News

Key points:

• Stationery retailer Kikki.K has gone into voluntary administration, putting up to 450 jobs at risk.
• Co-founder and CEO Paul Lacy said a recent potential partnership with a “big global business” fell through.
• The announcement follows the collapse of a number of other retailers, including Bardot, Jeanswest and Colette by Colette Hayman.
• Visit Business Insider Australia’s homepage for more stories

Stationery retailer Kikki.K is the latest casualty of Australia’s retail bloodbath, with the Melbourne-based global chain announcing its collapse into administration today – putting up to 450 jobs at risk.

In a statement, founder Kristina Karlsson announced the company would enter voluntary administration.

“It is with profound regret and sadness that we take this action,” she said. “This business began with a young girl’s dream 20 years ago and became an international success story with customers in over 150 countries.”

Co-founder and CEO Paul Lacy said all efforts had been made to save the business, including a potential partnership with a “big global business” which fell through. “We ran out of time and no choice but to place the company into external administration,” he said in a statement.

The administration is to be handled by Jim Downey of J.P. Downey & Co. The company has also been placed into receivership under receivers at Cor Cordis, who will operate the business while “its future is determined”.

The collapse of Kikki.K follows a number of other retailers who have been unable to maintain their fortunes during an extended rough period for the sector in Australia. In recent months, companies including Bardot, Jeanswest and Colette by Colette Hayman have all faced the administrator’s blade in pursuit of continuing viability.

The company has retail locations across Australia, New Zealand, Singapore, Hong Kong and the UK, and sells online to 140 countries worldwide.

Former CEO of David Jones Paul Zahra will succeed Russell Zimmerman as chief executive of retail’s peak industry body, the Australian Retailers Association, in May.

Zahra said he was optimistic about the future of retail and looking forward to supporting and advocating for the ARA’s members.

“In the last twenty years, the disruption and transformation of the sector has been significant as a result of ongoing changes in technology and consumer behaviour,” he said in a statement announcing his appointment on Thursday.

“However, what excites me is the untold story of innovation, whether in store formats, in online marketplaces, or the many small businesses that started life in someone’s living room.”

Creating “one voice” for all retailers

The ARA council said Zahra has the leadership skills and retail expertise to transform the ARA into “one voice” for small, medium and large retailers, after a long-planned merger with the National Retail Association (NRA) fell through last year.

“Paul brings a deep understanding of retail and the issues and opportunities faced by the industry and our members,” said ARA president Rowan Hodge.

“His inclusive and progressive leadership style, retail and digital expertise, broad networks, experience leading transformation, and strong vision for the ARA and the future of retail will be invaluable as the organisation moves forward.”

Hodge also thanked Zimmerman for his commitment to the ARA and its members for the past decade.

Zimmerman announced his retirement plans last November, saying he was making way for a new leader who had “the energy, youth and wherewithal” to take the ARA into its next phase.

From Sunshine to CEO

Zahra has worked in retail from the age of 16, when he was hired as a causal shop assistant at Target Sunshine, before being promoted to become the chain’s youngest ever store manager at the age of 22.

He went on to hold senior leadership roles at Target, Officeworks and David Jones, where he rose through the ranks to became CEO.

Zahra is a long-time champion of diversity and inclusion in the workplace and previously served as the chair of PwC’s diversity and inclusion advisory board.

Recently, he has been advising companies and boards of startups, small businesses and private equity on a range of issues, including leadership, disruptive change, digital transformation and diversity and inclusion.

LVMH announced today that it is converting three of its perfume manufacturing facilities where it normally makes fragrances for its Christian Dior, Givenchy and Guerlain brands to make hand sanitizer instead. The first deliveries will be tomorrow and by the end of the first week, LVMH expects to have made 12 tons of the hydroalcoholic gel. The product will be given at no charge to French authorities and the largest hospital system in Europe.

LVMH is accomplishing several things with this move. It is, of course, responding to a shortage of hand sanitizer. But more than that, it is positioning itself to its consumers and its employees as doing what’s in the public interest. It is also justifying having its factories remain open and keeping its employees coming to work. All of those things make the company more purposeful and less commercial.

What’s so interesting about LVMH’s move is how quickly they are doing it and their understanding of what luxury means right now. Luxury used to be providing the highest quality products—now it means that and more. A true luxury business has to fill consumers’ needs at the highest level and by converting to hand sanitizer manufacturing, LVMH is doing just that. This moment is unique; at any other time, hand sanitizer for a luxury company would make no sense. But in this moment, perhaps even only this week or month, it’s appropriate and commendable to make what would normally be the most un-luxurious product and LVMH gets that. It is a great example of why they continue to be a leader in luxury.

It’s also interesting that LVMH did not present its switchover as producing its own branded hand sanitizer. There’s no indication that the hand sanitizer it is producing will be for one of its brands; it appears to be no-named. It’s counter to the idea that everything produced at the company is a luxurious product for high-end consumers. It’s highly flexible thinking that allows management to act in this way.

We are in a time where shutdowns will reduce profits all over the world. That is taking time for people to adjust to because it is happening so rapidly. What’s needed in this moment is for brands to look beyond the profits they are losing and ask what else they can do to preserve their position during this very difficult time for everyone. That’s what LVMH is doing.

Myer has joined the list of retailers hit hard by the one-two punch of bushfires and coronavirus in the first half of FY20, posting a 26.9 per cent drop in statutory net profit after tax to $24.4 million.

The department store business saw total sales fall 3.8 per cent to $1.6 billion, though comparable sales rose 0.4 per cent excluding the impact of the exits of Apple and Country Road Group. Taking these exits into account comparable sales fell 3.6 per cent. 

Myer chief executive John King said the results were solid considering the macro headwinds hitting the industry at the moment, and shows the customer first plan is the right plan to transform the business moving forward. 

“Management has demonstrated discipline in a tough trading environment and while I am encouraged by the progress I am in no doubt that we still have considerable work to do,” King said.

Myer chief financial officer Nigel Chadwick added that though the first half trades at a positive cash position thanks to events such as Christmas, Black Friday and Boxing Day, the second half of a financial year is typically trades at a net negative.

And while the first half was impacted by bushfires and virus fears, it’s expected the second half could be worse hit.

“The challenging macro environment will continue in the second half, and the ongoing impact of the Coronavirus on store traffic remains uncertain,” King said. 

“The supply chain impact of Coronavirus is currently being managed by our teams in Hong Kong and Shanghai. The teams are focussed on mitigating the impact of delays to the planned delivery of merchandise.”

By the end of the week Myer expects its factories to be back up and running normally, after having been operating at 85 per cent capacity as of last week. 

Additionally, the business faces a four to six week delay in May due to the difficulty in sourcing goods, with King expecting goods shipped to stores to fall to around 40 per cent of normal levels through March.

“It’s a great opportunity to destock and focus on what stock we actually need,” King said. 

According to King footfall had been subdued in CBD and tourism-driven stores over the last few weeks, with the general decline in spending exasperated by a panic around the COVID-19 virus. 

Despite the headwinds largely hitting the business’ shrinking physical stores Myer’s online business grew 25.2 per cent during the period, now representing 10.5 per cent of total sales. 

King stressed that online had become Myer’s ‘biggest store’, and that despite the fact that only half of Myer’s range and half of it’s concessions were represented on the site, online profit was growing faster than online revenue.

In order to further grow this segment Myer will be merging its Myer Marketplace offering into the main website.

The growth in online sales volume wasn’t all good news for the business, however, with the diversity seen in basket types leading expected cost savings in shipping goods to fail to materialise. 

Outdoor clothing and equipment retailer Kathmandu has opened its first solar-powered store in Blackburn, Victoria, and is investigating the possibility of shifting more stores in its network to solar in order to reduce its environmental footprint.

“While it won’t be possible for solar power to be rolled out across the entire store network because many stores are located in large shopping centres not suited to individual solar systems, we intend to assess which of our stores could be adapted for solar power in the future,” Dean Smith, project manager for store development at Kathmandu, said.

The Blackburn store was selected because it is a large standalone store, making it well suited to the installation of a solar power system.

The system includes a solar-battery generator that will provide 100 per cent of the site’s energy need at 92,000 kilowatt-hours, offsetting over 124 tonnes of carbon dioxide emissions.

It also provides full battery backup power in the event of grid failure or overcast days, allowing the store to remain operational.

Kathmandu did not disclose the cost of the system, which has a five-year payback plan, but said it will eventually lead to substantial cost savings and even allow power to put back into the system.

“Kathmandu has been using sustainable practices for over 30 years and they are integral to our operations. Being able to improve our environmental footprint is one of our key pillars,” Smith said.

The move is just one of a range of initiatives the retailer has introduced to help it achieve its target of net zero environmental harm from business operations by 2025.

The two biggest components of this goal are becoming carbon neutral and having zero waste to landfill, according to Kathmandu’s 2019 sustainability report.

Smith said the shift to solar power in stores would “definitely contribute towards a zero carbon emissions goal”.

The system is installed but cannot be connected to the grid until a PVDB protection board is installed. This final piece of the puzzle requires parts from China, which are estimated to arrive later this month.

The most difficult part of the installation was learning about the new technology and dealing with wet weather, which led to a four-day delay, according to Smith.

A live feed of the store’s solar activities will be displayed on a monitor within the store, allowing customers to view the power generation versus usage.

There is increased concern about the virus's impact is spreading across Europe as companies warn employees against travelling to northern Italy, the country most-affected by coronavirus outside of Asia.  AP

Oxford Economics reckons an international health crisis could be enough to wipe more than $US1 trillion ($1.5 trillion) from global gross domestic product. That would be the economic price tag for a spike in workplace absenteeism, lower productivity, sliding travel, disrupted supply chains and reduced trade and investment.

Investors are already nervous, with US stock benchmarks slumping this week. The DJIA fell 3.2 per cent on Tuesday, and is now down 8.4 per cent in the past two weeks, while the S&P 500 shed 3 per cent in Tuesday trading, and is now down the most in two years.

For now, central bankers and governments are betting the coronavirus will not damage the world economy by much, and perhaps allow it to enjoy a rapid rebound once the illness fades. But that confidence is being tested.

After early gains, Wall Street plunged on Tuesday after a coronavirus warning unnerved markets. AP

Still, the protracted shutdown of Chinese factories that were supposed to be back online and the spread of the virus to South Korea, Iran and Italy's northern industrial heartland raise the specter of much greater death and disruption. The virus risks tipping Italy into a recession that could hurt the rest of Europe too.

South Korea's economy is being buffered, with consumer confidence plunging the most in five years.

UBS chairman Axel Weber is already far more pessimistic than the IMF and has warned global growth will experience a massive drop from 3.5 per cent to 0.5 per cent and China's economy will shrink in the first quarter for the first time since at least 1990, Bloomberg data shows.

“There is going to be quite a bit of impact that is going to go beyond the first quarter and that is where fiscal response, providing businesses with some tax relievers, some emergency funding, that is going to be very important for putting businesses through,” Weber said.

"The much larger downside risk is that this continues to be a problem," the former Bundesbank president said in Riyadh, where Group of 20 finance chiefs hinted at collective worries at the dangers of the virus.

How to assess the risk is complicated by doubt over how far the coronavirus will travel.

In an analysis that predates the current outbreak, the World Bank reckons a destructive pandemic could result in millions of deaths, and points to how even conservative estimates suggest such an experience might destroy as much as 1 per cent of global GDP.

A disastrous health crisis akin to the 1918 Spanish flu, which may have killed as many as 50 million people, could cost 5 per cent of global GDP, the Washington-based lender said in a 2015 report.

A March 2016 paper co-authored by former US Treasury secretary Lawrence Summers likened the annual financial impact of a pandemic flu to the long-term yearly cost of global warming. It calculated that if pandemic deaths were to exceed 700,000 per year, the combined cost to the world economy of premature lives lost and illness, along with lost income, would total 0.7 per cent of global income.

Oxford Economics's tally of the impact from a global pandemic stemming from the current outbreak suggests a cost of $US1.1 trillion to global GDP, with both the US and euro-zone economies suffering recessions in the first half of 2020. It describes such a scenario as a "short but very sharp shock on the world economy."

Aside from containment of the disease, one mitigating factor - and a major unknown for economists modeling the outcome - will be the actions of central banks and governments to cushion the effects.

"When we entered the year we certainly didn't think that central banks would be as eager to cut interest rates and to become even more supportive," said Credit Suisse Group's Nannette Hechler-Fayd'Herbe.

"Now, the answer is going to be quite dependent on how the coronavirus spreading is going to continue."

Yet for Drew Matus, chief market strategist at MetLife Investment Management, monetary policy alone would probably be insufficient.

"My guess would be you actually can't solve it with interest rates," he said. "People are worried about their families, worried about their health - 25 basis points doesn't do it, in terms of encouraging people to go out there and spend."

Bloomberg

NEW YORK, United States- Cosmetics maker Coty Inc has tapped Jimmy Choo Group boss Pierre Denis as its new chief executive, succeeding Pierre Laubies.

Denis, who has been on Coty's board since September 2019, will take the helm by summer this year upon the conclusion of a strategic review, the CoverGirl cosmetics maker said on Friday.

"He (Denis) brings 30 years of luxury, beauty and brand experience, having previously served in a variety of leadership roles with LVMH, notably with John Galliano, as well as with Christian Dior," Coty said.

Denis has since July 2012 served as the chief executive of Jimmy Choo, now part of US luxury fashion group Capri Holdings Ltd, which also owns Versace and Michael Kors.

Laubies, who joined Coty in November 2018, spearheaded the company's $600 million investment in reality star Kylie Jenner's beauty brands last year.

The company said Pierre-André Térisseas would assume the role of chief operating officer in addition to his current role as finance chief.

The cosmetics maker's board also elected Isabelle Parize and Justine Tan as non-executive directors.

Sales have rebounded at Super Retail Group's Supercheap Auto, Rebel and Macpac stores after disruption from the bushfires, but the retailer faces another potential threat this year from the coronavirus.

The auto accessories, sporting goods and outdoor retailer imports large amounts of stock from China and its Rebel and Macpac brands currently source from two factories in Wuhan, the epicentre of the virus.

Chief executive Anthony Heraghty does not expect the coronavirus to have a material impact on stock availability or consumer sentiment in the short term. However, if the virus stops workers returning to factories for several months supplies could be disrupted.

Despite the coronavirus uncertainty, Mr Heraghty is optimistic about the June half after a bounce in same-store sales at his two biggest brands, Supercheap Auto and Rebel, in January and February.

"Overall it's been a positive start to the second half," Mr Heraghty told investors on Thursday.

Supercheap Auto's same-store sales rose 3.1 per cent in the first seven weeks of the June half, up from 2 per cent in November and December, and Rebel same-store sales jumped 5.8 per cent, up from 3.4 per cent.

At Macpac, same-store sales were down only 0.4 per cent in January/February after plunging 13 per cent during the bushfires in November and December.

A case of no new surprises is probably good news in the market we're in.

— Grant Saligari, Credit Suisse analyst

However, trading remained weak at BCF, with same-store sales falling 8 per cent in January/February after sharp falls in November/December. Unless business picks up at Easter, the chain is likely to only break even in the June half.

'Credible' result in challenging times

The trading update followed a mixed December-half result, with underlying earnings before interest and tax falling 7 per cent to $115.4 million as rising costs offset higher sales. The result was in line with SRG's guidance in January, when the retailer warned EBIT would fall to between $113 million and $115 million because of the bushfires.

"I'd describe this result as credible, specially given it was a challenging half," Mr Heraghty said.

Net profit fell 20 per cent to $57.4 million after the retailer outlaid another $12.6 million to repay staff underpaid over the past eight years.

SRG first revealed in 2018 that it had underpaid about 4500 staff who were employed in setting up and refurbishing stores. More underpayments were discovered last February, taking the bill to $53 million and forcing former CEO Peter Birtles to take early retirement.

Additional underpayments were identified this year, taking total repayments to more than $61 million.

Sales rose 2.9 per cent to $1.44 billion, with same-store sales up 1.7 per cent and online sales up 22 per cent. But margins fell from 8.9 per cent to 8.0 per cent, due to higher store wage costs under a new enterprise agreement, new stores and heavy investment in online retailing.

SRG is aiming to deliver a seamless experience when customers shop online or in-store and strengthen loyalty by rewarding customers who shop more often.

Despite the fall in earnings, SRG maintained its interim dividend at 21.5¢ a share, payable April 12.

SRG shares rose 3 per cent to $9.40. The stock has fallen 10 per cent since the profit warning last month but is 20 per cent higher than its level a year ago.

"A case of no new surprises is probably good news in the market we're in," said Credit Suisse analyst Grant Saligari.

"I think [SRG] is implementing some quite good digital strategies and has got some well-positioned businesses that are achieving good top-line growth – what we saw in this result was a step up in costs partly associated with that sales growth," he said.

"We'd look for the company to be able to leverage that and generate better profit growth in fiscal 2021 and 2022."

Following an industrious year of brand partnerships, P.E Nation has landed the ultimate deal.

It has been announced as the latest global designer collaboration at H&M, the first Australian brand to join the start-studded alumni. 

Previous collaborations have included Alexander Wang, Lanvin, Balmain, Marni, Versace and Jimmy Choo. 

The P.E Nation x H&M collection will feature apparel, swimwear, undergarments and accessories, designed in collaboration with the H&M in-house team.

It will be available in stores worldwide as well as on hm.com from March 5.   

Staple items include leggings, bicycle shorts, skirts, t-shirts, swimwear, sports socks and bum bags. 

In line with the brand’s growing sustainability push, the range also features organic cotton and recycled polyester. 

Large logos and tie-dye are set against contrast elastic waistbands, straps, colour-blocking and zip details. Colours range from black, white, grey marl, sand, mint green, neon pink and pops of bright orange. 

In a joint statement, co-founders Pip Edwards and Claire Tregoning said the range is aimed at modern women.

“With the H&M collaboration, we want women all over the world to live a more confident, vibrant, fashionable life whilst juggling her fast-paced urban existence.

“The collection can be worn all day, every day, whilst being flexible, functional and style-led. All the pieces work so well together – it’s very easy to mix and match.”  

H&M head of design Maria Östblom praised the brand.

 “It’s been a lot of fun collaborating with P.E Nation – the teamwork and energy between them and our designers was great!

“Pip and Claire know first-hand about the need for activewear in all aspects of daily life as female entrepreneurs and cofounders of such a dynamic lifestyle brand. They are fantastic role models and super inspiring themselves. 

“For the collaboration, pieces such as colour-blocked leggings, tie-dye t-shirts and the pleated skirt really emphasise the super stylish and striking performance wear distinctive to P.E Nation. We’re all pleased that there are more sustainable materials included in the collection, too.”

Accent Group has delivered another record result - this time for the first half of the fiscal year. 

The footwear group has reported net profit after tax of $35.3 million, a 9.7% increase on the previous year.

The business' EBITDA grew by 10.5% to $67.7 million while group sales in company owned stores increased 14.1% to $444.2 million. 

Like-for-like retail sales for the first seven weeks of the second half are already up 3%.

Accent Group CEO Daniel Agostinelli said it would continue to avoid industry-wide discounting.

“The management team remain focused on continued innovation, execution of the growth plan, and trading the business to respond to market conditions."

"Sustainable underlying margin improvement remains a key focus, including avoiding lazy, discount-driven retailing, increasing vertical brand and product mix and driving operating efficiencies.

"Accent Group continues to be defined by strong cash conversion, and the consistent strong returns it delivers on shareholders’ funds."

Profit in the second half is expected to be achieved through revenue growth, driven by low single digit LFL growth and at least 70 new stores.

Accent attributed its first half results to strong eCommerce and store sales, profit growth in The Athletes Foot, underlying gross margin improvement and a focus on cost of doing business.

Agostinelli said although the headline gross margin was below the prior year, it had fared well given conditions.

This included foreign exchange headwinds and more significantly, the highly competitive market environment driven by the Cyber events in November.

The gross margin impact to EBIT margin was largely offset by improvements in cost of doing business.

Accent Group CEO Daniel Agostinelli said that the business is pleased with the results given the challenging conditions.

"We are pleased to have delivered strong sales and earnings growth in a challenging environment.

"The strength of the Group’s digitally integrated business model, along with the ongoing focus and investment on innovation in digital and store formats, continues to drive growth.

"I would also like to acknowledge the hardship and community impact caused by the bushfires over the last several months and to thank our team and our customers in affected communities for their efforts and resilience through this difficult time," he said. 

In the half Accent Group opened 51 new stores across Australia and New Zealand, with 26 of these opened in November and December. 

The business also closed eight stores upon lease expiry because an agreement with landlords for forward sustainable rents could not be reached. 

In 2020 Accent expects to open more than 70 new stores. 

In terms of strong performers in the retail portfolio, Accent reports that Skechers, Vans, Dr Martens, Platypus, Cat and Subtype were standouts. 

The Hype brand remains a continued focus for the Group, with Accent undertaking significant refurbishing work and improving product and brand differentiation in this business.  

Accent will continue to invest in The Athlete's Foot brand, with a further 17 stores added during the half to bring the store network to 66 stores. 

The Athlete's Foot sales and margin were ahead of last year on like for like and total stores basis, with particularly strong sales coming in January for back to school. 

Accent Group chairman David Gordon said that the growth in stores helped to deliver strong results. 

"The Group continues to invest in future growth including stores, digital and new incubation businesses in footwear and the high growth athleisure segment through the Stylerunner acquisition.

"The continued strong profit growth, cash position and confidence in the growth strategy have enabled the Board to declare a fully franked interim dividend of 5.25 cents per share," he said. 

Digitally, Accent's sales grew 33% during the half, on top of the 94% growth achieved in H1 FY19. 

This growth is underpinned by Accent's investment in the digital customer experience with a focus on customer communications. 

This investment results in a dual benefit for Accent by giving the customers direct, personalised communications while also reducing the reliance and cost on paid search channels.

In its wholesale business, Accent reports sales up 6.7% to $62.2 million, with strong performances from Skechers, Vans, Merrell and Timberland.

Recently acquired businesses also performed well, with The Trybe, Cremm and Sylerunner all reported to be on track. 

In a statement Accent said that these businesses are all performing well, despite being newly launched in H1.

"As they were all in start-up phase in H1, the EBIT impact of these businesses for the half was a planned combined loss of c$1m.

"The Trybe continues to show positive results with trade through the key Christmas and back to school trading periods in line with plan.

"Cremm soft launched just prior to Christmas and the key focus here for the next quarter is onboarding new brand partners and widening the product portfolio.

"The Subtype business, which we have now owned for 12 months, was ahead of plan and contributed positively to EBIT.

"Planning for the launch of Pivot is well progressed and on track for our first store to open in Shellharbour (NSW) in April 2020."

Beauty retailer Mecca announced it will take over a multi-level space in the 91-year-old Gowings Building in the Sydney CBD to create the biggest beauty store in the southern hemisphere.

The Aussie cosmetic giant will create its new flagship store on the 1200sqm three-level space that Topshop currently occupies in the iconic Gowings building, which they plan to unveil in the second half of 2020.  

The new beauty destination, which Mecca is calling the largest beauty store on this side of the world, is part of its plan to invest in experience, beauty and engagement and stay at the forefront of the beauty industry.

Mecca will dedicate 30 per cent of the new store’s floor space to beauty experiences, edutainment and inspiration, with an Australian-first proposition driven by a program of deeply customisable services, brand immersion, masterclasses, pop-ups and blockbuster new brand and product launches.

“I started Mecca with the desire to make every customer look and feel their best,” said Mecca founder and co-CEO Jo Horgan.

“I’m thrilled to be creating a store that embodies our exciting vision for the future of beauty and restores Gowings to its former glory with an experience-led strategy that puts the joy back into shopping. It will be the ‘beating heart of beauty’ in the Sydney CBD,” Horgan said.

The iconic Gowings Building in the Sydney CBD is a heritage-listed site. Sydneysiders’ fondness for the building and the prominence it has both nationally and internationally were deciding factors in taking on the lease,
according to Mecca.

“Gowings is one of Australia’s busiest pedestrian corners, incorporating the elegant State Theatre, award winning QT Sydney Hotel and highly regarded dining establishments Gowings Bar and Grill and the latest Parlour Cucina,” said Jane Hastings, CEO Event Hospitality and Entertainment.

“Mecca is a perfect fit to complement a corner where hospitality, entertainment and beauty set a world class standard of their own.”

Mecca’s long-time collaborator, Sydney design studio Meacham Nockles, has been appointed as the architect on the project.

The new store will include a curation of over 200 of the world’s most coveted brands, including NARS, Morphe, Drunk Elephant, Tatcha and Diptyque, and will include dedicated skin, hair and body treatment areas and private rooms, a makeup artistry Beauty Lab, Mecca’s largest ever Perfumeria, and a multipurpose level devoted to experiences and events.

Mecca’s fragrance, skin and makeup specialists will be on hand to assist shoppers.

By the time it opens, the new Mecca at Gowings is projected to be the business’s 115th store across Australia and New Zealand.

As Australian retailers start to feel the sting of coronavirus fears, an unlikley fashion hero has emerged.

Dolce & Gabanna.

The designer brand, founded by Domenico Dolce and Stefano Gabbana, is funding a study into therapeutic interventions for the virus.

The research will be coordinated by Professor Alberto Mantovani, scientific director of Humanitas University.

Dolce and Gabbana confirmed they had collaborated with Humanitas University in the past, with scholarships offered to medicine students.

“We felt we had to do something to fight this devastating virus, which started from China but is threatening all mankind," they said in a joint statement.

"In these cases, it is important to make the right choice.

"This is why we thought Humanitas University would be the ideal partner, whose excellence and humanity make it a special entity, with which we have already cooperated on a scholarship project.

“In the face of these tragedies of such a vast scale, each action may seem insignificant.

"But Prof. Mantovani told us the African fable about a hummingbird: while all the other animals were fleeing from a fire in the forest, it flew in the opposite direction, continuing to bring water in the attempt to put out the fire.

"We understood that in any case it was worth doing something.

"Even a very small gesture can have enormous significance. Supporting scientific research is a moral duty for us, we hope our contribution will help to solve this dramatic problem."

The novel coronavirus has infected more than 71,000 people around the world, mostly in mainland China. The death toll is 1,775.

Technical issues with a new e-commerce site Baby Bunting launched last year, which impacted sales and forced the retailer to roll back to its old website in November, dominated a call with investors about the company’s first-half results on Friday.

Chief executive Matt Spencer said the retailer was working closely with the vendor to resolve a problem with the way promotions appeared on the checkout page, but could not say when the new site would be back up and running.

The relaunch is further complicated by the fact that there are only a few times throughout the year when retailers like to execute such projects, so they cause minimal disruption to online shoppers. Baby Bunting won’t make the first window, which is in March. The next window is in July, a full year after Baby Bunting originally launched the new website.

Spencer did not mince his words when talking about the debacle.

“The launch of the new website has been disappointing. It’s been a distraction to the business, and it has impacted sales performance,” he said on the call on Friday.

The website problems also created an influx in customer support requests, which led to an additional cost of several hundred thousand dollars in the customer care centre in the first half, according to Spencer.

After rolling back to the old website in November, Baby Bunting’s online sales growth recovered, from 7 per cent year on year in the four weeks prior to the rollback, to 21 per cent year on in the four weeks after the rollback, which included Black Friday.

Visits to the website were up 13 per cent in the half, compared to the previous corresponding period, and online, which includes click and collect, accounted for 11.7 per cent of total sales, up 10.5 per cent on the previous corresponding period.

The technical issues struck a sour note in an otherwise positive first half, in which Baby Bunting lifted total sales, opened new stores and eked out an increase in comparable store sales, despite the addition of several new stores, which cannibalised sales in some existing stores, and the challenges presented by the bushfires and weaker December trading period.

“Our results for the first half reflect continuing profitability, growth and significant progress on a number of our operational objectives for the year,” Spencer said in a statement to the ASX.

Bunnings’s proposed acquisition of Adelaide Tools could lead to a lack of competition in the hardware market, a preliminary statement of issues released by the Australian Competition and Consumer Commission has warned.

The statement said that while Bunnings is a major player nationwide Adelaide Tools is one of only two tool specialists with a physical presence in Adelaide, and competes on price, innovation, range, and quality of service.

Therefore the proposed acquisition would likely stifle any local competition. 

“Bunnings has a very powerful position in hardware, building supplies and home improvement. Since the exit of Woolworths’ Master from the industry, Bunnings has grown rapidly and has become by far the leading player,” ACCC chairman Rod Sims said. 

“The ACCC considers that tools specialists, such as Adelaide Tools, are Bunnings’ closest and strongest competitors for the supply of trade and outdoor power equipment.”

With Bunnings already being the biggest player in the market nationwide, however, it’s unlikely the acquisition would increase its wholesale buying power.

Earlier this month the competition watchdog said it needed more time to consider the impact of the potential merger, and that the findings released on the 14th could be a statement of issues or a final decision. 

The ACCC clarified it will hand down its final decision on April 23.

Bunnings managing director Mike Schneider said the business has been providing the ACCC with timely and comprehensive responses to inquiries, and is disappointed with the delay.

“We strongly believe that this acquisition does not substantially lessen competition as there is limited competitive overlap between Adelaide Tools’ specialist power tool and heavy duty machinery offering and the Bunnings’ Warehouse customer proposition,” Schneider said.

“It is also our strong belief that this merger will enhance value for customers and create stronger competition in the South Australian market.”

Retailing veteran and Premier Investments founder Solomon Lew has enjoyed a multimillion-dollar windfall from the success of appliance manufacturer and distributor Breville following the company's better-than-expected half-year result on Thursday.

Breville shares soared to close up 27.6 per cent at $25.50 after it reported a surge in first-half revenue and sales and noted it had fended off the impact of the coronavirus outbreak.

Mr Lew personally holds about 5 per cent of Breville, and Premier Investments holds a 27.4 per cent stake. Combined, the stake is now worth over $1 billion following Breville's share price rally.

This marks a single-day increase of $233 million for Premier and Mr Lew's Breville holdings and a massive 1600 per cent increase in value on the investor's estimated entry price of $1.50 a share.

Breville told investors on Thursday revenue had grown 25.4 per cent to $552 million, beating consensus estimates by $40 million. Net profit after tax also grew, up 14 per cent to $49.6 million, slightly offset by a 1.2 per cent drop in margins due to the weak Australian dollar.

The company was also bullish on the coronavirus outbreak, flagging an end to manufacturing delays in China, with factories in the country starting to come back online following an extended closure.

While this would still see a slow ramp-up to normal production levels, Breville said its inventory levels for the first months of the new year were high enough to deal with such a slowdown, largely due to the company already holding excess stock as a hedge against Brexit and the New Year holiday.

Breville does the majority of its trade in North America, but following the US-China trade war, the company began to focus expansion on other markets such as the UK and Europe.

Chief executive Jim Clayton said the first half was a solid result for the group, but added he remained "mindful" of the global political and economic environment.

"We had good growth across all regions and categories and continued to deliver double-digit EBIT growth. Successful European expansion continued, diversifying our global footprint and adding growth and resilience to the portfolio," he said.

The company said its earnings before interest and tax for the full year would sit around $110 million, a 13 per cent increase on 2019. It also boosted its dividend 10.8 per cent to 20.5 cents per share, payable on March 18.

Breville has been a quiet achiever in Australia's retail landscape in recent times, consistently posting strong results and continuing to launch new products, including the 'Bluicer', a combination juicer-blender.

Its share price has swelled by more than 144 per cent since the start of 2019, and five years ago its shares were trading at around $7.

It's one of Premier's better investments, with the company's 10.8 per cent stake in department store Myer dropping in value by over 60 per cent since its purchase in 2017. Premier shares closed up 2.40 per cent to $20.93 today in early trade.

Outdoors apparel retailer Kathmandu has booked a strong first-half contribution from its recently acquired Rip Curl surfing business as bushfires and unusually hot weather led to a weak Christmas period for the company.

In a trading update on Friday, the ASX-listed company told investors its underlying half-year earnings before interest and tax (EBIT) for the 26 weeks to January 31 had risen 40 per cent on the same half last year, largely fuelled by its $350 million acquisition of Rip Curl.

This will take the company's underlying EBIT, which excludes one-off acquisition charges, to around $NZ27.7 million ($26.5 million), just shy of analyst expectations of $NZ29 million.

Same-store sales for the company's Kathmandu stores grew 1.5 per cent, a marked improvement on the flat growth recorded in the first half of the 2019 financial year. Its performance was helped by a 30 per cent uptick in online sales for the period.

Rip Curl, which the company acquired in October, improved its total sales by 2.7 per cent for its first three months under new ownership, and same-store direct-to-consumer sales grew 2.6 per cent.

The company's 118 Australian and New Zealand stores, which account for around one-quarter of Rip Curl's total revenue, booked a sales jump of 8.3 per cent over the hot summer.

Hiking boots brand Oboz also performed strongly for the half, with sales up 10 per cent.

Kathmandu shares soared following the result, closing up 17.6 per cent at $3.54

Kathmandu chief executive officer Xavier Simonet said the company had seen a shift in spend away from the Christmas period towards the Black Friday sales, which contributed to lower than usual December foot traffic.

"The Christmas trading period has seen a further shift towards Black Friday and Boxing Day events. Low December market foot traffic between these two events, unusually hot weather, and bushfires in Australia, have combined to moderate first-half sales," he said.

"We have responded to these challenging Australian conditions by focusing on operational execution, and we are pleased to have achieved same-store sales growth for the first half."

Mr Simonet said the company was monitoring the coronavirus outbreak, noting Kathmandu sourced its products from a diverse range of suppliers and that it takes longer to turnover. Consumer confidence has so far not been affected by the virus, he said.

"[Kathmandu] has mitigation plans in place if there is a prolonged disruption to our Chinese suppliers," he said.

Kathmandu investors and analysts gathered on Friday for an investor briefing in the surf town of Torquay in Victoria, where they were presented with a pitch outlining the long-term synergies and benefits of the acquisition.

Part of this pitch involved a focus on Rip Curl's technical product sales, which account for 40 per cent of revenue and focuses on products such as wetsuits, boards, and high-tech watches.

Despite the sales uptick, Morgan Stanley analysts remained concerned about the business' inherent seasonality, saying if Rip Curl's sales are overly skewed towards the hotter first half of the financial year, Kathmandu could be left picking up the slack.

This was a "key issue" for analysts, who remained underweight on the stock and said it would need 12 per cent growth in second-half EBIT to meet expectations.

Booktopia founder Tony Nash is bullish on investment despite weak conditions in the retail sector after closing an equity deal that will pour $20 million of new capital into the business.

Bringing an end to a long search for funds, Nash on Thursday announced a consortium of private investors have tipped in to the online bookseller, led by Champ Ventures co-founder Su-Ming Wong and JBS Investment founder John Sampson.

It comes less than a week after Booktopia bought collapsed Co-op Bookshop out of the retail bargain bin, although Nash said these events are unrelated.

The money will be used to chase Big W’s spot as Australia’s largest book retailer, which Nash is confident the business will accomplish before year’s end as the Woolworths-owned department store closes sites across the country.

“In the past, we’ve had to sell the books to create the money to invest. Now we don’t have to do that,” Nash told SmartCompany.

“We can execute on all our plans.” 

Booktopia plans to double its inbound and outbound capacity from 30,000 individual books per day to 60,000, and will also invest in expanding the capacity of its 13,000sqm Sydney warehouse to keep up with growing demand for popular titles.

Nash said he’s not worried about investing at a time of downturn for Australia’s retail industry.

“My recommendation is everyone start investing,” Nash said.

“If you invest now when things are tougher then you are in a strong position to catch the prevailing headwind.

“Then when things pick up, you’re miles ahead of the competition.”

While Nash did not disclose how much of the company he signed away, the entrepreneur did confirm founding shareholders will retain a majority stake in the business.

Booktopia booked $131 million in revenue for the financial year 2019, and Nash said the business was expected to grow to $175 million in the 2020 calendar year.

In an interesting coincidence, the announcement comes as Booktopia celebrates its 16th birthday.

Under the deal, which also included a portion of long-term debt, Wong will join Booktopia’s board, which is additional advice Nash welcomes.

“You can get dumb money, and you can get smart money,” Nash said.

“By getting someone smart to invest, you can sit down and talk strategy. We’ve got people inside the tent rather than consultants.

“We’ve always wanted to have someone who can add value around the boardroom table.”

Nash’s journey trying to raise capital for the Booktopia business has been long and tumultuous. In late-2018, the founder embarked on an ambitious $10 million equity crowdfunding strategy, but finished well short of his target after some scrutiny from corporate regulator ASIC.

By combining a shaggy rug offcut and a wire storage basket, Samantha Slater has fashioned herself a brand new ottoman.

Promptly, her 64,000 Instagram followers sound off in the comments. "So clever! I have to try this at home," writes one.

"Love this one, the easy hacks are always my favourite," enthuses another devoted fan.

Surprisingly, the two aren't talking about infiltrating computer systems. Instead, this is the world of Kmart hacks, where shoppers from across the country – largely mums and Millennials – share their creative stylings and DIY takes on products from the discount department store.

In the past five years, hundreds of similar Facebook groups and Instagram pages have sprung up across the internet, many with membership numbers that would rival some large country towns.

Some focus on the hacks, some review products, and others share design inspiration. But all have the same caveat: thou must love Kmart.

These swathes of devoted customers mark a significant change in fortune for the once-troubled Kmart, which less than 10 years ago was struggling to differentiate itself from its competitors, including its more profitable stablemate Target.

In 2010, the company's earnings were just under $200 million and parent company Wesfarmers was looking at ways to grow topline sales. It had embarked on a new 'Expect Change' campaign, desperately trying to convince shoppers the low-end retailer had changed its stripes.

This was under the leadership of turnaround king Guy Russo, who eventually succeeded in flipping the script for the discount retailer, focusing on lowering prices, simplifying product ranges, and bringing in more on-trend pieces.

Within just four years Kmart's sales and earnings far outstripped Target's, and the department store has continued to shine even in recent years when weak confidence and low spending has seen other retailers suffer.

With Kmart's successful reinvention came a notable change in how the business sold itself to customers. Splashy catalogues with weekly specials were replaced with images of chic home settings, coupled with a greater focus on social media and TV advertising.

"If you think back a few years, in the discount department store space it was very catalogue-driven, almost all the communications were based on your catalogue," Laurie Lai, Kmart's general manager of marketing told The Sydney Morning Herald and The Age.

"We know our customers were moving on to digital, social media, watching online TV, all those things. So we went that way too."

The business also moved away from focusing just on low prices, pivoting instead towards "value" – giving customers the absolute best bang for their buck, rather than having them spend as few bucks as possible.

At the heart of this strategy are the products themselves. Walking through a Kmart store can feel like a scene from a Wes Anderson movie, with simple wood and pastel tones a dominating feature.

The eternal popularity of these ranges – some sell out within hours of launching – are a testament to the company's 50 person-plus buying and design team, who work with 9 to 12-month lead times to cook up the new products, often taking inspiration from international designers.

However, some local designers have accused the retail giant of poaching and reproducing their own designs, a claim the company rejects, saying instead it looks to global trends for its inspiration.

"We actually get the international trends that all retailers use, right off the catwalk," Julie Miller Sensini, Kmart's general manager of apparel and design says.

"And then we distil those down into what we know our customers like and dislike."

That's aided by collaboration with pages like Slater's (who is otherwise known as the Kmart Hack Queen). She says the Kmart team regularly take feedback from her and her followers, including flying her to special sneak-preview events of new ranges, and providing them with the occasional free product.

"They take our feedback and they're always looking at what questions we get, and what answers people give," she says. "I think they're just really grateful we're putting so much time in."

And while it might look to some like Kmart is pulling the strings behind these massive fan groups, Lai stresses they are entirely organic, but notes Kmart's team draws "a lot of inspiration" from the innovative fans.

The 'cool mum' of department stores

Intentionally or not, Kmart has succeeded in becoming the envy of every low-end department store in the country that has struggled to shake some of the 'cheap and nasty' stigma associated with the segment.

Jana Bowden, associate professor in marketing at Macquarie University, believes Kmart has succeeded over competitors  like Target and Big W by eradicating that stigma, turning the potentially embarrassing experience of shopping at a discount retailer into something shoppers want to share.

"Instead of being embarrassed by the experience they take pride in going discount shopping, buying something on a tight budget, and showing other consumers how they've managed to succeed with that tight budget," she says.

"They've fostered a real pride in being thrifty."

But with the retail sector currently taking a beating, and fellow discounters Big W and Target shutting stores, Bowden questions if Kmart's fortunes can last.

"There are questions about the longevity of their strategy," she says. "Kmart is going to have to keep reinventing the wheel to make its campaign look innovative and keep drawing consumers in.

"That may have a limited lifespan if the economic conditions become more severe in the retail market."

The latest JB Hi-Fi financial results cement the reputation of chief executive Richard Murray as one of the country's best retailers over the past decade.

Murray has reached the pinnacle of the cut-throat retail industry against a background of persistent attacks by short sellers, the arrival in Australia of Amazon and the collapse or slow disintegration of many other retailers.

As well as keeping the JB Hi-Fi earnings machine on song, Murray was able to seamlessly integrate the Good Guys into the larger business following its $870 million purchase three years ago.

On just about any measure Murray stands out. JB Hi-Fi stock has performed better than just about any other retailer and easily outpaced the performance of the S&P/ASX 200.

This outperformance has been helped by the market's reassessment of what is a reasonable amount to pay for JB Hi-Fi's earnings. The price earnings multiple for the stock has doubled over the past two years to 20.

Sales per square metre are higher than every other Australian retailer and comparable to the best retailers in the world. At 15 per cent the company's cost of doing business is one of the lowest in Australia and lower than a half a dozen global companies in its peer group.

Two key things keep helping the company deliver better than expected results – value for money and excellent customer service.

JB Hi-Fi shares surged on Monday after Murray upgraded profit for the full year to June on the back of consensus-beating results for the half year to December 31.

At midday, JB Hi-Fi's shares were up 10.2 per cent at a record high of $44.20 – the shares have more than doubled in the past 13 months.

Sales and profits were higher than expected and the January sales numbers underpinned a profit upgrade for the full year.

During a call with analysts on Monday, Murray went through the company's five key competitive advantages but the most interesting aspect of this was the fact the slide in the presentation pack left out the two key things that keep helping the company deliver better than expected results – value for money and excellent customer service.

Murray later highlighted these two issues and the extraordinary lengths the company goes to in order to ensure its electronics products are price competitive.

The company's partnerships with large suppliers have proven to be a sound strategy. For example, it is one of the biggest resellers of Apple products and its rollout of telco services in partnership with Telstra has driven higher sales and foot traffic.

Murry said he was "blown away" by the results in telco in the Good Guys during the half year.

Murray said he sees plenty of opportunities to improve the productivity of JB Hi-Fi's 300-strong store network, including improved supply chain management. One aspect of the strategy that has worked well is capital investment, which is running at about $50 million to $60 million a year.

The company is constantly reassessing the performance of stores. It shut three stores in Sydney and opened three in the half. The performance of all stores is measured against the best performing.

In the half year, online sales rose 18.3 per cent to $170.8 million or 6.3 per cent of total sales. Murray said JB Hi-Fi was further investing in, and would keep evolving its online offer.