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Sales at Primark grew 2.2% for the 24 weeks to 29 February 2020, however the value retailer’s parent company Associated British Foods warned trading in the second half of the year would be “radically different” as a result of the coronavirus crisis. 

UK sales were 2.7% ahead of last year, partially offset wth a decline in like-for-like sales. Sales in the Eurozone were 5% ahead of last year. 

ABF chairman Michael McLintock said: ”There was Very little effect of Covid-19  on our underlying first half results but trading in our second half will be radically different.” 

The value retailer has been forced to close all of its stores under the UK government lockdown and does not trade online. It has warned that the reopening of these stores is “likely to be complex”. 

ABF has written down the value of the chain’s stock by £284m to reflect realistic pricing when stores re-open.

McLintock added: ”The rapid closure of Primark stores has presented a major challenge to the group to manage and mitigate the profit and cash flow impacts arising from the loss of sales. We have taken steps to confirm the availability of existing, and to agree new, borrowing facilities.” 

“Our assessment of ongoing concern shows that, even though this is a time of unprecedented uncertainty, the group has ample cash liquidity to deal with the likely challenges in the year ahead.” 

At the half year, the group had net cash of £801m and an undrawn, committed revolving credit facility (RCF) of £1,088m. Funds were drawn down in full on the RCF on 18 March. 

ABF did not seek a waiver for its covenant test for September 2020 but has confirmed a waiver for February 2021. The group has also been granted access to funding under the Bank of England’s Covid Corporate Financing Facility. 

As at the date of these interim results, the group had available central cash on hand of £1.5bn.

The value retailer has committed to take all product that was in production and finished, and planned for handover by 17 April. Future orders have been cancelled until further notice. 

Chief executive George Weston said: ”When we are allowed to reopen we must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales at least until the remaining risk is minimal. In time we can rebuild the profits. We can’t replace the people we lose. 

”At Primark we have 68,000 of our people receiving furlough payments from governments across Europe, without which we would have been forced to make most redundant. From making sales of £650m each month, since the last of our stores closed on 22 March, we have sold nothing.

”One of the world’s great clothing retailers is entirely shut. We have paid for in full, and taken delivery of, very large amounts of completed stock which we can’t sell for now and we have established a fund that will ensure everyone in a vulnerable country who worked on a Primark garment, whether completed or not, is paid for that work. And we are supporting suppliers with commitments to buy garments that are as yet unfinished. But not until shops reopen and we can place new orders, will the economic hardship that Covid-19 has caused to all those in our supply chain begin to reduce.

”I am in awe of the Primark teams for their care, good judgement and immense hard work as they have managed this crisis.”

Online sales at John Lewis have grown 84% year on year between the middle of March and 15 April, amid the coronavirus outbreak. 

Overall, John Lewis sales were down 17% year on year since the middle of March, and down 7% year on year since 26 January.

In its full-year trading update, John Lewis announced that profit before partnership bonus, tax, exceptional items and reporting standard IFRS 16 dropped by 23% year on year in the 12 months to 16 April 2020. John Lewis said this was a “weaker performance” than it had hoped for, driven by significant operating profit decline at John Lewis, which was partly offset by operating profit growth in Waitrose, and lower group costs. 

Profit before tax grew by 25% to £146.4m, as a result of an increase in “exceptional profits” driven by the reduction in pension obligations following the decision to close the defined benefit section of the pension scheme. 

Meanwhile, total revenues dropped by 1% “due to the challenging retail environment”. This drop was more pronounced at John Lewis, which experienced a decline in like-for-like sales of 1.8%, compared with 0.2% at Waitrose.

During the year the “Partnership Board” were awarded a bonus of 2%. The company said: “This was prudent and affordable and recognises the contribution made by partners working in the business today without creating risk for our future sustainability.” 

John Lewis’ debt ratio improved to 3.9 times, the lowest level since January 2014. It continues to review plans to reduce it to around three times cashflow within four years.

“I wrote to you with the highlights of last year’s financial performance when I announced the bonus decision in March", chairman Sharon White said. “With the outbreak of Covid-19, I wanted to give you the latest picture on our trading performance. I also wanted to say more about how we are supporting customers, partners, suppliers, and our communities at this time of national emergency.

“This is a time of great uncertainty and volatility and the full-year picture is impossible to predict. We are therefore looking at a range of different possible outcomes and how these might affect profits, sales and cash flow. We are confident that the future of the business is strong. Our short-term trading has though been significantly affected, principally because of the closure of all 50 John Lewis branches. John Lewis online remains open – providing essential goods and services to enable customers to live well at home – and online sales are substantially up on last year. But it has not been enough to offset the loss of shop trade. Demand at Waitrose has risen sharply but operating costs have increased too, especially as we have expanded online delivery.”

She added: “The pandemic has significantly changed the trading patterns in both brands. In Waitrose, we have seen strong sales growth up 8% year-on-year since 26 January. 

“In John Lewis, trading has been mixed. With stores closed, we have seen a significant spike in our online sales which are up 84% year-on-year since the middle of March. The highest demand has been in areas linked to working and living at home like technology and food preparation but also in looking after and entertaining our children and keeping fit. However, these are some of our less profitable lines. We are buying more Scrabble but fewer sofas. Overall, John Lewis sales are down 17% year-on-year since the middle of March, and down 7% year-on-year since 26 January.

”Our worst-case scenario for the full year assumes significant sales decline between April and June, and weak sales thereafter. Over the course of the full year, this worst-case would result in a sales decline of around 35% in John Lewis, around double the current level, while at Waitrose it would result in a more modest decline of less than 5%.”

With regards to cash and liquidity, she said: “We started the financial year with just over £900m cash and investments in the bank and with access to a further £500m of undrawn committed bank facilities. Six weeks into the crisis, we are holding broadly the same level of cash and investments. But with such unprecedented trading volatility we have a range of actions that we are ready to take to secure the financial sustainability of the partnership.

“The government has introduced a 12-month business rates holiday for England and Scotland. This will save the partnership around £135m this financial year. The government has also deferred payment of VAT until March 2021, which will help our short term cash flow.”

The board has taken a steps to preserve liquidity. These include:

• Lowering planned stock intake in line with slower trading at John Lewis.
• Reducing operating costs, including cutting back on marketing spend by close to £100m.
• Minimising capital and investment commitments: capital and investment spend for 2020/21 will be more than £200m lower than originally planned.
• Furloughing more than 14,000 Partners whose jobs are temporarily no longer supported by the business.
• Negotiating with landlords regarding rent relief, including an immediate switch to monthly from quarterly payments.
• Working with our banking partners to consider how extra flexibility can be provided, should it be needed.

In addition, the executive team, non-executive directors of the partnership board, the independent directors and White will be taking a 20% cut in pay from April, initially for three months.

On Tuesday, John Lewis Partnership confirmed that 14,000 staff have been furloughed across the business due to the coronavirus lockdown, and that they will receive full contractual pay until the end of May.

With these actions and continued close attention, White said she is “confident that we have sufficient cash to operate successfully through a broad range of potential scenarios.”

The group also revealed that it paid out £939,773 to former managing director Paula Nickolds, who exited in January. The group also confirmed an £892,362 pay packet given to Rob Collins, who had been managing director of the group’s Waitrose grocery arm until he stepped down in October. 

White added that the strategic review announced in March will now be accelerated and substantially complete by the summer. It will take account of changes in consumer behaviour to come out of the pandemic, such as a more pronounced shift to online and a desire to shop in more sustainable ways.

“The partnership has been trading for nearly a century. It has survived a world war and bombings, economic crashes and crises. Thanks to you, we shall also come through Covid-19 too and emerge stronger”, White added. 

Retail’s shift online, spurred on by social distancing measures introduced to combat COVID-19, went into overdrive during the Easter long weekend with department store Myer recording massive spikes in sales.

According to chief customer officer Geoff Ikin, overall online sales rose 800 per cent over the long weekend, with customers targeting self-care and home improvement categories.

Beauty sales rose a massive 7000 per cent on Saturday, April 11, due to the department store’s discount on beauty products, with skincare, fragrances and makeup being the main items purchased.

Additionally, intimate apparel orders rose 600 per cent, with customers targeting sleepwear, lingerie, activewear and underwear. 

Sales in home and entertainment also rose 300 per cent while childrenswear and menswear rose 140 per cent and 160 per cent respectively.

“Customer service and satisfaction is paramount to us, and our teams are working hard to ensure everyone receives their purchases as quickly as possible,” Ikin said.

“We’ve also reduced our free delivery threshold to $49 and have relaxed our returns policy to give customers peace of mind with any purchase they make over this coming period.”

To support the growing online channel, Myer has brought back 2000 staff members to assist with the surging order volume.

It isn’t clear which departments these staff members originally came from. Inside Retail has reached out to Myer for comment and clarification.

Creditors of discount department store Harris Scarfe have voted to sell the business to Spotlight Group through a deed of company arrangement.

The DOCA will result in unsecured creditors losing money while the firm’s sole secured creditor, Allegro Funds, will be paid in full.

“The Administrators have conducted extensive investigations into the security held by the secured creditor (Allegro), [and] the security was found to be valid and enforceable,” Administrator BDO said in a statement to Inside Retail. 

According to a report by the AFR, Allegro will be paid $70 million through the DOCA, while unsecured creditors will receive between 1.3 and 20.5 cents in the dollar.

Unsecured creditors are owed between $146 million and $236 million. 

The deal will see the business continue to trade under new ownership and will result in ongoing employment and supplier relations continuing, according to BDO.

However, in anticipation of its sale to Spotlight Group the retailer made 59 of its staff redundant as part of a wider restructuring. A spokesperson for receiver Deloitte said the decision wasn’t easy, but that all affected employees were paid entitlements in full. 

These redundancies were made on top of the more than 450 staff let go during Harris Scarfe’s voluntary administration when 21 stores were shuttered. 

At 99 Bikes in Bondi Junction, queues have been snaking out the door over the past few weeks.

The queues are thanks in part to physical distancing rules, but it's also because the COVID-19 lockdown has everyone going gaga for cycling as they look for new ways to get active or alternatives to public transport.

Matt Turner, son of travel entrepreneur Graham "Skroo" Turner and managing director of Pedal Group, the company behind 99 Bikes, says there has been a huge uptick in business, especially over the last four weeks.

"There's been about a 50 per cent increase across our stores, but in our city stores it would be more, so around inner Sydney, inner Melbourne, inner Brisbane," he said.

Online retailer Bicycles Online has also seen its sales figures more than double in the past two weeks. Commuter bike sales grew 210 per cent, kids bike sales were up 60 per cent and mountain bike sales surged 170 per cent.

"Sales are exceeding what we would expect to see at Christmas,” said Bicycles Online co-founder James van Rooyen.

Bikes 99 salesman Nick Johns said the last four weeks had been "non-stop".

"We've got people dusting off old bikes, we've had a lot of people who have been thinking about getting a bike for a long time who say they may as well do it now," he said.

"We've also had a lot of people spending time with their family which is really good to see, buying kids bikes. We've even had a few families come into and buy all bikes [for the whole family]."

Mr Johns said it was great that families were spending more time together and that so many people were getting active.

"They've got the choice if they want to get fat and be alcoholics or get fit and love their family, that's how I see it. Sorry I'm blunt," he said.

99 Bikes has 47 stores across the country and is jointly-owned by Flight Centre, the Turner family and employees.

The company has employed about an extra 50 staff to cope with the increased demand. Of those, about half were Flight Centre staff who had been stood down.

Mr Turner said there was strong demand across a mix of products, especially for bikes under $1200 through to trainers, which had all sold out.

"It's been challenging from a supply perspective and a people perspective. But generally I think the guys in the store are loving the extra attention from more customers and getting more people onto bikes, which is obviously why we exist."

All 99 Bikes stores were practising physical distancing and limiting the number of customers in the store at any one time. (Most states are still allowing people to cycle with the people they live with or one other person, but check any social distancing requirements as they can vary from state to state.)

Mr Turner believes the cycling surge is being driven by three reasons: transport, health and exercise and family activities.

Australian Cycle Alliance president Edward Hore said the pandemic had definitely sparked a renewed interest in cycling.

"Essentially, it's the easiest way to keep your social distance and get exercise at the same time," he said.

"It's good for your metabolism, it's good for your fitness and it's good for your mental health. There are just so many positives of going for a ride right now."

Mr Hore said fewer cars on the road also meant it was a lot safer for cyclists at the moment.

Alexander Miller, spokesman for the Bicycle Network, said data collected a few weeks ago had indicated an increase in cyclists on key commuter routes.

"We think it's a good thing to go out and ride a bike and make sure you're getting that physical activity every day, at least 30 minutes, because it's really important for physical and mental health."

Mr Turner said it was hard to know if the surge in demand would sustain, but the company was planning "as if it will be".

"We don't want to miss out on that extra demand. Worst case is we end up with too much product of the things that are in demand now," he said.

Mr Hore hopes it will lead to more cyclists on the road, as well as an appreciation of social distancing between cyclists and motorists.

"We know what a metre and a half is now... so it's obvious now we can all give each 1.5 metres safely – even on the road," he said.

Fashion designer Shona Joy opens up on an important milestone for her namesake brand - and the challenges and opportunities that lie ahead. 

This year, we celebrate the 20th anniversary of the Shona Joy brand – though not quite in the way we had imagined.

I wanted to take this opportunity to reflect and share our story - both of our recent hardship as well as the silver linings we’ve found while being forced to rapidly adapt to this new environment.

It has been devastating to watch our successful business become so vulnerable, within the blink of an eye.

In the space of just three days, we had millions of dollars’ worth of orders cancelled by some of our biggest retail partners.

Large immediate orders that had been produced specifically for our key retailers were rejected in-transit.

We received cancellation notices for forward orders on our upcoming collections that had been put into work, with materials purchased and production well underway.

We’ve been rattled by the uncertainty of how to move forward in a sensible fashion and to what extent we should be investing in future collections.

Through all this uncertainty, our small Sydney based team has pulled together (from afar) - working night and day with an overwhelming sense of loyalty and support.

While we adapt to this new way of working, we’ve made it a priority to support those who have always supported us – with many of our boutique partners having to close their doors.

We’ve done everything we can to promote our loyal stockists using our own channels, as well as offering discounts to enable their businesses to survive.

I’m so proud of how our team has found incredible strength through the tough times that have been thrust upon us all.

In the fast-paced environment of fashion there’s been hardly any time to look from above with clarity and work out which trajectory we are on.

Having this time has allowed us to pause and reflect upon the rapid growth our brand has been through in the 20 years since I began selling my designs at the Bondi Beach and Paddington Markets.

So, we’re seeing this as an opportunity to re-focus, to look within and decide what our new future will look like.

By slowing down, we can all simplify what we're about and how we can be better - we now have the time to perfect processes and be more thoughtful with our choices as we plan our next chapter.

We’ve always been passionate about working to create a more ethical and sustainable future for our industry so we’re taking this time to find ways to work more sustainably.

As an immediate action, we’ve been able to significantly decrease our use of airfreight, shifting to sea-freight wherever possible.

We’ve also been able to focus on the new product categories we’ve been developing behind the  scenes, based on the feedback of our amazing customers.

Though our supply chain has become incredibly fragile, our first ever Basics Collection is due to launch very soon along with new additions to our Wedding Edit and easy-wear styles as part of our Resort Collection.

Through all the challenges, we’ve been humbled by an undeniable sense of togetherness and unity as  our beautiful community has come together to support each other.

Today, more than ever we’re so grateful – being an Australian brand has never felt so good.

"The past few weeks may have been filled with uncertainty, but one thing remains crystal-clear: kindness wins."

That's the official word from Seed, which has restructured its 'Seed of an Idea' campaign to match current times.

The campaign was recently launched to help women kickstart their own businesses.

In line with the new climate, the retail chain has reshifted its focus to support charities and local enterprises.

#seedofkindness has launched by profiling three such ventures, including the fashion industry favourite 'Buy From The Bush'. 

Grace Brennan launched 'Buy From The Bush' after seeing the effects of drought on country communities.

It encouraged consumers to purchase from rural retailers, with many independent fashion boutiques reporting record sales.

Seed revealed it was time to celebrate social enterprises dedicated to the greater good. 

"The global coronavirus pandemic has sparked an outpouring of generosity and altruism among Australians, providing much-needed hope and comfort.

"It’s never been more important to support our communities, show compassion and find new ways to help our neighbours in need."

Design-led retailer kikki.K, which entered into administration on March 10, has found a silver lining.

A spike in sales as workers set up home offices. 

Last week, kikki.K saw eCommerce sales boom to 6,500 orders. This is five times the volume of the same week last year.

The dollar amount represented over 60% of what the brand’s revenue would have been from the 59 bricks and mortar stores across Australia, New Zealand, the UK and Singapore.

The stores were closed by administrators to protect the wellbeing of its team and the community at the end of March.

The response, and further sales data from kikki.K, suggests that people around Australia and the world are prioritising setting up home work spaces.

Core stationary items dominated the company's revenue.

The ‘Everyday Essentials’ Collection for instance, is delivering over 38% of total business sales.

In the last week alone, kikki.K sold over 7500 units of desk accessories, filing and storage items. 

Notebooks was the number one category for kikki.K last week, selling through almost 10,000 units online, while nearly 8,000 units of pens and pencils also hit people’s shopping baskets

kikki.K sales data also uncovered a surprising jump in tactile crafting and DIY projects.

Close to 1500 units were sold in the brand’scategory of Display Presentation, driven by products like Vision Boards and DIY Albums.

Flight Centre is cutting 800 stores and raising $700 million to help it ride out a bleak scenario of the coronavirus throttling the travel industry for 18 months.

The cuts eliminate almost half the Flight Centre stores catering to leisure travellers and are part of the strategy to reduce costs by almost 70 per cent at the Brisbane-based travel agency.

But Monday's move also causes pain as Flight Centre’s existing shareholdings are diluted in a massive capital raising. Risks remain, too, including uncertainty about how long the pandemic will linger.

Flight Centre is among companies, including peer Webjet, slashing costs and raising funds after the virus triggered mass shutdowns of borders and economies.

The shutdowns mean Flight Centre's total transaction value – representing all money flows such as cash transferred to airlines – in March fell to as low as 20 per cent of normal levels.

To combat the impact, Flight Centre wants to reduce costs from $227 million monthly to $65 million.

It has already stood down or made redundant almost 6000 staff, dumped marketing spending and rejigged landlord arrangements.

Flight Centre chief executive Graham "Skroo" Turner flagged deeper staff hits, depending on government packages globally such as Australia's JobKeeper program.

"Property and people costs will have to come down more," he told The Australian Financial Review.

The company last month flagged closing 35 per cent of stores globally. Now the target is 50 per cent. That latest figure includes 40 per cent of Australian stores, or 426 outlets including brands such as Travel Associates.

Mr Turner said this would leave Flight Centre "with the right number of larger stores with more people in them in better locations".

The company is also raising $282 million through a placement of shares with institutions and $419 million via a non-renounceable entitlement offer to existing investors, as flagged in the Financial Review's Street Talk column. Macquarie Capital and UBS are underwriting the offer to pick up any unsold shares.

"We're confident that this will, even with almost no income over the next 12 to 18 months, this'll give us enough money to be able to take advantage when travel restrictions are lifted," Mr Turner said.

Flight Centre is raising cash at $7.20 a share, a 27.3 per cent cut to the last traded share price of $9.91.

The company’s own disclosure flags continuing risks including the pandemic’s squeeze on economies impacting travel spending, fallout from cancellation policies and the hurt to branding from cutting stores.

Risk of no revenue

Carter Bar Securities analyst Peter Drew said positives from the raising include Flight Centre potentially running for 18 months with almost no revenue. He expected income to be "substantially reduced", but not so that it is too bleak.

The company could also cut its cost base on a more permanent basis, he said.

The downside with the capital raising was dilution, as shares on issue would nearly double. This would happen at a company that Mr Drew said had managed to avoid raisings since 2007.

"That’s the reality," he said. "It’s an essential capital raising."

Mr Drew said future questions included whether Flight Centre had raised too much money. But the worst case would be to raise too little now and have to return to the market, he said.

The dilution comes with almost 40 per cent of the new equity stemming from the institutional placement, involving the use of temporary rules relaxing limits on fundraising.

The other entitlement offer is 1 share for every 1.74 shares investors already own. Company founders – Mr Turner, Bill James and Geoff Harris, who account for almost 42 per cent of existing stock – are taking up $25 million in their share entitlement, below their theoretical limit of almost $175 million.

Mr Turner pointed out the founders "are heavily diluted as well".

"I’m afraid that's what happens when you want to do a [large] share placement," he said. "It’s part of our long-term survival strategy. There’s not a lot of choice really."

Flight Centre’s lenders are also bumping up loan facilities by $200 million and will waive covenant testing for the June and December periods.

Citigroup analyst Bryan Raymond said Flight Centre's overall liquidity would be about $1.98 billion, but risks lay in factors such as debtors not being able to pay up cash to Flight Centre.

"Given the scale of the crisis ... we see elevated risk around the magnitude of debtors" in the retail and corporate arms worth about $543 million, and in bonuses for mass sales worth about $330 million, he said.

Mr Turner said the company was generally confident in collecting debts.

The pandemic was the toughest challenge Flight Centre had faced "and it is inevitable that some businesses across our industry will fail, given the significant loss of revenue", he said.

But Flight Centre flagged the possibility of being in a stronger condition than rivals and being able to access good store sites if required when the pandemic eased.

The company said some work, including charter operations, was ongoing. And in China, where the virus first broke out, weekly ticket sales were slowly recovering although remained at 15 per cent the average of the beginning of year, the company said.

As customers increasingly self-isolate and avoid what remains of bricks-and-mortar retail, David Jones has seen sales through its online channel more than double in the month of March.

Online sales rose 108 per cent during the month, and made up 20.3 per cent of sales. However, overall sales for the period fell 19 per cent on the same period of FY19.

South African parent-company Woolworths Holdings said while the majority of David Jones stores across Australia and New Zealand remain open, smaller stores such as those in Barangaroo in Sydney and James Street in Brisbane have been closed. 

“The impact of the slowdown due to COVID-19 was seen earlier in stores that have a higher proportion of tourist trade and Asian demographic customers,” Woolworths Holdings said in a trading update. 

“The impact has subsequently become more widespread across all stores and customer segments with a significant reduction in foot traffic in March.

The group said footfall had continued to fall, and it was not focusing on stimulating trade, reducing inventory and generation cash reserves. How the business plans on doing these things, however, was not specified.

Woolworths Holdings stable-mate Country Road Group, made up of Country Road, Mimco, Politix, Trenery and Witchery, closed all stores on 28 March for at least four weeks.

In the process the business stood down its retail employees while keeping its online channel running. 

During the first two weeks of March store traffic in these stores fell 36 per cent, and a further 60 per cent in the following two weeks, causing a 32.3 per cent decrease in sales compared to the previous period. 

Across its Australian, New Zealand and South African operations, Woolworths Holdings is expecting to take a 20 per cent hit to headline earnings for the year to 28 June 2020 due to global shifts and restrictions on trade in place. 

In response, the Woolworths Holdings board, group CEO and senior executive teams are foregoing 30 per cent of fees and salaries over the next three months.

[Harvey Norman told shareholders on Thursday evening the business would be revoking its decision to pay its FY20 interim dividend of 12 cents per share.

Additionally its executive team and non-executive directors have opted to forgo 20 per cent of their salaries and director’s fees respectively for the next three months. 

“In the present environment, the Board believes that preserving cash is the most prudent course of action to protect shareholder value,” company secretary Chris Mentis wrote in a letter to shareholders. 

The announcement saw shares fall 7 per cent on Thursday evening, from $2.97 per share to $2.76 per share. By the time of publication on Friday, shares had rebounded slightly to $2.77 per share. 

The decision will keep $149.5 million of cash in the business and comes two weeks after Harvey Norman revealed a 9.4 per cent increase in comparable sales in its Australian stores for the period of March 1st to 17th. 

At the time, chairman Gerry Harvey described to 60 Minutes that coronavirus could be an ‘opportunity’ for retailers in certain categories, noting that sales of freezers had quadrupled and air purifiers had doubled. 

Public backlash was swift, and two days later Harvey admitted he was “mortified” that he had come off as a “heartless, greedy old bastard”.

“Now everyone thinks I’m this callous old bastard out making a profit on other people’s misery… but believe me, that was not my intention,” Harvey said, according to SMH.

“I was trying to give a positive view [of the COVID-19 crisis].”

Harvey Norman was contacted but hadn’t provided comment by publication. 

The Harvey Norman board’s decision is made in the context of dozens of retailers entering a hibernation state amid a collapsed bricks-and-mortar retail sector, with customer confidence hitting an almost-50-year low.

ANZ head of Australian economics David Plank said confidence on current economic conditions had fallen almost 50 per cent over the last two weeks to its lowest ever level. 

“And many other aspects of the survey are exceptionally weak. The announcement of the largest fiscal package yet may stabilise confidence, but much will depend on how the pandemic evolves,” Plank said. 

However, according to Plank, there are some glimmers of hope.

“Future finances were up marginally and inflation expectations rose. In fact, there was a sharp uptick in the weekly reading of inflation expectations, which rose to 4.3 per cent.”

Retail spending increased more sharply than expected in February thanks to a surge in spending on basic necessities in supermarkets and department stores.

Retail trade rose by 0.5 per cent in February to $27.8 billion, seasonally adjusted, according to figures released Friday by the Australian Bureau of Statistics. 

Online retail contributed 6.6 per cent to total turnover in February 2020.

“Retailers reported a range of impacts from COVID-19 in February, with increases in food retailing slightly offset by falls in more discretionary spending,” said Ben James, ABS’ director of quarterly economic wide surveys.

Preliminary retail figures released two weeks ago suggested shoppers frantically buying toilet paper, rice, pasta and other goods due to coronavirus fears would result in a 0.4 per cent rise for the month.

The February rise follows an unrevised fall of 0.3 per cent in January, which was weighed down by people staying indoors because of the smoke from the devastating bushfire that hit eastern Australia throughout the summer.

January was also the nation’s first back-to-back monthly retail decline since August 2017.

The latest figures were boosted by a 3.1 per cent rise in department store spending, a 0.8 per cent rise in food retailing, and a 0.7 per cent rise in household goods, but were weighed down by a 2.9 per cent fall in the clothing and footwear sector.

The next result will take into account the mass store closures that begun in March, and will be released in the week of April 20.

Qantas, Star Entertainment, Domain or Kathmandu could all potentially be taken over by Wesfarmers if the cashed-up retailing conglomerate listens to investment bank Macquarie.

Research from Macquarie's equity strategy team, sent to clients on Thursday, unveiled a laundry list of ASX-listed companies the Perth-based behemoth could target after its Coles sell-down this week.

Wesfarmers offloaded a further 5.2 per cent of its stake in the supermarket chain on Tuesday, boosting its balance sheet with pre-tax proceeds of $1.06 billion, or a profit of around $130 million.

While the primary reason for the sell-down was to shore up its position during the coronavirus pandemic, chief executive Rob Scott told The Age and The Sydney Morning Herald the company was looking at acquisitions and had already been approached by some struggling businesses.

"We have been approached by some companies that are facing funding challenges, and we do look at those opportunities," he said.

Analysts have since been speculating what businesses Wesfarmers could look to snap up, with JP Morgan's Shaun Cousins saying the battered share prices of many companies presented the company with a number of buying opportunities.

Macquarie went one further, issuing a list of businesses which would meet the criteria for an acquisition: shares are down 30 per cent or more from a three-year high, an enterprise value under $5 billion, a return on equity lower than their ten-year average, and a history of profitability.

"This provides us with a list of proven business models, that are the right size and valuations that are currently attractive," they said.

Thirty-eight companies met the criteria, including Viva Energy, takeover target National Storage, car dealer AP Eagers, Bega Cheese, casino giant Crown, Flight Centre, and fellow retailer JB Hi-Fi.

Macquarie also compiled a smaller list of companies which would be a good strategic fit for Wesfarmers, though they do not all fit the financial criteria.

On that list is Ardent Leisure, Boral, Brambles, Domain, Fletcher Building, Incitec Pivot, Kathmandu, Lynas, Orica, Qantas, Star Entertainment and Super Retail Group.

Of these, Macquarie picked Orica and Incitec as the most likely targets due to their alignment with Wesfarmer's chemicals, energy and fertiliser segments.

Wesfarmers put a $1.5 billion bid in for rare earth miner Lynas last year, which was rejected by the company. It dropped the bid in August, but Macquarie believes it could revive its pursuit of the miner given its decline in value.

In retail, Kathmandu and Super Retail would have "sufficient scale" to be relevant to Wesfarmers, Macquarie said, even though the analysts viewed both as less likely targets given Wesfarmers already has significant retail exposure.

This was a view shared by Wesfarmers shareholder Contact Asset Management, with director Will Culbert telling The Age and The Sydney Morning Herald Wesfarmers shouldn't limit itself to the retail sector.

"As a conglomerate with a long and successful history, I don’t think that they need to necessarily constrain themselves to only the retail sector," he said.

"It is difficult to speculate on what Wesfarmers will do...however, it appears to be a very good time to have a war chest and a strong balance sheet. We would expect Wesfarmers to maintain its long-established discipline of acquiring businesses that meet its [return on capital employed] hurdles."

Despite Macquarie's extensive shopping list, it did temper expectations of an imminent acquisition, saying the company is "likely to be conservative given current economic uncertainty and looming risk of shutdowns".

Wesfarmers shares were down 1.8 per cent to $35.02 by mid-afternoon on Thursday.

Kathmandu Group has announced a $207 million equity raising plan in the wake of uncertainty surrounding COVID-19.

Responding to the current climate, Kathmandu is set to fortify its balance sheet with pre-emptive equity raising to cushion the impacts from a prolonged COVD-19 situation. 

The Group has launched a fully underwritten $207 million equity raising at an offer price of $0.50 per share via a $30 million placement to certain institutional investors, together with an approximately $177 million 1.2 for 1 pro-rata accelerated entitlement offer. 

Kathmandu Holdings’ Group CEO Xavier Simonet said that while the business experienced positive first half results, the Group needed to ensure it could weather the impacts of prolonged pandemic. 

"The Group’s first half financial results highlight the strength of our three global brands, Kathmandu, Rip Curl and Oboz.

"These results also show the strong position we would have been in to drive the next wave of our growth in line with our long-term diversification strategy had the global COVID-19 pandemic not occurred.

"In this situation of uncertainty and challenges, the health and wellbeing of our team and customers is paramount, while we maintain business continuity and ensure we are well positioned to bounce back quickly when more normal operating conditions return.

"The Board is taking pre-emptive action with the capital raising announced today, to ensure our Group remains strongly capitalised during the current market uncertainties.

"The proceeds of the equity raising will be used to deleverage the Group’s balance sheet and provide liquidity and funding in the medium-term should we experience a prolonged global COVID-19 pandemic," he said. 

The equity raising further strengthens the actions the business has already taken to combat COVID-19 including closing its stores and challenging all operating expenses. 

The use of the equity raising proceeds will go towards; paying down the existing Revolving Multi-Option Facility ($86 million); providing additional cash on balance sheet ($115 million); and, funding the transaction costs associated with the equity raising. 

Post equity raising, the Group will have total liquidity of NZ$315 million, with no debt maturities prior to November 2022; and will reduce net debt as at 31 January 2020 from 1.9x down to pro forma 0.5x.

The announcement of the equity raising follows a trading halt which was placed on Kathmandu ordinary shares on 31 March which will be lifted on April 02. 

After speculating that Bunnings’ proposed acquisition of Adelaide Tools would lessen competition in the South Australian Market, the ACCC has revealed it will not oppose the merger.

According to the competition watchdog, the transaction isn’t likely to substantially impact competition due to the existence of expanding competitors such as Total Tools and Sydney Tools. 

“Although Bunnings has a clear overall focus on the DIY segment, it does market heavily to attract trade customers and is focused on growing its tool sales to tradespeople,” the ACCC said. 

“[However], the differences between Bunnings and the Adelaide Tools businesses and the existence of large expanding specialist tool retailers… meant that we didn’t consider the threshold of a substantial lessening of competition was reached.”

Despite this, the ACCC said the decision shouldn’t be seen as an indication that it wouldn’t continue to scrutinise the DIY retailer, and any attempt to remove any competitive threat to the business would be “very closely scrutinised”.

Bunnings managing director Mike Schneider said the Bunnings team would now work toward integrating the business into the group, while allowing it to operate as a standalone power tools and heavy machinery business.

“While our businesses are very different, we see strong alignment between the Adelaide Tools and Bunnings brands,” Schneider said. 

“We strongly believe that competition is great for customers and we remain as committed as ever to driving customer value through all of our offers.”

Wesfarmers boss Rob Scott has warned the federal government's $130 billion JobKeeper wage subsidy may need to be supported by additional measures at the end of coronavirus pandemic

Mr Scott told The Age and The Sydney Morning Herald while he supported yesterday's announcement of a $1500 fortnightly wage payment for nearly six million Australian workers, the subsidy "only goes so far".

Mr Scott – who oversees the operation of Bunnings, Officeworks, Kmart and Target – said while the package was "very generous" and critical for the economy, there was an "important need" for businesses to keep operating during the crisis if they are able to do so safely.

"Notwithstanding the generous package, there are many, many people who will face a lot of financial hardship is as a result of businesses being unable to operate," he said.

Wesfarmers' businesses have stayed open during the crisis, with hardware chain Bunnings and office supplies company Officeworks both seeing a heightened level of demand in recent weeks.

Due to this, Mr Scott said his business was not currently planning to take advantage of the subsidy, but warned if a more significant shutdown came into place, Wesfarmers would apply.

"If we don't take more personal responsibility for complying with the government's mandates around social distancing and gatherings, then we will see a more significant shutdown, and that will be extremely damaging to the economy," he said.

With the payments amounting to just $39,000 for a full year salary, Mr Scott noted it wouldn't cover the loss of wages for many of Wesfarmers' employees.

"We should all be mindful while the JobKeeper subsidy certainly helps workers for businesses that are essentially shut down, we all need to brace ourselves for what is likely to be a more significant downturn in GDP and the economy," he said.

"The more we can do to keep businesses operating and help businesses big and small manage the cash flow burden in the months ahead, that will be important."

Virus to accelerate retail's structural change

Following a recovery from the coronavirus pandemic, Australians can expect to see a more concerted push into online selling along with further closures across bricks and mortar stores, Mr Scott predicts.

Australian retail had been in the midst of a structural change prior to the virus, and the disruption over the past month is likely to have "accelerated" those shifts, he said. One such change will likely be in retail leasing.

"There are some challenges facing bricks and mortar retailers relating to the way leases are structured, the size of stores, and also some of the more onerous regulations that disadvantage retailers that employ a lot of people versus online retailers that employ far less," Mr Scott said.

"So I think we'll see further rationalisation."

Yesterday, Wesfarmers completed a $1.06 billion sale of a further 5.3 per cent stake in supermarket giant Coles, netting the company around $130 million in pre-tax profits, and shareholders have already begun to question the best use for the company's fresh funds.

Primarily the profits will be used to boost Wesfarmers' balance sheet, Mr Scott said, though the conglomerate was also actively seeking opportunities to invest despite the "many risks" present in markets currently.

"We have been approached by some companies that are facing funding challenges, and we do look at those opportunities," he said.

"But in the current environment, those types of opportunities we would only look at in a collaborative way to help companies with any funding issues they may have."

About 1700 staff employed by retail group Brand Collective – that manages labels including Shoes and Sox, Clarks and Mossimo – will be stood down at the end of the week as the government scrambles to assemble a wage-support package and the retail body predicts more store closures.

The head of the Australian Retailers Association supports the government's package but called for greater clarity on rent support, predicting more closures in clothing, footwear and accessory stores as businesses struggle with falling foot traffic resulting from stay-at-home advice designed to contain the spread of the coronavirus pandemic.

Russell Zimmerman, executive director of the ARA, said technology related outlets and book stores appeared safe, for now, as demand for products assisting in the transition to work-from-home arrangements was on the rise.

"Where it comes to people trying on clothing as a consumer, they might be very concerned about trying a jumper on that might have wiped across someone's face that might have had coronavirus," Mr Zimmerman said. "Immediately clothing and footwear comes to a standstill."

The three-pronged burden facing retailers – keeping staff safe, plummeting sales and brand damage for those stores that do remain open – meant it was becoming increasingly untenable to keep bricks-and-mortar stores operating, Mr Zimmerman said.

"Retail is staring down the barrel of sales that have gone down by approximately 75 per cent," Mr Zimmerman said, adding store owners were only making enough money to cover wages.

"How do you pay for your stock? For services? Your utilities bills? There is insufficient money going through to operate a business. If you continue to operate your business in this fashion, you will become technically bankrupt."

Mr Zimmerman said a lack of force majeure clauses that include pandemics meant business owners are still legally responsible for covering lease payments and, while the industry supports the federal government's work around wage support, it awaits further guidance on rents.

The private sector has stepped in to support with rents, with Australian banks now extending the six-month deferral of loans to businesses with up to $10 million in debt, including commercial landlords, on the condition tenants affected by the pandemic are not evicted for failing to pay rent.

However, others in the industry, including Brand Collective chief executive Martin Matthews, are calling for mandated rent-free periods or rent subsidies for business owners until the major disruption ends.

Brand Collective revealed it would temporarily stand down the majority of its workforce from next week as the business told its landlord it could no longer afford to pay rent.

"There is a high degree of uncertainty about our legal obligations during this period and we are hoping to work constructively with landlords to manage this – shopping centres can’t survive if retailers don’t survive," Mr Matthews said. "Clear government guidance on how landlords should approach rent holidays during this period is required."

The kitchen and laundry appliances chain best known for its Appliances Online blimp that flies over Sydney also announced this weekend it would shutter a string of stores in an effort to adhere to occupational health and safety standards and assist in curbing the spread of the coronavirus.

Winning Group, the parent company of Appliances Online, will close 22 bricks-and-mortar facilities starting Monday but said it would continue its online operations and committed to retaining its staff with full salaries.

Chief executive John Winning said it was a "proactive" step to close the stores "in a commitment to the safety and health of our team and our customers".

These closures come as troubled department store Myer joined swathes of other Australian shopkeepers that have temporarily halted trading. The 120-year-old company said it would shut 60 stores from Sunday for at least a month.

While there had been speculation Myer might open "dark stores" – using store fronts to operate click and collect-like operations – for now, the retail giant is pushing customers to shop online.

Australia’s Bunnings stores have introduced new buying restrictions as panic buyers clear the shelves of essential items.

Speaking to Today, managing director Michael Schneider said the new measures were designed to ensure nobody missed out on high-demand products.

“As the uncertainty continues we want to make sure we can reassure customers that if you come to Bunnings you can get the products you are looking for,” Mr Schneider said. “And you can get the things done at home you need to.”

Under the new, temporary restrictions, which came into effect today, shoppers will be restricted to a maximum of four items per person for cleaning and storage products, gardens sprayers and batteries.

There will be a maximum of one item per customer for generators, gas bottles, respirators or face masks, fuel cans, methylated spirits and turpentine.

In a release, Mr Schneider stressed most Bunnings products were still available for customers as usual.

“We’re seeing increased demand for some products and we want to be as fair as possible for customers,” he said.

“We are working closely with suppliers to get stock into stores to meet customer demand and our suppliers have been a huge support in making this happen.

“Our store teams are doing an incredible job looking after our customers and working to get stock onto the shelves as it comes in and I’d like to thank them for all their efforts.”

He also apologised for the inconvenience caused by the limits as well as for temporary stock shortages and thanks customers for their patience.

The chain has already ditched its iconic weekend sausage sizzle and cake stall fundraisers due to the deadly pandemic.

The news comes after Bunnings’ parent company Wesfarmers revealed all 53 New Zealand Bunnings stores would now be open to trade customers only and closed to the general public for four weeks following the government’s new restrictions on “non-essential services”.

And yesterday, a Melbourne Bunnings employee broke down in tears on air during a call to GOLD104.3’s Breakfast Show host Christian O’Connell while describing the “rude” and “disrespectful” actions of some customers since the outbreak took hold.

“I work at Bunnings and the amount of disrespectful, impatient people coming through is disgusting. We are run off our feet, we are trying our best – understand that everyone, and for those that are giving us respect and are being patient we can’t thank you enough,” he said before being overcome with emotion.

“It’s a struggle … we are trying, we are definitely trying 100 per cent … trying not to have a breakdown is impossible. Woolworths, Coles any retail worker, we are doing our best.”

Premier Retail CEO Mark McInnes has voluntarily decided to work from home without pay until April 22.

His entire Just Group executive team, who manage brands such as Just Jeans and Portmans, have been stood down and agreed to work from home when required with either no pay or reduced leave entitlements.

Similarly, Premier non-executive directors have voluntarily decided to not receive any remuneration during this period.

The moves come as parent company Premier Retail prepares a total shut down stores, affecting 9000 employees.

Premier will temporarily close all retail stores in Australia from 6 pm (local time) today, 26 March 2020, until 9 am (local time) Wednesday 22 April 2020.

This follows similar decisions the business has been forced to take in New Zealand, the United Kingdom, and Republic of Ireland.

This means all employees in Australia are to be stood down, except for a small number of employees required to perform limited essential work.

"This means our team members will not attend work and will not be paid," the company said in a statement. 

"We have put in place special arrangements for employees to access accrued annual and long service leave entitlements to reduce the impact over this time."

Globally these closures will impact over 9,000 employees.

In Australia and New Zealand close to 70% of stores are already in holdover or with leases expiring in 2020 providing the Group with maximum flexibility.

These extraordinary circumstances mean Premier intends not to pay any rent globally for the duration of the shutdown.

Premier will provide further updates when new information becomes available but no later than April 21.

Spell & The Gypsy Collective has launched an online series of health and wellbeing Instagram Live videos in the wake of COVID-19. 

While the business decided to close its Byron Bay boutique on March 24 until April 6, the label launched At Home With Spell to maintain and cultivate a connection with its consumers. 

The series includes daily Live videos that cover subject matters ranging from sound meditation to styling sessions presented by Instagram personalities including Ruby Tuesday Matthews, Karissa Sparke and Amelia Edmondson. 

Announcing the program on Instagram, Spell co-founder Lizzy Abegg said that the buisiness wanted to do something that felt valuable to its community. 

"Over the years, we’ve always felt uplifted and supported by our online community and we know you’ve always been there for us. 

"We’ve come together in celebration of one another, in love of similar things, through the good times and the bad (Blue Skies recall anyone?!), through fires and floods, and coming together to support Australia in her time of need.

"During these times of uncertainty we wanted to do something that feels valuable to our community, we wanted to inspire beautifully, bring lightness in a time of darkness.

"We thought we’d reach out to some of our friends to help us find little moments of joy and play while doing the right thing and staying home to flatten the curve!

"We bring you At Home With Spell, a live series with wellness, movement, insight, creativity and styling to keep us connected during the lockdown," she said. 

The At Home With Spell program began on March 24.