News

Homewares retailer Greenlit Brands is one step closer to distancing itself from troubled parent Steinhoff International after selling its general merchandise business, which includes Harris Scarfe and Best & Less, to private equity firm Allegro Funds.

Greenlit Brands, formerly known as Steinhoff Asia Pacific, has also sold to Allegro its plus-size women's clothing chain, Postie, and Harris Scarfe's Debenham's business, which is due to close its only store early next year.

The deal – foreshadowed in Street Talk in September – enables Greenlit to focus on its more profitable household goods businesses, which include Freedom, Fantastic Furniture, Snooze, Plush, OMF (Original Mattress Factory) and FutureSleep.

The sale of the general merchandise business is another step towards Greenlit's ultimate separation from Steinhoff International, either through an initial public offering of the household goods businesses or a trade sale.

Cotton On Group has expanded three of its fashion and lifestyle brands into Vietnam, with Cotton On launching its first physical store in the region, and Rubi, and Typo to see stores opening before December.

The first store was opened in Ho Chi Minh’s Vincom Thao Dien shopping centre according to The Saigon Times, with a second store in Aeon Mall, Ha Dong to follow shortly.

The expansion was facilitated through an exclusive partnership with Imex Pan Pacific Group, which has brought over 100 international brands to the region.

According to James Lavdas, general manager of licensing at Cotton On Group, there is a growing demand for street and casual wear fashion in Vietnam.

“As a customer driven business, we are excited to give customers in Vietnam the opportunity to shop Cotton On through our first store,” said Lavdas.

“Cotton On is a global fashion and lifestyle brand that is all about casual Australian style, [and] we’re confident our distinctive product offering resonate with customers who want access to the most effortless, on-trend products.”

According to Cotton On Group, the business will be the first Australian apparel retailer in the emerging Vietnamese fashion market. 

Cotton On’s aggressive expansion

Vietnam is but the latest market for Cotton On Group, which earlier this year launched into India as an online brand through marketplaces Myntra and Jabong, as well as opening its first store in New York in late 2018.

AVS Global Network, Cotton On Group’s expansion partner in India, said that while sports- and street-wear were once a small market in India, they have been picking up as consumer trends change.

“Many consumers are becoming conscious of the importance of health and fitness, and it’s making them savvy about brands which meet their lifestyle expectations,” AVS co-founder Sumanto Das told Mint. 

The federal government's Clean Energy Finance Corporation and Atlassian billionaire Mike Cannon-Brookes have teamed up to back a new $30 million venture capital fund targeting the "agrifood" sector.

The CEFC and Mr Cannon-Brookes' personal investment fund, Grok Ventures, have each committed $8 million to Tenacious Ventures, which describes itself as "Australia’s first dedicated agrifood tech venture capital firm".

Tenacious Ventures is seeking to raise $30 million and is led by Matthew Pryor, who helped found agrifood tech startup Observant, which was sold to India's Jain Irrigation in 2017; and Sarah Nolet, CEO of agrifood tech advisory firm AgThentic.

The fund plans to invest in early-stage startups focused on the agricultural supply chain and which are trying to lift farm efficiency and reduce waste.

The global agricultural sector accounts for about 14 per cent of worldwide greenhouse gas emissions. Mr Cannon-Brookes said in a statement: "Innovation in agriculture is desperately needed across the world to make our planet more sustainable.

"Kick-starting this industry in Australia will take guts and expertise, and the CEFC brings both."

The CEFC was established under the Gillard government in 2012 to spur investment in clean energy while it introduced a carbon pricing scheme.  The organisation has deployed more than $5 billion into clean energy initiatives, mostly through loans for green energy projects. It also has access to $200 million in growth capital for direct investments into clean energy start-ups.

The Sydney Morning Herald and The Age revealed earlier this year that private investors were circling the CEFC amid hopes the government might look to privatise the organisation. The UK government sold its "green bank" to Australia's Macquarie Group for £2.3 billion in 2017.

CEFC CEO Ian Learmonth said in a statement: “The agricultural sector poses a demanding climate change challenge: how to produce more food, more efficiently, for a growing population amid a more extreme climate, while also reducing greenhouse gas intensity and emissions."

Mr Cannon-Brookes, an outspoken advocate for action on climate change, has repeatedly clashed with the Morrison government over energy policy.  Grok is also a major investor in climate-themed startups including Brighte, a solar financing company, and HST Solar, a software platform for the design and engineering of solar projects.

Mr Cannon-Brookes has also said he would back a $20 billion project to build the world's biggest solar farm in the Northern Territory.

“There's no doubt that new ideas in agriculture will play a massive role in reducing carbon emissions, while also delivering return on investment. The economic upside for Australia’s
economy is also huge," Mr Cannon-Brookes said in the statement.

“Sarah and Matt have a solid track record of finding those new ideas, and then making them
work. I can't wait to see the innovation in food tech and agriculture that they deliver.”

Beauty giant Mecca is locked in a battle to protect its reputation as one of Australia's best workplaces with former and current employees accusing the business of discrimination, bullying, and favouritism.

The popular Australian retailer has been rocked by a stream of allegations published on an anonymous social media account, prompting founder and owner Jo Horgan to pledge reform and review the company's policies and practices.

In an email to staff, Ms Horgan said she was "deeply saddened" to learn of the numerous allegations, and said the company was taking the claims seriously.

"If we are not meeting these standards, we need to acknowledge this, apologise, and make the necessary changes," she said.

The complaints stem from an anonymously-ran Instagram account with the handle @Esteelaundry, which last month began collating and posting employees' accounts of working at the beauty giant.

More than 50 accounts of alleged mistreatment from people claiming to be former Mecca employees were posted to the page, detailing experiences of harassment from managers, racism towards staff, and a "toxic" culture of favouritism and nepotism.

Current and former employees have backed the anonymous complaints, telling The Age and The Sydney Morning Herald their experiences with the company were vastly different to the positive, fun, and "gloss and glamour" way Mecca presents itself.

Mecca is a beauty powerhouse in Australia, owning around 25 per cent of the $2.4 billion top-end cosmetics market, with 100 stores across Australia and New Zealand and over 4000 staff.

In the 2018 calendar year, the company reported revenue of $444.4 million, a 20 per cent increase on the year prior.

The business has been named as one of Australia's top workplaces in the Great Place to Work survey six times in the last six years, most recently taking out the fourth spot for companies with more than 1,000 employees.

Narita Salima, a former retail worker, initially expected her experience would reflect these accolades, believing her time at the company would be "fun and exciting" after landing a casual job at the retailer in 2016.

But, after just a few weeks, the then 22-year-old employee found herself dreading coming to work. She says she was bullied and ridiculed by managers over trivial issues, often on the shop floor in front of customers.

"It was traumatic. That whole Mecca culture, that positive workplace, it's just so fake."

After working for a month and a half, Ms Salima says she raised concerns with her line manager about the bullying she was experiencing. She was fired from the retailer shortly after.

Another former employee who worked in the head office said the environment was "cult-like". She says she was asked to quit simply because she was not "passionate" about her work.

"My manager pulled me into her office and said 'I know you're not passionate about your job, I think it's time for you to give me your resignation'," the employee says. "I'd never had any performance issues in the history of my job there. I was shocked."

Another employee claims Mecca workers weren't regularly paid for overtime at the end of their shifts, with the company having a policy of not closing the store's doors until all shoppers had left.

This would lead to employees staying back as much as an hour overtime, often unpaid, and at other times paid with leftover test products.

Employees say attempts to resolve these issues with HR were futile, with one worker labelling the department "toothless". Others say their time at Mecca significantly affected their mental wellbeing, with one former makeup artist saying the constant "bullying and belittlement" prompted her to visit a psychologist.

"I already had anxiety and [Mecca] made it so much worse," she said.

Following the complaints, Ms Horgan, a former entrepreneur of the year recipient, sent a number of emails to staff recognising and addressing the claims and saying she would take action in both the short and long-term.

In these emails, seen by The Age and The Sydney Morning Herald, Ms Horgan says she was surprised to hear of the concerns, claiming just 0.2 per cent of Mecca's retail workforce had made a bullying complaint in the last two years.

The messages also disputed the claims of unpaid overtime, saying the company's pay policies were regularly reviewed and were "guard rails" to help build the business' culture. The company says staff are paid overtime in line with legislation and all product benefits are in addition to standard pay.

Mecca has appointed an external culture specialist to commence a "listening tour" around stores and make recommendations to the company on what it can do better. It has also established a new anonymous workplace complaints hotline.

In response to a detailed list of questions from The Age and The Herald, a spokesperson for Mecca said the company did not believe the allegations represented the views of the company's 4000 staff, but was striving to "do better".

“It is our aim to ensure each and every one of our team members has a positive working experience," the spokesperson said.

"To anyone for whom that has not been the case, we are truly sorry. We are listening to and taking seriously any issues raised and I recognise there are always things we can, and will, do better.”

* This article has been updated to include the total number of Mecca staff and additional comment from the company.

Wesfarmers’ retail businesses have seen an improvement in sales growth in recent months compared to the second half of FY19 due to a modest improvement in retail conditions and signs of improving customer confidence.

However, with Bunnings, Officeworks, and Kmart Group all having signed new enterprise agreements in the last year, managing director Rob Scott noted the shift in staff pay could impact earnings.

“Our businesses face a number of cost headwings this year, largely as a result of higher personnel costs from new enterprise agreements, increased investment in digital and technology and the impact of a lower Australian dollar,” Scott said. 

“These pressures will be offset through productivity and sales growth benefits over time, but will have an impact on earnings growth in the near term.”

Retail chains trading up

Hardware and DIY chain Bunnings is trading well into FY20 and is benefiting from the diversity of its customer base, Scott said, with commercial and trade customers seeing strong growth. 

Scott also identified online as a large avenue for growth for the business, with its click-and-collect offer now available across all Australian stores.

Kmart Group saw a more challenging FY19,with EBIT falling 13.7 per cent to $450 million, though has also seen a pick-up in sales over the first few months of FY20. 

However, due to its new EBA, lower Australian dollar and higher levels of shrinkage, the group will face cost pressures.

According to Scott, the repositioning of Target is continuing, but the discount department store will continue to see weaker sales as the process evolves. 

“It will take some time to realise this transformation, which will see Target transition to a smaller and higher quality store network, with greater product and price differentiation relative to Kmart,” Scott said. 

The integration of Catch will strengthen the Kmart Group’s e-commerce capabilities, and should help position the department stores into the Christmas period.

Pushback on remuneration “frustrating”

Despite signs of improved trading, the business narrowly avoided a first strike against its remuneration report, with shareholders voicing their concerns about executive pay.

In total 21.45 per cent of shareholders voted against the report – slightly below the 25 per cent needed to deliver the first strike. 

Wesfarmers chairman Michael Chaney noted that executive remuneration was an “extremely frustrating issue”, and one that takes up a large amount of director time – largely to ensure the balance they find satisfies the often divergent demands of external stakeholders. 

“It is not in doubt that there is increasing unsease about executive remuneration – in the general community about salary levels, and in the professional community and amongst regulators about the structure of remuneration packages,” Chaney said. 

“[We] need to work hard to balance community and investor expectations with the need to reward our executives appropriately, retain their services and attract new talent to the organisation.”

The issue has grown more complex, Chaney argued, with the emergence of private equity and its ability to deliver high rewards outside of the public view. 

Chaney said that despite having decreased remuneration for key executives by 26 per cent and delivering solid returns over the year the business would still see a large vote against the report – highlighting how difficult it is to keep all stakeholders happy. 

Earlier this year Richard Ma, the chief executive of San Francisco-based security company Quantstamp, spent $9,500 (£7,500) on a dress for his wife.

That is a lot of money for a dress, particularly when it does not exist, at least not in a physical form.

Instead it was a digital dress, designed by fashion house The Fabricant, rendered on to an image of Richard's wife, Mary Ren, which can then be used on social media.

"It's definitely very expensive, but it's also like an investment," Mr Ma says.

He explains that he and his wife don't usually buy expensive clothing, but he wanted this piece because he thinks it has long-term value.

"In 10 years time everybody will be 'wearing' digital fashion. It's a unique memento. It's a sign of the times."

Ms Ren has shared the image on her personal Facebook page, and via WeChat, but opted not to post it on a more public platform.

Digital collection

Another fashion house designing for the digital space is Carlings. The Scandinavian company released a digital street wear collection, starting at around £9 ($11), last October.

It "sold out" within a month.

"It sounds kinda stupid to say we 'sold out', which is theoretically impossible when you work with a digital collection because you can create as many as you want," explains Ronny Mikalsen, Carlings' brand director.

"We had set a limit on the amount of products we were going to produce to make it a bit more special.

Being digital-only allows designers to create items that can push boundaries of extravagance or possibilities.

"You wouldn't buy a white t-shirt digitally, right? Because it makes no sense showing it off. So it has to be something that you really either want to show off, or an item that you wouldn't dare to buy physically, or you couldn't afford to buy physically."

Carlings' digital collection was produced as part of a marketing campaign for their real, physical products. But the firm thinks the concept has potential - a second line of digital garments is planned for late 2019.

The Fabricant releases new, free digital clothes on its website every month, but consumers need the skills, and software, to blend the items with their own pictures.

This also means the company has to find another way to make money until digital fashion becomes more popular.

"We make our money by servicing fashion brands and retailers with their marketing needs, selling tools, and creating content that uses that aesthetic language of digital fashion," says The Fabricant founder Kerry Murphy.

It is not entirely clear who is buying the digital garments from Carlings, or downloading clothes from The Fabricant.

Mr Mikalsen says Carlings has sold between 200-250 digital pieces, but a search to find them on Instagram only resulted in four people who independently purchased from the collection and had no involvement with the company.

However, some of the those clothes might have only been shared privately.

Amber Jae Slooten, a co-founder and designer at The Fabricant, concedes it is mainly industry professionals, who use the CLO 3D software, that are downloading their clothes.

"But it's also just people are very curious to see what the files look like. People just want to own the thing, especially since that one dress sold for $9,500."

Marshal Cohen, chief retail analyst at market research company NPD Group, calls the emergence of digital fashion an "amazing phenomenon", but is yet to be convinced about its long-term impact.

"Do I believe it's going to be something huge and stay forever? No."

He says the technology works for people who want the perfect image. "If you don't like what you're wearing, but you love where you are, you now have the ability to transition your wardrobe, and digitally enhance the photograph to make it look like you're wearing the latest and greatest."

Players of computer games have long been willing to spend money on outfits, or skins, for their in-game characters. That partly inspired The Fabricant to work in the digital space.

"The only reason we made the collection the way we did - inspired from Fortnite - was because of the whole link between buying skins and buying digital clothing," Mr Mikalsen says.

"When it comes to technology and the way people are living their lives, we have to be aware of that the world is changing."

Designers working on skins for games face extra challenges - they have to make sure it fits the story and the character.

Once the outfit is designed, which can take one try or 70, the hardest part starts according to in-games cosmetics consultant Janelle Jimenez.

The skins have to work in the game - a medium that, unlike digital fashion, often involves movements such as walking, fighting or dancing.

"For a game like League of Legends, you have to do 3D, there's sound effects, there's animations, all of these things have to come together to make the character feel like they're sort of expressing a different fantasy of themselves.

"It's less like changing clothes and more like seeing an actor playing a different role."

The influence of games and shifts in customer tastes gives some in the fashion industry confidence that digital clothes, in some capacity, will have long-term impact.

"Digital fashion will become an important part of every fashion business' future business model," says head of the Fashion Innovation Agency at the London College of Fashion, Matthew Drinkwater.

"It's not going to replace everything, but it will be an important part of that."

Strong investor appetite for listed retail chain owners has sparked float plans at private equity-backed youth fashion chain Universal Store.

Street Talk can reveal Universal Store's shareholders, which include three of Australia's most successful private equity investors, have hired JPMorgan and UBS to help ready the company for the ASX boards.

Universal Store is expected to seek to raise about $150 million for a $300 million-odd valuation in a listing slated for next year.

While accounts for the most recent financial year are not yet filed with ASIC, Universal Store made $14.3 million before tax in the 2018 financial year on sales worth $112.4 million. Pre-tax profit almost doubled in 2018, while sales were up 28 per cent.

The numbers were expected to be substantially higher in 2019.

Universal Store sells men's and women's clothing, targeting fashion-focused shoppers aged 15 to 34 and stocks brands including Patagonia, Harley-Davidson, Wrangler, Birkenstock, Lee and Lacoste.

The company has about 60 stores and also sells clothes online.

Funds raised at the mooted IPO are pegged to go into the business and would fund help its growth plans, which include store roll-outs and bulking up its online offering.

It is understood Evans Dixon is involved in the IPO preparations as financial adviser to Universal Store and oversaw a pitching process to appoint the two investment banks.

The float considerations – and preparations – come only one year after three private equity firms teamed up to back Universal Store management in a $100 million-odd buyout.

The private equity investors include Brett Blundy's BB Retail Capital, Trent Peterson's Catalyst Direct Capital Management and Adrian MacKenzie's Five V Capital, who have each had plenty of success in Australia's retail sector.

The preparations come as small cap fund managers bid up the value of listed fashionwear companies including the Blundy-backed Lovisa and City Chic Collective. Both companies' shares have more than doubled this year.

The question is whether sentiment towards those stocks can carry into the new year and help drive interest at Universal Store.

As always, Universal Store's plans will also be dependent on wider equity capital market conditions. Sentiment towards new listings has dropped in recent months, with investors nervous and more selective than they were a year or two ago.

Unsurprisingly, the market is trading at close to a record high as the IPO contenders line up. However, it remains to be seen whether the building pipeline of floats makes it to market next year as planned.

Shops reported an increase in customers in October amid signs retail grew solidly for the first time in a year, a survey of the Australian services industry suggests.

“Increased discretionary spending was evident across the consumer sectors,” the Ai Group said in its summary of its monthly Australian Performance of Services Index report.

The report released on Tuesday will likely be welcomed by retailers after ABS figures released on Monday calculated that retail spending in September rose by only a lacklustre 0.2 per cent – half as much as expected by economists.

“A strengthening of the Australian PSI in October is an encouraging if tentative sign of a gradual pick-up in services sector activity,” Ai Group chief executive Innes Willox said.

The overall PSI measure rose 2.7 points in October to 54.2, moving higher above the 50-point mark separating expansion and contraction in activity.

The PSI, compiled from responses of about 200 companies, indicated that retail sector activity was up 1.7 points to 52.4 points on a trend basis in October as more items were sold although the improvement may have been propped up by prices that continued to slide.

“Retail sector participants reports an increase in new customers and better weather conditions for sales this month,” the AiG report said.

“There are tentative signs that lower interest rates and recent tax rebates may be providing a mild boost to local discretionary spending”.

Willox said many companies continued to face tighter margins.

“The fall in selling prices reported by businesses should serve as a note of caution and some of the sales growth was associated with price discounting,” he said.

The growth in the retail, hospitality and recreation sectors offset contraction during the month in the PSI categories of “property and business services” and wholesale trade, which both declined at an accelerated pace. 

“Respondents noted slower demand from the construction sector and lack of confidence from business customers. They said the slow global outlook is inhibiting demand,” the report said.

Nike has brought its popular ‘Nike By You’ customisation service to Australia. 

Launching in Nike’s redesigned Melbourne Central store, which opened last Friday, the service allows customers to personalise their Nike sneakers and apparel by printing and engraving their chosen initials or phrase on items and choosing coloured laces for sneakers. 

“Having the ability to personalise your Nike sneakers and apparel is something that we’ve seen resonate globally, and we’re excited to be giving our consumers the opportunity to connect their style and creativity to Nike,” Ashley Reade, Nike Pacific general manager, said in a statement. 

Nike was an early mover in the personalisation trend in retail, launching its NikeID service in 1999. The founders of Shoes of Prey, a design-your-own-shoe brand that launched in 2011, before closing down last year, explicitly referenced Nike in their pitches to investors. 

Brands like The Daily Edited and July, which allow customers to monogram their products, indicate that customisation continues to resonate with shoppers. 

“We look forward to delivering uniquely personal and innovative experiences with the best of Nike product and services to Australian consumers,” Reade said.

In addition to the ‘Nike By You’ service, the redesigned Melbourne store features a 35 per cent bigger footwear offering with 115 different sneaker silhouettes, including an increased Nike Air Jordan offering and exclusive Nike sneaker collaborations 

The store also features a strong women’s apparel collection with more than 50 bra and tight options, including a one-to-one bra fitting and styling services, and an increased focus on other forms of sport, such as yoga, pilates and dance.

“We are continuing our commitment to better serve female consumers through innovation and services that fuel her journey with sport,” Angie Callaway, APLA Nike Stores general manager, said in a statement.

“One-to-one services and a great representation of Nike sportswear and women’s apparel create a more meaningful and personalised shopping experience for our female consumer.”

The store also features artwork by local Melbourne artist David C. Morton.

Outdoor retailer Kathmandu has appointed a new chief executive following the completion of its Rip Curl acquisition.

With Kathmandu’s $350 million takeover of surfing brand Rip Curl completed, the company named chief operating officer Reuben Casey as the new chief executive of the Kathmandu business.

Current chief executive Xavier Simonet will lead the combined Kathmandu group as group chief executive officer.

Chris Kinraid will continue with his role as group chief financial officer, which now includes oversight of Rip Curl. Michael Daly will continue with his role as chief executive officer of the Rip Curl business.

“Reuben has been a key contributor to the success of Kathmandu over the last few years,” Simonet said. 

“I congratulate him on his promotion and I wish him all the very best success as chief executive officer of Kathmandu.”

Casey, Kinraid and Daly will report to Simonet.

Kathmandu’s shareholders voted overwhelmingly to acquire the surf brand earlier this month, with over 99.9 per cent in favour.

“Rip Curl is an iconic and authentic global action sports brand,” Kathmandu chairman David Kirk said at the time.

“Similar to Kathmandu’s core outdoor products category, the surf products market has a stable, committed core customer, with steady growth in participation and spending.

“The acquisition of Rip Curl is an opportunity for Kathmandu to considerable diversity its geographic footprint, channels to market and seasonality profile, and creates a NZ$1 billion outdoor and action sports company anchored by two iconic Australasian brands.”

The acquisition gives the combined group access to new international markets, with Rip Curl trading in South America, the Middle East, and South Africa, as well as parts of Southeast Asia where Kathmandu is not present.

Primark has bucked the retail gloom with “striking” annual figures showing that its “cheap chic” is drawing shoppers to the high street at a time when rivals are closing stores.

The company said sales at UK stores open for more than one year had risen 1.2% in the year to 15 September at a time when British retailers faced a slowdown in fashion sales. The annual increase came despite a difficult second half when the summer heatwave kept shoppers from the high street. Annual profits jumped 15% to £843m.

“The performance in the UK was striking, with a significant increase in our share of the total clothing market,” said George Weston, the chief executive of the Associated British Foods (ABF) parent group.

Primark’s performance was in contrast to the struggling New Look chain, which said at least 85 stores would close as part of the restructuring plan announced earlier this year.

In March, New Look predicted 60 closures as a result of its company voluntary arrangement (CVA), but more landlords have opted to take back the keys rather than agree to lower rents.

New Look’s executive chairman, Alistair McGeorge, said the future of another 39 stores was in doubt as talks with landlords continued. The veteran retailer has shored up New Look’s financial performance since returning to the helm a year ago, but the trend is still downward, with like-for-like sales 3.7% lower in the 26 weeks to 22 September.

Fashion retailers have faced a perfect storm this year as rising costs following last year’s business rates revaluation were compounded by weak consumer spending and a shift to online shopping.

Investors are braced for disappointing figures from Marks & Spencer on Wednesday, which some analysts think will show clothing sales down more than 2% as it struggles to arrest a long period of decline. M&S plans to close 100 shops by 2022.

Primark – the UK’s third largest clothing retailer, behind Next and market leader M&S – is a rare exception these days as it does not sell online. It has defied this year’s gloom and successfully exported its bricks-and-mortar business model overseas to major new markets including the US and Spain.

Weston said the retailer used the internet to create a buzz around new ranges among almost 13m shoppers who have subscribed to its social media feeds. “We can sell clothes in our stores more cheaply than online,” he said. “If you want the best-value clothing, you have to go down to the high street to get it.”

Primark will open more than 1m sq ft of new selling space in the coming year, with stores planned in mainland Europe as well as in the UK, including its biggest to date, a 160,000 sq ft branch in Birmingham Pavilions.

ABF, boosted by Primark’s strong results, was the biggest riser on the FTSE 100 on Tuesday, closing up 3% at £24.60. Across the ABF group, which also encompasses large grocery, agriculture and ingredients businesses, overall profits were up 3% at £1.4bn on sales of £15.6bn. Its grocery brands include Kingsmill bread, Twinings tea and Silver Spoon sugar.

Weston warned that a no-deal Brexit could cause major disruption even if companies attempted to prepare for the worst by stockpiling ingredients, packaging and finished products. “The reality is, if we lose Dover, we’re in trouble,” said Weston. “If the Channel tunnel no longer becomes a usable freight route because the French don’t have the customs capability on their side, then the UK food supply chain will struggle.”

David Jones’ losses over the two years has ballooned to almost $1.3 billion, according to documents filed on the Australian Securities and Investments Commission by Osiris Holdings – an intermediary between David Jones and parent company Woolworths Holdings.

After losses of $785.6 million in 2018, the department store chain saw an additional $489.2 million in 2019, largely due to impairment charges over both years. 

David Jones has struggled with the difficult trading conditions and lessened economic growth in the Australian market, seeing its operating profit almost halve to $37 million in FY19.

Due to the department store’s struggles Woolworths Holdings slashed David Jones' market value to around $965 million earlier this year, following a similar cut in 2018.

However, Woolworths Holdings chief executive Ian Moir told the DailyMaverick that he believes the worst is over for the chain. 

“We’ve had many bad years at David Jones and learned many lessons,” Moir said. 

“We know more about the Australian consumer through fixing the David Jones business beacuse we have collected data and research about what they want. We believe the worst is over.”

According to Moir, 2021 will be a stronger year for David Jones.

The way to the consumer’s heart is through the stomach

Though David Jones’ department store offering will still make up a large part of the business’ offering, it has recently announced a number of secondary ventures related to its David Jones Food offering: a partnership with BP, as well as a standalone food store in Melbourne.

These ventures see the David Jones brand in a different context, utilising brand equity that has been built up over decades to enter a new category, through focusing on the high end of fresh produce sector in a way David Jones managing director of food Pieter de Wet said will differentiate them from the competition. 

“The IP we created over decades of working with our suppliers is what delivers those products, and over time, that’s what we see as a big opportunity that will differentiate us,” de Wet said. 

Talk about good timing: in the 12 months before General Pants CEO Sacha Laing got the call that the company’s head office was on fire, he had tasked the IT team with putting a disaster recovery plan in place. 

That plan enabled the business to continue operating virtually without a hitch, despite the head office burning down on Tuesday morning. 

“The business is up and trading per usual,” Laing told Inside Retail on Wednesday.

The retailer has already secured new premises, which a small team is setting up for the arrival of the 90-person head office staff on Monday. In the meantime, employees are working from home or stores on their laptops. 

“Our data protocols are all pretty rigorous and we had everything backed up,” he explained. 

“I couldn’t be prouder of the disaster recovery plan we had. It meant our operations were unaffected.”

Worst case scenario averted

When Laing first heard that the company’s head office, located in an industrial complex in the Sydney suburb of Alexandria, was on fire, his first thought was for the safety of his team. 

His second thought was to understand the state of the damage. And his third was to determine whether there would be an impact the customer or store environment. 

“Once I realised the answer to that question was no, I spent time reassuring the team. For some people, it could be quite confronting,” Laing said. 

One thing that wasn’t on his mind, however, was the continuity of business operations. 

“I guess I was confident knowing we had a rigorous disaster recovery plan in place,” he said. 

General Pants’ IT team led the process over the last 12 months. It involved ensuring staff could access key data – such as email, inventory and point of sale – in the event of an unexpected event, such as a fire. 

“If there’s a message for my fellow CEOs, it’s be prepared,” Laing said.

Scentre, the owner and manager of Westfield malls in this country, has reported moderately better sales growth across its portfolio, boosted in particular by results from its specialty tenants.

Specialty in-store sales grew 1.8 per cent for the year, according to the listed landlord's September quarter update. That's an improvement on the June quarter specialty sales growth of 1.3 percent. A year ago the growth was 2 per cent.

Over the past 12 months sales growth in retail services has been strongest at 6.3 per cent. Discount department stores and cinemas were strong as well. Sales in jewellery and department stores fell 4.7 per cent.

Chief executive Peter Allen said there was continued growth in customer visitation.

"This sales update is an incremental positive but we believe this is largely driven by the benefit of rate cuts and tax rebates which are more transitory," the analysts wrote.

"We believe leasing activity remains challenging with lease deals generally getting bigger in size (sq m) which typically carry lower rents/sq m."

As well, direct market feedback has shown that retail asset values are under pressure, they wrote.

The stock traded relatively flat, losing 2¢ to close at $3.83.

Priceline Pharmacy owner API has reported a 4.1 per cent increase in Group revenue to $4.0 billion, as the flagship health and beauty retailer saw like-for-like sales return to growth. 

API reported net profit after tax of $56.6 million, up 17.4 per cent on the prior corresponding period, as its businesses reported growth in market share.

Priceline Pharmacy, Consumer Brands and Clear Skincare all reported growth in market share and contribution while its Pharmacy Distribution business had solid cash generation and stable market share. 

“Our core business performed to expectations, with Priceline Pharmacy reporting improving like-for-like sales growth throughout the year and Pharmacy Distribution holding market share in a competitive environment,” API CEO and managing director Richard Vincent said in the results announcement on Thursday. 

The Group’s net debt levels however increased from $55.9 million to $199.1 million over the year to August 31 due to the costs of purchasing a 12.95 per cent stake in Sigma Healthcare, an investment in Consumer Brands inventory and investing in Clear Skincare clinics. 

Since the acquisition of Clear Skincare, API has expanded the network to 52 clinics. 

Priceline Pharmacy’s total network sales for the period were up 2.4 per cent to $2.2 billion. 

Vincent said a lot of focus has been put on the timing and attractiveness of Priceline’s promotional offers, alongside major product launches and category development initiatives which proved popular with customers and drove increased footfall.

The store network grew by a net 13 stores during the year to 488 in total. While the franchise network grew, the number of company-owned stores reduced by seven during the year where the company believed high rental prices were not justified.

Vincent said the Group remains focused on delivering its core strategy.

“While we have demonstrated our ability to return to positive retail sales, consumer confidence is expected to remain soft and we continue to adjust our cost base accordingly to deliver profit growth,” Vincent said.

He expects performance during the year will initially be determined by the sales over the Christmas trading period and said the resolution of the 7th Community Pharmacy Agreement negotiations remain important.

Australian brands Barney Cools and Platypus Shoes have teamed up to launch Barney Cools' first range of sneakers exclusively through the footwear retailer.

The new sneaker collection from the apparel brand reflects its laid-back, summer style and comes in both low-cut and hi-top styles, with the Barney Cools website calling the collection: Poolside Sneakers. 

Key features of the line include extra sole thickness, lightly waxed laces and a cotton canvas outer. 

The range will also be complemented by a selection of especially designed Barney Cools accessories including a hat, socks and a side bag. The accessories will also be exclusively sold at Platypus. 

Platypus head of marketing Tia Paterson said Platypus is thrilled to bring Barney Cools' first sneaker collection to consumers. 

"We’re so excited to bring Barney Cools’ first footwear range exclusively to Platypus Shoes customers. 

"There is a natural synergy between our two brands, and we are confident this will be the first of many Barney Cools collections," she said. 

The Barney Cools sneaker collection comes in a range of colours: White, Black, Summer Yellow, Seagrass, Pink and Indigo, and will retail for $99 a pair in select Platypus Shoes across Australia.

Bedding, linen and homewares group Adairs is the latest retailer to complain of a slowdown in trading over the first quarter, although the company is clinging to its forecasts for 2020.

The outlook emerged as the company recorded protest votes at its annual meeting over the re-election of directors and the awarding of executive options.

Chief executive Mark Ronen told the AGM there were a number of pressures on the retailer, such as currency movements, but that it was planning for the key Christmas period and managing its supplier networks to safeguard margins.

However the company had recorded a slowing of like-for-like sales growth since July.

“Turning now to the new financial year. Trading for the first 16 weeks of fiscal 2020 has delivered like-for-like sales growth of plus 3.3 per cent with stores sales plus 0.8 per cent and online sales up 16.6 per cent,” Mr Ronen said in his CEO address.

“Whilst this represents a slight slowing in like-for-like sales growth, our clear focus in the current environment, particularly against a backdrop of continued AUD/USD weakness, has been on growing our like-for-like gross margin dollars.

“We are pleased to report that by working with our product suppliers and managing our discounting and promotional activity levels we are making good progress on this.”

In 2019 Adairs recorded like-for-like store sales growth of 7.25 per cent.

At this stage Adairs is sticking to earnings guidance.

“Our key sale periods, including Christmas, lie ahead of us and we are well placed in terms of planning and inventory to deliver our customers with the product and experience that they have come to expect from us during these important periods.

“Given this, and having regard to the year to date performance, the board remains comfortable that the fiscal 2020 guidance previously provided remains appropriate.”

For 2020 the company has forecast sales of $360 million to $375 million and earnings of $43 million to $46 million.

Friday’s AGM saw some investor angst over the re-election of Adairs directors and the allocation of long term incentive options to a key executive.

Of the four Adairs directors up for re-election, three scored a “no” vote of 19 per cent and the fourth had 20 per cent of lodged proxy votes voted against them. There was also a 20 per cent vote against the awarding of executive options.

Meanwhile investors remain nervous as the AGM season plays out and retailers provide updates on trading for the first quarter.

Earlier this month furniture group Nick Scali’s shares were crunched by almost 20 per cent after it warned of a slowdown in sales for the quarter.

While there may not have been a loss in the Myer case because the market consensus was markedly lower than the company's guidance, typically market consensus closely follows profit projections provided by companies.

The landmark case is the first time a shareholder class action has gone all the way to judgment.

On Thursday, during a call with reporters, Amazon executives declined to answer any questions concerning regulation.

"I have nothing to report on that," chief financial officer Brian Olsavsky said.

Revenue for the quarter beat expectations, rising 24 per cent to $70 billion. The third quarter included Amazon's made-up sales holiday "Prime Day", which has become one of the company's biggest shopping events of the year.

Amazon has also increased its staff numbers. It had 750,000 worldwide employees at the end of September, up nearly 100,000 from the previous three months. Besides adding workers in its warehouses to pack and ship boxes, the company has been hiring more software engineers and salespeople for its cloud business. Amazon is the second-biggest US-based private employer, just behind rival Walmart.

For the current quarter, which includes the holiday shopping season, Amazon expects revenues between $US80 billion and $US86.5 billion. That's below the $US87.4 billion analysts were forecasting.

Demand also picked up in New Zealand, with same-store sales rising 3.8 per cent in the first quarter after falling 0.3 per cent in July and rising 1.9 per cent in the June quarter.

Momentum also improved at The Good Guys, despite sluggish demand for appliances, with same-store sales down 1.8 per cent in the first quarter after falling 3.4 per cent in July.

The trading update came as a relief to investors following profit warnings last week from Nick Scali and radio network owner Southern Cross. JB Hi-Fi shares rose 6 per cent to $36.22, taking gains this year to  68 per cent.

"We have all our ducks in a row to make sure we execute Christmas well."

— Richard Murray

Mr Murray reaffirmed guidance for total sales to grow 2.2 per cent to about $7.25 billion this year – $4.84 billion from JB Hi-Fi's Australian stores, $240 million from New Zealand and $2.18 billion from The Good Guys.

This follows a 3.5 per cent increase in sales to $7.09 billion and a 7.1 per cent rise in net profit to $249.8 in 2019.

Mr Murray gave no profit guidance, saying the company preferred to trade through Christmas before giving earnings guidance.

"[The first quarter] is nice but the Christmas quarter is mission critical – we have all our ducks in a row to make sure we execute Christmas well," he said.

"In JB Hi-Fi and The Good Guys, we believe we have two unique and relevant brands, particularly in the eyes of our customers.

"With a customer-focused business model built on a diverse product offering, deep relationships with our suppliers, a high-quality multi-channel offer and exceptional customer service, we are confident we will maintain our market leading competitive position."

The retailer avoided a first strike against its remuneration report, even though proxy advisory firm ISS Governance Services and the Australian Shareholders' Association recommended shareholders vote against it, citing "inferior" disclosure and lack of performance conditions for a new "variable reward" incentive scheme.

About 17.3 per cent of shares voted were against the remuneration report – just short of the 25 per cent needed to record a first strike – after a 21.7 per cent protest vote in 2018.

About 17 per cent of shares were voted against the issue of  51,723 restricted shares to Mr Murray under the variable reward plan, which combines long and short-term incentives in an attempt to simplify remuneration.

Mr Murray said the board was comfortable the variable reward program was "fit for purpose" but would take on board shareholder feedback.