News

Trade has been more challenging for the global jewellery industry in the second half of FY23, according to New Zealand-born retailer Michael Hill.

This has been particularly noted in Australia and New Zealand, with the latter impacted by significant weather events and a recent resurgence of security incidents and related costs.

Michael Hill added that third-party transactional data for the total Australian retail jewellery segment has shown a double-digit decline in sales for the first four months of the second half.

The Australian jeweller recorded a group sales drop of 3.5% for the second half, while its total group sales for FY23 year-to-date are up 5.5%.

“Despite the more challenging market conditions and the resulting impact on many retailers, I’m encouraged by the Michael Hill performance, as we continue to take market share in our category,” CEO and managing director Daniel Bracken said. “Looking forward to FY24, I’m energised by the pipeline of strategic initiatives that underpin our growth aspirations for the group.”

Meanwhile, the brand has taken over operational control of its newly acquired Bevilles from today, June 1.

Initial steps for the Bevilles’ store rollout growth strategy are reportedly progressing well, with Michael Hill noting that offers of new locations from a number of landlords have been tabled and are currently being considered to prioritise the highest potential new locations.

The company is planning to open 80-100 Bevilles stores by FY28, including further expansion in New Zealand and Canada where Michael Hill already operates. This could also include coverting existing Michael Hill stores into Bevilles locations where the demographic aligns.

Bevilles currently operates 26 Australian stores across Victoria, New South Wales and South Australia. Michael Hill operates 148 across all Australian states and territories, along with 47 in New Zealand and 86 in Canada.

The financing of its Bevilles expansion, alongside other company initiatives, comes from a new three-year $90 million credit facility from ANZ and HSBC.

As well as expanding Bevilles store network, the facility will fund a new digitally-led 'Bespoke' diamond jewellery brand, further rollout of its gold recycling platform, continued international digital expansion and additional organic strategic growth initiatives.

“I’m excited the Bevilles Jewellers acquisition has completed and welcome the Bevilles team members to the Michael Hill family,” Bracken said.

“This acquisition not only demonstrates the Board’s commitment to strategic investment and growth but also provides a platform for significant store network expansion and delivery of incremental earnings.”

Universal Store chief executive Alice Barbery says young consumers are facing serious pressure from rising rents and university fees, which will dent spending in coming months at the trendy youth apparel retailer.

Shares in Universal crashed 25 per cent after it flagged on Wednesday that while it remains on track to deliver record sales for the year ending June 30, subdued trading will persist into fiscal 2024, after noting that spending in April and May-to-date has tightened.

Ms Barbery told The Australian Financial Review that she has clear insights to the retailer’s core consumer given most of its staff are also about the same age.

“The two biggest costs for them are rent and HELP, used to be called HECS debt. They’re paying back their student loans, which are increasing at an extraordinary rate. And the rents if you’re on $70,000 a year – if you’re a young person and your rent goes up $150 a week, you’re going to feel it.

“We knew that customers would get more discerning, and they are getting more discerning, but they’re still coming through, and our foot traffic is still really good.”

The Brisbane-based company’s shares tumbled to $3.11, while fellow youth jewellery fashion chain Lovisa Holdings, backed by Brett Blundy, fell 7.7 per cent to $21.84. JB Hi-Fi, which also counts on the youth consumer, fell 2.8 per cent to $44.06.

Ms Barbery said a clear message for shareholders is the company is not overstocked, and has not had to dramatically discount to move inventory.

“I do think this is an overreaction,” she said referring to the sell-off. The retail sector is on the front line of cost-of-living pressures, and many are starting to show evidence of slowing spending.

Universal Store noted that its new Perfect Stranger retail format is performing strongly and continues to show potential for an attractive national roll-out of its top-selling brand. Cheap Thrills Cycle will deliver record sales and solid earnings, and emerging brand Worship has had an “encouraging performance”.

Ms Barbery said the store footprint is growing.

“I didn’t feel that this was a bad news story. It was just a story of a current economic climate and while youth customers are more shielded from economic downturns, they’re certainly exposed in these two areas,” she said.

Universal Store’s stock at June 30 is expected to be higher than the prior year, mostly because of the Cheap Thrills Cycle acquisition made last October, new store openings, and more inventory to support an upgraded distribution centre.

Group sales are expected to be in the range of $258 million to $261 million compared with $208 million in 2021, with Universal Store sales projected at $238 million to $240 million.

Underlying full-year sales for Cheap Thrills Cycle are expected to be $40 million to $42 million, compared with $35 million last year.

Group gross margins are expected to slightly exceed the 61.1 per cent delivered in 2022. Underlying earnings before interest and tax will come in between $39 million and $41 million, up from $32.6 million.

A total of 95 physical stores are expected to be open by the end of the year, made up of 77 Universal Stores, 8 Perfect Stranger sites, and 10 Thrills stores. Four new store openings have been pushed out until the first quarter of next financial year.

Universal Store will release its full-year results on August 25.

Real estate, healthcare stocks and retailers skewed to low-income earners are the three main sectors of the sharemarket set to get a boost from the Albanese government’s second federal budget, thanks to a $15 billion welfare package and policies targeting net migration and first home buyers.

While brokers said the budget, which delivered its first surplus of $4.2 billion since 2007-08, had little impact on the long-term outlook for the Australian sharemarket, in the short term, equities could rally.

Companies from Mirvac to Ramsay Health Care were just some of the stocks named in the flurry of post-budget equity reports.

Macquarie Research noted that Australian equities tended to rise more in the month after a midterm budget – meaning outside of an election year – by some 1.4 per cent, and 1.7 per cent if it is delivered by a Labor treasurer. That compares with a fall of 0.7 per cent if delivered just after an election, or a drop of 1.8 per cent if delivered before.

Even so, the broker said it was more concerned with what’s happening further afield, with its portfolio defensively positioned ahead of an expected US recession.

The “budget does not change our equity strategy view,” Macquarie strategists wrote in a report to clients. “There were no major surprises, and the surplus looks short-lived.”

Despite the broker predicting a deficit next year, “we still expect an earnings downgrade cycle over calendar 2023”.

“While many central banks are getting closer to the end of their hiking cycle, we think the lagged effect of past hikes will be an earnings headwind.“

UBS strategist Richard Schellbach also said that while the budget supported low-income households, forecasts for equity market earnings growth, market targets and sector positioning remained unchanged.

Still, he named some potential net winners from the budget, starting with the funding support announced for low-income households.

This includes the $1.5 billion energy bill relief fund, $1.3 billion allocated for household upgrades to assist 111,000 homes, and the $40 fortnightly boost to JobSeeker, Austudy and Youth Allowance payments.

“Stocks that could be positively impacted via their customer skew to low-income households include, Domino’s Pizza, Coles, Wesfarmers (through Kmart business), and Super Retail Group,” he wrote.

Mirvac, Ramsay Healthcare

Building material suppliers CSR and Boral and developers Stockland and Mirvac, along with companies such as Domain (Nine Entertainment, publisher of The Australian Financial Review, is Domain’s biggest shareholder) and REA Group, could also benefit from the government’s assistance for first home buyers, Mr Schellbach said.

From July 1, access to the Home Guarantee Scheme will be expanded to allow any two people to buy an eligible home with just a 5 per cent deposit.

Major developers, including Lendlease, could also see “marginal net positive developments” from the halving of the managed investment trust withholding tax to 15 per cent for newly constructed build-to-rent developments, and an increase in the capital works tax deduction rate to 4 per cent, from 2.5 per cent, at a cost of $30 million.

More broadly, UBS noted that polices aimed at increasing net migration – which is set to jump by 1.5 million over the next five years – and skilled migrants, would help tackle skills shortages which would be a boost to a number of sectors that were hard hit from border closures during the pandemic.

These include transport, food production, healthcare, engineering and contracting sectors. Telcos, including Telstra and TPG, would also get a boost from a step-up in migration numbers, the bank noted.

Strategists at RBC said any boost to net migration would benefit healthcare companies such as Estia Health, Regis Healthcare and Ramsay Health Care.

The broker added that extending the exemption of international students from the fortnightly cap on aged care work hours would continue to assist with staffing, though it noted that it was only until December 31.

Additional funding for Medicare bulk billing would likely indirectly benefit diagnostic companies, including Sonic Healthcare, Healius and Capitol Health, RBC wrote. “Improved access to primary care should lead to more volumes of diagnostic testing,” it said.

Goldman Sachs also noted that the budget allocated $11.3 billion over four years to fund a 15 per cent increase in the award wages for about 250,000 aged care workers.

Elsewhere, companies operating in the renewable energy sector were in focus, though some brokers were not overly enthusiastic.

In its post-budget commentary, Barrenjoey cited the government’s $4 billion investment in renewable energy, including $2 billion for a new program to accelerate large-scale hydrogen projects.

“The energy transition did feature in the budget, although initiatives remain
somewhat piecemeal and materially smaller than America’s Inflation Reduction Act and the EU’s Green Deal,” it wrote.

Westfield owner Scentre’s efforts to step up customer events is paying off handsomely, with a 14 per cent lift in foot traffic so far this year accompanied by a similar-sized increase in sales by its tenants.

Chief executive Elliott Rusanow said customers visits had hit 163 million over the first 17 weeks of the calendar year, an increase of 20 million or 13.7 per cent over the previous corresponding period.

Scentre has focused on winning people’s time and attention through events and tie-ups, such as its program celebrating Disney’s 100th anniversary, confident that  the increased foot traffic will pay off for its tenants and its own income ultimately.

“Our focus is providing people with more reasons to visit our destinations and so far this year, we have activated more than 3300 events,” he said in the shopping centre owners’ March quarter update.

“Our business partners achieved $6.4 billion of sales in the quarter, up 14.4 per cent compared to the corresponding quarter in 2022. On a rolling 12-month basis to 31 March 2023, our business partners achieved record sales of $27.5 billion.”

While January of last year was disrupted by a COVID-19 outbreak, Scentre sales figures show healthy gains when compared to the corresponding, pre-pandemic results in 2019.

Total sales were up 14.4 per cent for the three months to March and specialty sales were 12.1 per cent higher, compared to last year. Compared to the 2019 first quarter, for the three months, total sales were 11.2 per cent better and specialty sales were up 14.9 per cent.

JPMorgan analysts described the sales figures as a healthy “acceleration of growth” compared to the 2019 trading results.

Scentre has reconfirmed its full-year earnings guidance of funds from operations
in the range of 20.75¢ to 21.25¢ per security for 2023, which would represent growth of 3.4 per cent to 5.9 per cent. It expects to deliver distributions of at least 16.5¢ this year 2023, an increase of 4.8 per cent.

Scentre does not disclose at its quarterly updates its leasing spreads, a key industry metric which describes the difference between old and new rents and is a potential indicator to future income growth. Those spreads, while negative, were showing signs of improvement through last year.

Other major ASX-listed mall owners including Vicinity and GPT have reported positive spreads over the March quarter, JPMorgan analysts noted.

The Labour government’s new federal budget has promised a host of relief measures to small businesses and retailers to curb the rising cost of living and inflationary pressures.

Australian Retailers Association CEO Paul Zahra said cost-of-living relief was “front of mind” for retailers and consumers alike.

“Australians are rightfully keeping a close eye on cost-of-living reprieve, but so too are retailers – with discretionary spending beginning to significantly soften in the wake of inflation and consecutive interest rate rises.

To help small businesses bounce back from the current cost of living crisis, a $20,000 instant asset write-off has been introduced along with an energy bill relief and a Small Business Energy Incentive program to encourage investments.

Zahra said “alleviating” the cost-of-living pressures is a vital component of economic stimulation.

The budget’s made reforms to the Australian migration system, are “welcomed” by the retail community since it will ease labour and skills shortages.

“The red tape of Australia’s migration system and the barrier of expensive childcare are two leading drivers of high job vacancies.

“We are pleased to see the commitment to cut the cost of childcare for 1.2 million families – together these measures will have enormous benefits for retail and the broader economy,” said Zahra.

He flagged businesses need more support managing higher labour, leasing and supply chain costs as well as insurance.

Australian Food and Grocery Council (AFGC) CEO, Tanya Barden, said this year’s federal budget provides “much-needed” cost of living relief to businesses.

“The cost of living measures announced tonight recognise that higher levels of discretionary spending are essential drivers of growth.”

The $310 million Small Business Energy Incentive, introduced in the budget, will assist small and medium food and grocery manufacturers invest in upgraded, energy-saving plants and equipment.

Barden described the incentive as a “sensible support” for essential industries that keep supermarket shelves stocked amidst fragile supply chains, rising input costs and subsidised foreign competitors.

With a $4 million cash injection and a forecast $9 million in gross market value for 2023, The Volte is one of the country’s fastest-growing fashion businesses, with one key difference: it doesn’t stock any clothing.

Based in Perth, The Volte is a peer-to-peer luxury clothing rental agency.

Launched in 2018 with a seed funding round later that year that pitched the business as “Airbnb for fashion”, The Volte has now closed a series A funding round with $4 million from eBay Ventures and Perth-based Better Labs.

The Volte chief executive and co-founder Bernadette Olivier said the money would be used to increase the team – she currently employs five people – and to expand the company’s technological capabilities with a goal of returning to profitability (which it had achieved in 2020 owing to reduced overheads during the pandemic).

“Partnering with eBay makes a lot of sense,” Ms Olivier said before the announcement, which will take place at Australian Fashion Week on Tuesday.

“Both businesses are focused on the circular economy – eBay is about resale, we are about rental. Working together was a straightforward next step.”

While the partnership with eBay will not change the way The Volte is run, the two businesses will promote each other.

“They will support our rental, we will promote them as our resale partner,” Ms Olivier said.

Booming market

The fashion rental market is booming, with retailers such as David Jones and Country Road partnering with other players such as GlamCorner, The Volte’s competitor.

Internationally, pioneer Rent the Runway launched a disappointing initial public offering in 2021, and last year made about a quarter of its staff redundant in a bid to carve a path to profitability.

Ms Olivier believes her business model is different enough to weather economic storms.

“We don’t take on inventory,” she said. “And that cuts our overheads and ensures that we are focused on one thing: renting clothing. When you hold the inventory yourself, it dramatically shifts where your focus is. The business becomes one of logistics, shipping and laundry.”

Consumers can lease their own clothing on the site, and must handle all logistics – including delivery, returns, cleaning and any damage to the item – themselves. The Volte charges the lender 15 per cent commission and the borrower 13.5 per cent, plus an optional $5 fee for insurance.

Cothing as assets

Ms Olivier believes the luxury price point of The Volte’s clothing gives it an edge.

“Our average dress is sold on the rack for $1500,” she said, citing commonly rented brands such as Zimmermann and Aje.

“Our customers are renting out their clothing as assets, the way you would with a house and Airbnb. So, they are invested in providing a good experience for the renter, and treating rental as a business.”

Consumer analyst Craig Woolford, from equities research outfit MST Marquee, said there would naturally be a “softening” in the post-COVID rental market. To ensure long-term success, platforms needed to ensure a breadth of choice for consumers while protecting those lending their assets, he said.

“A lot of these businesses had incredible success during COVID,” Mr Woolford said.

“There was outsized demand in retail online during that time, and it would have made its way to the rental market. Consumers are going back to stores now, though, and they do have more options. So, I think the appeal of rental will soften.”

Attracting repeat customers was also key, Mr Woolford said.

“What these platforms will need is a certain amount of scale to succeed. Great inventory is one thing, but you need breadth of range, styles and sizes to have long-term success. Platforms that have that breadth will emerge as the winner here.”

In October last year, The Volte began working directly with designers to introduce them to the rental market. Rebecca Vallance, Alemais and Kit X were among the initial offering, and Ms Olivier said there were more to come.

“Our biggest challenge is prioritisation,” she said. “We offer luxury fashion for rental but up until very recently, the website did not reflect that, for example. This round of funding will allow us to act like the company we know we can be.”

Discount apparel retailer Best & Less Group (BLG) says trading conditions were “inconsistent” through the March and April months of the second half year.

In a trading update for the 19 weeks to May 14, sales were up 1.8 per cent to $221.9 million when compared to the previous corresponding period. Like-for-like sales were down 1.4 per cent while online sales fell 18.2 per cent.

Sales improved in the lead-up to Mother’s Day and have been consistent since, while BLG’s non-discretionary product lines are continuing to perform well.

BLG executive chair Jason Murray said consumer confidence has been at “historic lows” yet the business is “optimistic” for sales growth.

“We expect to see the benefits of lower product and shipping costs begin to flow through in the first half of the next financial year and we will remain focussed on tightly controlling our cost base to preserve profitability.”

He added the company now expects to deliver pro forma net profit of between $10 million and $12 million for the second half, assuming no material deterioration occurs during the May and June trading periods.

A further four new stores are due to open before the end of the calendar year.

Australian company Munro Footwear Group (MFG) has rescued New Zealand kids’ shoe company Bobux International from receivership.

MFG owns and sells brands including Mountfords, Midas, Mollini, Mathers, Williams, Cinori, Ziera, Colorado and Diana Ferrari. It operates more than 290 stores in Australia and employs 2500 staff.

In a LinkedIn announcement, Bobux International said MFG has a “shared passion for a customer-centric approach” which aligned well with the brand.

“MFG’s co-CEO Jay Munro is genuinely excited about increasing the breadth of the group’s portfolio in its ambition to become the first choice in footwear.”

Munro said the company has a “proven track record” of building brands under its business model.

“I’m very confident that we will be able to preserve the essence and heritage of the Bobux brand whilst enabling it to reach its full potential.”

MFG took over operations of Bobux last week, has already resumed production and is ascertaining delivery plans for the upcoming season.

Founded in 1991 by Colleen and Chris Bennett, Bobux International sells high-quality shoes, boots and sandals for toddlers and kids. The label is sold in 40 countries internationally as well as online.

Australian swimwear label Seafolly has opened an expanded footprint and new retail concept in Western Australia, with plans to update its existing retail fleet of 30 stores over the next three years.

The news comes amid media reports that Seafolly is up for sale by its private equity owner L Catterton, with management firm FTI Consulting handling the sale.

News of the sale follows nearly three years of leadership by current CEO Brendan Santamaria, who joined the brand after it was saved from collapse in mid-2020.

Speaking exclusively with Ragtrader, Santamaria said the new concept in Claremont is an expanded presence from a smaller concept store that existed in the area.

“We've relocated ourselves to what they're calling the new Claremont quarter - the fashion end of the quarter,” Santamaria said.

“Our new retail concept draws on inspiration from the beauty of Australian beach and coastal environments. They're what we call our next generation stores.”

The new store concept includes digital screens and an expansive fitting room experience alongside Seafolly’s Fit Stylists and customisable lighting.

It will also feature a heritage gallery showcasing some of Seafolly’s past campaigns.

Seafolly has a total of 30 stores - 26 in Australia and four in Singapore. From this, Santamaria said the brand will roll out the new concept and expand it over the next three years, which includes the opening of more retail stores in key locations.

Santamaria predicted that omnichannel retailing is balancing following a swing to online over the COVID-19 pandemic, citing this as the reason for its focus on bricks and mortar.

“The demand for Seafolly continues to increase across both in-store and online,” Santamaria said. “We're focused on supporting that omni channel experience.

“However, we haven't declined online - we've grown a bit year-on-year in like-for-like sales.”

“We find that whilst 70% of our transactions commence online, the transactions end up being in the bricks and mortar.”

In owned eCommerce, Seafolly is represented through four websites across Australasia, Singapore, North America and the United Kingdom.

Santamaria said that, since migrating with eCommerce platform Shopify, Seafolly has increased its average order value by about 15%.

“However, the business in the last three years really enjoyed more than 50% increase in its average transactional value.

“And what's driving that? We think the replatform has enabled us to unlock the omni channel environment that really includes a range of services from click and collect to ship from store, reservation of product and delivering that seamless shopping experience.”

As well as balancing commerce channels in online and in-store, Santamaria said retailers should also consider social commerce as well.

“In understanding consumer preferences and shopping habits, retailers are able to tailor their offerings and provide that real personalised experience, and this leads to greater loyalty and increases the likelihood of a repeat purchase,” Santamaria said.

“Experimental retail concepts will still remain a big trend, creating spaces that are designed to offer unique shopping experiences.

“That's the big thing where retailers will really move their shift towards that omni channel retailing and giving consumers that real seamless experience.”

Speaking on the future of Seafolly, Santamaria said he is looking forward to the business experiencing a full year of normality post-COVID.

“We're very proud of what we've achieved, what our employees have achieved for their hard work,” he said. “Hopefully we'll embark on the next phase of growth for the business, and we're working with our shareholders to help raise more capital that will allow us to unlock the value both domestically and in the number of international markets.

“Over the last 18 months to two years, we've gone really hard in recruiting the leadership team we've got and it's been fantastic.

“We're very excited about that next chapter.”

Australian retail group Brand Collective has signed on Canada Goose, with plans already underway for the performance luxury brand in the local market.

The venture will operate under a Brand Management Agreement, with Brand Collective opening the brand's first two Australian stores in Melbourne and Sydney this year, as well as launching a dedicated eCommerce platform in October, and rolling out select wholesale distribution.

“Partnering with a world-class luxury brand like Canada Goose gives us a great sense of pride,” Brand Collective CEO Eric Morris said. “Canada Goose is known for being an experience-driven and storytelling brand, immersing consumers in its heritage and enabling them to thrive in the world outside.

“With Brand Collective’s unique ability to bring brands to life, Australians can now engage with all that Canada Goose has to offer in an unfiltered way.”

Founded in 1957, Canada Goose’s core down-filled products are manufactured in Canada, with an overall range including parkas, lightweight jackets, apparel, accessories and footwear for men, women, and children.

It is positioned in the luxury retail sector and identifies the likes of Moncler as a key competitor.

Canada Goose marks Brand Collective’s first foray into luxury.

“I’m thrilled to be expanding our presence in Australia, bringing Canada Goose to even more consumers,” Canada Goose Chairman and CEO Dani Reiss said. “Australia is a world-renowned destination for luxury, and we’ve seen how strongly our brand is resonating in the market.

“With our long-term strategy in place and an expert partner in Brand Collective, I look forward to this next chapter of the Canada Goose story.”

Canada Goose sells in over 60 countries and operates more than 50 retail locations across North America, EMEA and APAC.

As a global publicly listed company, it has a market cap size of $2.6 billion Canadian dollars and a total revenue $1 billion Canadian Dollars.

Australian retail sales were up 2.6% year on year (YoY) in April 2023 according to the latest Mastercard SpendingPulse, despite declines in most categories.

Jewellery reported the largest decline of 21.1% in spending, with apparel down 9.1%.

Other categories reporting declines included home furnishings (down 17.5%), electronics (down 15.9%), lodging (down 14.8%) and fuel and convenience (down 8.9%).

The total growth in April spending was driven by grocery (up 8.5%) and restaurants (up 8%) - the only categories to record growth in April 2023.

Australian Retailers Association CEO Paul Zahra said the results suggest the country’s cost-of-living crisis is now deterring retail spending.

“Most categories are recording significant declines now compared to 2022, with households across Australia saddled with mounting cost-of-living pressures and consecutive interest rate rises,” Zahra said.

“We believe that April’s sales growth is predominately driven by price increases on food essentials which make up the lion’s share of retail spending.

“Most retailers thrived last year, with low interest rates and high household savings leading to robust spending growth. It isn’t surprising to see these declines today when compared to a successful period in 2022.”

Zahra said with discretionary purchasing slowing significantly, it will be a challenging environment for businesses - “especially those on tighter margins.”

“Retail businesses are simultaneously battling rising operating costs associated with increasing cost of debt, fuel, energy, labour, supply chains and rent.”

Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment.

Australian swimwear label Seafolly has opened an expanded footprint and new retail concept in Western Australia, with plans to update its existing retail fleet of 30 stores over the next three years.

The news comes amid media reports that Seafolly is up for sale by its private equity owner L Catterton, with management firm FTI Consulting handling the sale.

News of the sale follows nearly three years of leadership by current CEO Brendan Santamaria, who joined the brand after it was saved from collapse in mid-2020.

Speaking exclusively with Ragtrader, Santamaria said the new concept in Claremont is an expanded presence from a smaller concept store that existed in the area.

“We've relocated ourselves to what they're calling the new Claremont quarter - the fashion end of the quarter,” Santamaria said.

“Our new retail concept draws on inspiration from the beauty of Australian beach and coastal environments. They're what we call our next generation stores.”

The new store concept includes digital screens and an expansive fitting room experience alongside Seafolly’s Fit Stylists and customisable lighting.

It will also feature a heritage gallery showcasing some of Seafolly’s past campaigns.

Seafolly has a total of 30 stores - 26 in Australia and four in Singapore. From this, Santamaria said the brand will roll out the new concept and expand it over the next three years, which includes the opening of more retail stores in key locations.

Santamaria predicted that omnichannel retailing is balancing following a swing to online over the COVID-19 pandemic, citing this as the reason for its focus on bricks and mortar.

“The demand for Seafolly continues to increase across both in-store and online,” Santamaria said. “We're focused on supporting that omni channel experience.

“However, we haven't declined online - we've grown a bit year-on-year in like-for-like sales.”

“We find that whilst 70% of our transactions commence online, the transactions end up being in the bricks and mortar.”

In owned eCommerce, Seafolly is represented through four websites across Australasia, Singapore, North America and the United Kingdom.

Santamaria said that, since migrating with eCommerce platform Shopify, Seafolly has increased its average order value by about 15%.

“However, the business in the last three years really enjoyed more than 50% increase in its average transactional value.

“And what's driving that? We think the replatform has enabled us to unlock the omni channel environment that really includes a range of services from click and collect to ship from store, reservation of product and delivering that seamless shopping experience.”

As well as balancing commerce channels in online and in-store, Santamaria said retailers should also consider social commerce as well.

“In understanding consumer preferences and shopping habits, retailers are able to tailor their offerings and provide that real personalised experience, and this leads to greater loyalty and increases the likelihood of a repeat purchase,” Santamaria said.

“Experimental retail concepts will still remain a big trend, creating spaces that are designed to offer unique shopping experiences.

“That's the big thing where retailers will really move their shift towards that omni channel retailing and giving consumers that real seamless experience.”

Speaking on the future of Seafolly, Santamaria said he is looking forward to the business experiencing a full year of normality post-COVID.

“We're very proud of what we've achieved, what our employees have achieved for their hard work,” he said. “Hopefully we'll embark on the next phase of growth for the business, and we're working with our shareholders to help raise more capital that will allow us to unlock the value both domestically and in the number of international markets.

“Over the last 18 months to two years, we've gone really hard in recruiting the leadership team we've got and it's been fantastic.

“We're very excited about that next chapter.”

Erica Berchtold, the incoming CEO of Best & Less Group, is on track to join the discount retailer in September as planned despite Brett Blundy and Ray Itaoui lobbing a zero premium, off-market takeover offer for the business.

The Australian Financial Review’s Street Talk column revealed that the pair had made a $1.89-per-share, cash offer for the chain on Sunday night – a 4.5 per cent discount to the last closing price, but supported by its biggest shareholder, private equity firm Allegro Funds.

Allegro controls 32.43 per cent, while Mr Blundy already owns a 16.45 per cent stake of Best & Less, and is on the board. He joined in 2021 when the group hit the ASX at $2.16 per share. The stock fell 3 per cent to $1.92 in afternoon trade on Monday, and was at $1.99 before the deal was announced.

The trust of executive chairman Jason Murray, Bignor Family, controls 8.27 per cent of the retailer and also agreed to back the deal, pending a superior proposal.

The offer was initiated by Mr Blundy’s BB Retail Capital and provides a liquidity event for those two big shareholders, making it appealing despite the discount. The structure of this deal means Best & Less will remain listed on the ASX.

Best & Less has formed an independent board committee to evaluate and respond to the offer, although the men will meet the minimum acceptance threshold of more than 55 per cent. Their ultimate holding will be dependent on minority shareholders wanting to retain some holding in the business controlled by Mr Blundy and Mr Itaoui.

Lead independent director Stephen Heath said while the offer does not contain a typical control premium, and despite the major investors’ acceptance, the independent committee determined that it should be made available to all shareholders to accept or not.

He said it was business as usual, and Ms Berchtold, the former The Iconic CEO, will still join the company on September 4.

“We will carefully consider the proposal and provide a formal recommendation in our target’s statement, and we will also commission an independent expert’s report.

“That being said, we note that the offer will provide an ability for shareholders who wish to exit large shareholdings in [Best & Less] to do so in an orderly fashion without unduly impacting the company share price,” Mr Heath said.

Mr Blundy, he added, is “an individual with a strong track record of delivering value in the retail sector”.

Sources close to the company said the move reflects the underlying confidence that Mr Blundy has in the business, despite its latest results showing first-half profits and sales weaker than expected, with its core customer hit harder by cost-of-living pressures and higher interest rates.

The billionaire is one of Australia’s most successful retailers and is also behind other listed names such as shoe company Accent Group and chairman of the fashion jewellery chain Lovisa. All of these investments are held via his private investment group.

Mr Blundy’s offer comes after he upped his stake to 9.9 per cent in March in troubled retailer City Chic Collective, which operates plus-size women’s apparel brands.

iRetail owner Ray Itaoui joined Mr Blundy in his bid for Best & Less which operates 248 stores and an online platform in Australia and New Zealand through its two brands: Best & Less and Postie.

Mr Blundy lives in Monaco, and has known Mr Itaoui for years. Mr Blundy previously told the Financial Review’s BOSS in 2016 that Mr Itaoui was one of the seven executives who were his partners in the many businesses he has built from Sanity Entertainment and Dusk.

Mr Itaoui is the former CEO of Sanity, which Mr Blundy founded in the 1980s. Mr Itaoui went on to become an integral part of the BBRC organisation and a multimillionaire in his own right.

Australia’s biggest private convenience store operation, 7-Eleven, is up for sale and could deliver the two families who own the franchise chain a multibillion-dollar payday.

“The Withers and Barlow families have decided that the time is right to review options for the future ownership of the business with a view to setting it up for future growth and success,” Russell Withers said on behalf of the 7-Eleven shareholders.

The chain was started by the billionaire businessman Withers and his late sister, Beverley Barlow, in the 1970s. It had grown from a single store in suburban Melbourne in 1977 to become one of Australia’s largest fuel and convenience retailer, with a network of about 750 stores across Victoria, NSW, ACT, Queensland and Western Australia, Barlow said.

The sales process comes one year after the group paid about $100 million in a class action settlement with franchisees after an investigation by this publication and the ABC’s Four Corners program uncovered evidence that the convenience store chain was engaged in systemic wage theft and doctoring of payroll records.

The chain was also forced to pay back more than $173 million to workers, although former Australian Competition and Consumer Commission boss Allan Fels, who previously headed the repayment panel, said that it did not reflect all the unpaid wages.

After the settlement last year, chief executive Angus McKay said 7-Eleven was pleased the matter had come to an “acceptable resolution”, and added the company had also invested $50 million in systems to prevent wage theft, and training for franchisees.

7-Eleven Holdings chairman Michael Smith said in a statement on Monday that the sales process was at an early stage and was expected to take months.

“7-Eleven has an unrivalled brand and convenience footprint in the attractive fuel and convenience market in Australia,” he said.“The business has great momentum and a compelling strategy for growth across convenient food, the continued transformation of our total merchandise offer, digital and format innovation, and new stores. With such a strong platform in place, the shareholders have decided that the time is right for new ownership of the business to oversee the next phase of our growth and development.”

The company was not providing any further details of the sales process, which has commenced, but a listing on the ASX is considered unlikely given the state of the sharemarket, meaning a trade buyer is the most likely option.

While no one is currently offering a valuation of the privately owned business, a sale could yield billions for the owners, based on recent transactions.

Last month, ASX-listed Viva Energy acquired South Australian fuel and convenience store business OTR Group for $1.15 billion. OTR has 174 integrated fuel and convenience stores in South Australia.

7-Eleven is the third-biggest convenience store operator in Australia behind Viva and Ampol, according to RBC Capital. It owns 250 stores, with the remaining 500 consisting of franchise operations. Integrated fuel and convenience stores account for 612 of its outlets with 192 directly owned by 7-Eleven.

Vlad Yakubson has been appointed as the new CEO and MD of specialty home fragrance retailer, Dusk Group.

Yakubson has more than 25 years of experience in specialty retail and is currently the GM of the men’s fashion brand, YD. He has also held various senior leadership roles in visual merchandising, retail operations, finance, marketing and property.

Chairman of Dusk Group, John Joyce, described Yakubson as a “dynamic, value-driven leader” who brings deep retail experience across diverse product categories.

Of his appointment, Yakubson said he is “impressed by the brand’s category leadership, agility and passion for retail execution.”

He will join the group no later than October 31 after he concludes his ongoing commitments.

Yakubson replaces Peter King who resigned in January.

Drinks and hospitality business Endeavour Group is set to make its 14-day payment terms plan permanent for all of its small suppliers.

The group implemented a 14-day payment term plan during the first lockdowns in March 2020 to provide pandemic-related support to more than 900 suppliers across the country.

Last March, the company announced it will extend the program until June of this year – but now it says the program will be permanent.

Group CEO and MD, Steve Donohue (pictured above), said the decision to extend the initiative comes following feedback from suppliers over the last years.

“While lockdowns seem like a distant memory now, the flow-on effects for our small suppliers cannot be underestimated.

“In order to have a vibrant drinks industry, it is important these businesses are given every opportunity to succeed.”

He added many businesses continue to face ongoing challenges such as supply chain constraints, high inflation and rising costs of doing business which warrants the extension.

Suppliers who receive under $1 million in payment from the group and make under $10 million in annual turnover will benefit from these new payment terms.

To align and boost the adoption of a circular economy, Michael Hill has launched a gold jewellery recycling program called “Re:cycle” online.

The program marks the first phase of the company’s new sustainable jewellery ecosystem which focuses on the “renewal and circularity” of existing precious metals and products.

The company says precious metals used to make jewellery can be refined and recycled repeatedly without losing their purity or value.

Daniel Bracken, CEO of Michael Hill, said the ‘Re:cycle’ program is the retailer’s first major foray into jewellery circularity.

“Through research, we know that recycling 1g of pure gold can reduce an estimated three tonnes of ore extraction and avoid up to 16kg of carbon emissions.

“This program, combined with our customers allows us to contribute towards reducing the need for virgin-mined gold.”

Customers can recycle any broken or old gold jewellery pieces in exchange for their value on Michael Hill’s dedicated gold recycling website. They have to send photos and details of their pieces in exchange for a postage label.

Once assessed and valued by Michael Hill’s experts, customers will be a gift card that can be used in-store or online.

The retailer has partnered with a precious metal services company, Morris & Watson, on this initiative.

The Iconic’s Net Merchandise Value (NMV) dipped slightly by -0.2% in the first quarter of 2023, with parent company Global Fashion Group (GFG) reporting a tough consumer climate.

The Group said the Australia and New Zealand (ANZ) region is seeing more cautious consumer sentiment, matched with higher levels of promotion.

As well as The Iconic in ANZ, GFG operates Zalora in South East Asia (SEA) and Dafiti in Latin America (LATAM).

GFG said its overall NMV fell by -6.7% year-on-year (YoY) to €303.3 million in Q1, impacted by order volumes, down -19.1%, and Active Customers down -17.7%.

This was partly offset by the 15.4% increase in Average Order Value driven by inflation, country mix and category mix. Revenue was down -10.1% YoY.

In LATAM, NMV declined -13.7%, while SEA saw a drop of -6.9%. Both regions were affected by marketing investments, alongside reductions in Active Customers.

GFG delivered Gross Margin of 41.1%, a 1.7ppt decline YoY driven by price activity. Profitability was impacted by fixed cost de-leverage which led to an Adj. EBITDA margin of -12.1%.

While macroeconomic uncertainty continues, GFG said it is managing inventory carefully and has reduced inventory levels by €31 million compared to last year.

The Group said it expects to deliver NMV growth between -5% and 0%, c.€1.5-1.6 billion in NMV and c.€1.0 billion of Revenue by the end of year, all on a constant currency basis. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin is expected to be between -3% and -1%.

The Group expects to achieve Adj. EBITDA breakeven in 2024.

GFG said the outlook reflects the demand environment and near term de-prioritisation of growth to protect cash flow and improve profitability. It said these actions provide the opportunity to make year over year gains in Gross Margin and Adj. EBITDA across the second half of the year.

“Our focus remains the same as we set out at our recent Capital Markets Day,” GFG CEO Christoph Barchewitz said. “With ongoing market uncertainty, we are concentrating on what we can control - carefully managing our costs, our inventory and growing our Marketplace, which carries no balance sheet risk.

“This will allow us to stay on the path to profitability, whilst we wait for the right moment to return to investing in growth.”

Private equity firm ACTA Capital is understood to be running the ruler over Seafolly after the business was placed up for sale by the interests of luxury goods retailer Louis Vuitton in recent months.

It comes as other private equity firms have side stepped the opportunity, including Anchorage Capital Partners, which was believed to have looked at the retail brand but opted to bow out of the auction.

ACTA Capital is the firm of former Alceon executive Richard Facioni.

It manages Alceon Group’s investment in Mosaic Brands, the retail business behind Noni B, Millers Rockmans, Rivers, Katies and Autograph among others.

ACTA also has the Alquemie Group retail investment platform with licenced brands such as SurfStitch, EziBuy, Ginger & Smart and Pumpkin Patch.

Sources say that Seafolly, up for sale through FTI Consulting, has up to 40 per cent of the Australian women’s swimwear market, so the question is where the new buyer finds future growth.

It generates more than $90m of annual revenue and is not yet thought to have turned the corner into becoming profitable, but is no longer loss making.

US-based L Catterton, backed by the Arnault family’s company Louis Vuitton Moet Hennessy, purchased the business through a series of deals between 2014 and 2018, but Seafolly fell into voluntary administration in 2020 amid the global pandemic.

L Catterton bought the business out of voluntary administration.

It currently has 30 stores globally, including 26 in Australia and four in Singapore and the brand is sold in 2100 locations globally.

When it collapsed, Seafolly had 44 stores in Australia and its swimwear was stocked in 2,700 stores in 41 countries.

Sales were $112 million in the 12 months to December 2019.

Since that time, Seafolly has purchased the swimwear brand JETs and closed its Sunburn-branded stores.

Elsewhere, some believe that Brett Blundy’s play for Best and Less will result in a deal where the Australian clothing and homewares retailer remains listed, and the retail tycoon simply lifts his stake in the business, enabling Allegro Funds to stage an exit.

That’s because shareholders are unlikely to be keen to sell out price less than they paid for the shares when the business listed in 2021.

Best and Less floated at $271m or $2.15 per share, and Mr Blundy’s deal through his BBRC group involves an offer by takeover of $1.89 per share with a minimum acceptance offer of 55 per cent.

The last traded price before the offer was $1.985.

When the business was listed, Mr Blundy purchased a stake of 16.45 per cent and remains a director and the vendor, private equity firm Allegro, retained 32.43 per cent.

Executive chairman Jason Murray holds 8.27 per cent and is expected to also sell into Mr Blundy’s deal.

Allegro is likely comfortable cashing out at a lower price.

It inherited Best and Less as part of a wider deal with Greenlit Brands and has already made its money on its investment after Harris Scarfe was placed into voluntary administration, enabling it to reset the leases.

Harris Scarfe was then sold it to the Spotlight Group.

Working for Best and Less is E&P Corporate Advisory and law firm Ashurst.

Profits at luxury fashion brand Chanel have surged in Australia over the past year as high-end brands continue to perform strongly despite rising living costs.

Documents filed with the Australian Securities and Investments Commission (ASIC) this week outlining Chanel’s financial performance in Australia for 2022 reveal the company recorded profits of $86.3 million in the 12 months to December 31 – a 32 per cent jump on its $65 million profit the year before.

Chanel had strong sales momentum in Australia throughout the year, booking revenue of $571 million, up from $454 million a year before.

Chanel has a bricks-and-mortar presence across Australia that includes more than 15 boutique stores and its products are also sold through department stores David Jones and Myer.

The 113-year-old brand – founded by French designer Coco Chanel – is a private company owned by Alain and Gerard Wertheimer, whose grandfather was one of Chanel’s early business partners.

Chanel has been reporting global annual financial results since 2018 and has performed strongly throughout the pandemic. Revenue hit $US15.6 billion ($17.8 billion) across all its markets in 2021.

The business will be due to share its global financials for 2022 in the coming month, but the group’s Australian numbers filed this week indicate that trading conditions remain strong.

Chanel Australia did not comment on the local numbers or the trading conditions which led to them.However, in an interview with the Financial Times last week, Chanel’s global chief executive, Leena Nair, said she was cautiously optimistic about the outlook for luxury goods, noting pent-up demand for products in markets such as China.

Luxury fashion operators have been resilient despite global economic jitters and predictions about a broader slowdown in discretionary spending.

The world’s largest luxury goods company, LVMH, smashed analysts expectations last month when it reported a 17 per cent jump in quarterly sales to €21 billion ($34 billion). The company told investors that the numbers marked an “excellent start to the year” despite uncertainties about the global outlook.

“Asia experienced a significant rebound following the lifting of health restrictions,” the company said.

Demand for designer goods has also remained strong across Australia’s second-hand market, including platforms such as eBay. Data from eBay Australia this year revealed that the listing price of a second-hand Coco Top Handle bag by Chanel increased from $3700 to $7000 between 2019 and 2022.

Local retail analysts have recently pointed out that a “two-speed” consumption pattern is emerging in Australia, with high-income earners still more than happy to spend on discretionary goods at the same time as lower-income Australians are cutting back.

“The tight economy shines favourably on higher-income groups due to the wage gains they are experiencing and ownership of assets,” UBS said in a note to clients last month.