australian retail sales have remained strong over the holiday period, improving on last year,” said Jade Clarke, head of Westpac DataX. 

Private equity firm Anchorage Capital Partners is reportedly in the final stages of acquiring David Jones from Woolworths Holdings, the South African retail giant that bought the department store chain for $2.1 billion in 2014. 

The Australian Financial Review reported on Wednesday that Woolworths Holdings’ deal with Anchorage Capital was imminent and estimated to be between $120 million and $130 million, a fraction of what the company paid for David Jones eight years ago. 

Multiple reports suggest the deal will be done by Christmas. 

Inside Retail contacted Anchorage Capital Partners about the reports, but they declined to comment. David Jones had not responded to Inside Retail’s request at the time of writing. 

Speculation about the sale of David Jones has increased in recent months, following reports in April that its parent company had been meeting with banks. 

It comes after a tough few years for the department store, which was impacted by forced store closures during the Covid-19 lockdowns, and a failed foray into food halls, which were shuttered after a strategic review in 2020. 

Scott Fyfe, the former CEO of Country Road Group, which is also owned by Woolworths Holdings, took over as CEO of David Jones in 2020. 

Since then, he has overseen the reinvigoration of the department store, including the refurbishment of its flagship stores in Sydney and Melbourne, and the exploration of new trends, such as fashion rental and resale. 

In 2021, the retailer reportedly turned a profit for the first time since 2018, thanks in part to a number of costly impairments coming to an end and the Australian government’s JobKeeper wage subsidies. 

In October, Woolworths Holdings’ CEO Roy Baggatini wrote in the company’s annual report that David Jones was “debt-free, self-funding, and has a clear roadmap to improving profitability”. 

As such, he wrote that Woolworths Holdings was now in a “favourable position to explore all future options in respect of this business, and how best to further unlock value for the group and our shareholders.”

According to the Australian Financial Review, Fyfe will remain CEO of David Jones after the sale is complete.

Brosa, the upmarket online furniture brand, has been placed in voluntary administration, citing a decline in trade since Covid-19 restrictions enabled consumers to shop at physical stores again. 

Last February, Brosa’s co-founder and CEO Ivan Lim told Inside Retail the business grew more than 100 per cent last financial year, in line with other online furniture retailers. 

Fuelled both by existing customers increasing their order frequency and average order value during the pandemic, and new customers, who sought out online furniture retailers when stores were closed, the company seemed assured of success, its sales tripling. 

“There’s still so much growth, and we are really fortunate that we built a leading position as far as a digital-first experience goes for home and living,” Lim said.

But this week the dream was over, with KordaMentha Restructuring commencing a sale process for Brosa, and Richard Tucker and Michael Korda appointed as voluntary administrators.  

“The business faced challenges when sales declined after the Covid-19 restrictions were lifted,” said Tucker. 

“This caused short-term cashflow pressures after a period of phenomenal growth.”

KordaMentha is seeking expressions of interest in the business as a going concern. 

Tucker said Brosa had developed a strong customer base and technological capabilities “that would be an asset to many other furniture retailers”. 

“I expect that there will be strong interest in the Brosa business. The company was embarking on a campaign to reduce its inventory holdings and refocus itself as a make-to-order business.”

KordaMentha is planning a stock clearance from the company’s warehouses in Sydney and Melbourne. 

David Jones, the country’s highest profile department store, is in the hands of private equity investors after its South African owner Woolworths Holdings sold the company to Anchorage Capital.

The firm has agreed to buy the David Jones operating business – without its flagship Melbourne property – and says it will accelerate its growth aspirations despite the retail sector facing significant economic headwinds in 2023.

David Jones chief executive Scott Fyfe, who will stay on to run the business, said there would be more investment in its stores and customer experience but refused on Monday to confirm if Anchorage’s playbook would include job losses among its more than 7500 staff once it officially grabs hold of David Jones in March.

Woolworths boss Roy Bagattini at a press conference on Monday declined to disclose the sale price for the David Jones business, saying it was “complex” and that final sale price would “become clearer” in March.

He also declined to explain if the final price Anchorage would pay for David Jones would depend on how the department store performs over Christmas, but described the sale price as “a little bit of a moving target”.

However, sources close to the transaction said David Jones had been sold for around $100m, crystallising substantial losses for Woolworths, which spent eight years trying to turn around the department store.

Woolworths will retain ownership of the flagship Melbourne CBD store, which could be worth as much as $250m. It is believed Woolworths will also attempt to extract as much as $200m in dividends from David Jones before it is handed over to Anchorage.

Woolworths acquired the then ASX-listed David Jones for $2.1bn in 2014, at the same time buying out businessman Solomon Lew’s stake in Country Road for $209m.Woolworths will keeping that business, which also includes the Mimco and Witchery brands.

The Australian first revealed that the South African company had brought in investment banks in the hope of offloading the department store in early April, a move denied by Woolworths.

In buying David Jones, Anchorage gets control of Australia’s premium omnichannel department store owner, with 43 stores and two distribution centres across Australia and New Zealand, as well as a rapidly growing e-commerce business.

Mr Fyfe told The Australian that the company was “back under Australian ownership and we are going to unleash the full potential of this amazing brand”.

“Anchorage has got a very clear strategy for the business, it is a growth strategy which is really important, they’ve obviously come on board with their financial capital investment in the business which is fantastic,” Mr Fyfe said, although he declined to rule out job losses.

“We need to set this business up as a stand-alone business now, so I think it will provide great opportunities for our people.

“I’m not in a position to say whether there will be or will not be (job losses) at this point in time and clearly that is a discussion I need to have with Anchorage.”

Anchorage declined to comment. The private equity firm has extensive experience in retail and consumer investments over 25 years. This includes Anchorage buying Dick Smith Electronics from supermarket group Woolworths for under $115m in late 2012 and then only one year later flipping it on the ASX for a value of $520m. Dick Smith later collapsed, leaving creditors owned hundreds of millions of dollars.

Mr Fyfe said there were a number of strategies Anchorage and his management team could pursue to resuscitate earnings.

“The first place is the capital investments. The last few years has been very challenging for us in terms of the recovery from Covid and we have been capital constrained as we have worked through these periods,” he said.

“So an injection of new capital is fantastic for us.

“And we will use that to prioritise on consumer facing areas, whether that is a customer, or omni-channel business perspective, or an online perspective.

“And we will really scale this business up for success and we can now move at pace. Clearly having an ownership structure in Australia is really beneficial for us. And we can go on and really maximise the opportunity.”

He said he wasn’t daunted by the feared slowdown in spending in 2023 as the impact of interest rate rises, spiking energy bills and soaring inflation threatened to curtail discretionary spending – especially at a luxury retailers.

“We are very clear about the headwinds that are coming, particularly recent interest rate rises that put challenges on consumer confidence and consumer spending,” Mr Fyfe said.

“We have got strong momentum, I’ve been really encouraged by our trading through Black Friday, Cyber Monday and into peak Christmas trading both from a physical and a digital perspective, probably actually more from a physical point of view because we really invest in our premium luxury assortment. We have actually seen consumers trading up.

“We are very aware of calendar year 2023 there will be some headwinds, and we are constantly focusing on value for money across this assortment we offer and making sure that customer base – who have got a higher affluence than the average in Australia – really stick with us.”.

Mr Bagattini, who was brought on board as CEO in 2020 to fix and ultimately sell David Jones, said the acquisition hadn’t turned out as initially envisaged.

“David Jones is just a phenomenal brand. It is an iconic retailer. It’s stature as an iconic retailer just goes on forever. And when you part company as it were there’s a level of sentimentality,” he said. “At the end of the day I’m feeling good about the fact that we are able to set David Jones up with a very positive opportunity to drive forward.”

He declined to name the actual total sale price, only saying it would be more than David Jones current value of $290m in its own accounts – which includes the Melbourne CBD store.

In the years following the acquisition, led then by former Woolworths chief Ian Moir, there were more than $1bn in writedowns. The company launched, and quickly ended, several strategic initiatives including opening dozens of David Jones food courts and locating food services in BP service stations.

The latest accounts showed David Jones had a net profit of just $14.5m in 2022, from $84.3m in 2021 – an 82.7 per cent decline.