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Authentic Brands Group will look to expand Boardriders branded shop-in-shops, retail stores, e-commerce and wholesale distribution, as well as establish an online marketplace, after finalising its deal to buy the parent of Billabong and Quiksilver.

ABG chief executive and founder Jamie Salter overnight penned a definitive agreement to purchase Boardriders, owned by Oaktree Capital Management, which values the group at $US1.25 billion ($1.88 billion). The transaction was flagged a week ago after a prolonged sale process.

Billionaire Mr Salter said on his Instagram feed that as an early believer in the global appeal of action sports, “this one brings me back to my roots. We see big things on the horizon with @weareboardriders.”

The acquisition includes two of Australia’s most well-known surf labels, Roxy, RVCA, DC Shoes, Element, VonZipper and Honolua, as well as local retailer Surf Dive ’n Ski, which has more than 80 locations and an e-commerce platform.

Boardriders has operations across the Americas, Europe, Australia and Asia via a network of 500-plus owned retail stores, 7000 wholesale accounts, and e-commerce sites in 35 countries. It posted about $US1.8 billion in top-line sales last financial year to October 31.

ABG staff visited Australia in January as part of its due diligence process and will now likely send a team down under to hammer out final details with regional operating partners.

Headquartered in New York, ABG connects brands with operating partners and distributors, and earns royalty fees. Its brand portfolio includes surf, skate and snow brand Volcom, Reebok, Brooks Brothers, Elvis Presley, David Beckham, Juicy Couture and Ted Baker.

ABG confirmed that it will look to leverage its global network of category experts and operating partners to convert Boardriders into a licensed business model.

“The company is in discussions with several current and new operators in key regions to manage the manufacturing, physical retail, e-commerce and wholesale operations of Boardriders,” it said in a statement.

It already has licensing deals with two of its brands, Nautica and Brooks Brothers, with True Alliance. Michael Hendler’s True Alliance also holds the exclusive distributor rights of The North Face in Australia and New Zealand.

Conquest Sports, which holds the rights for the Converse brand in Australia and New Zealand, also has a joint venture with Blue Star Alliance to distribute surf brand Hurley locally. Blue Star looked at buying Boardriders, and could still strike a deal with ABG for certain brands via this JV.

ABG in 2021 bought US outdoor sportswear retailer Eddie Bauer, which was added to SPARC Group, a joint venture between mall owner Simon Property Group and ABG. It could add the Boardriders operations in the US to this platform, leaving only Asia Pacific and Europe to licence operations or brands.

Boardriders has a big business in Australia and NZ. It has its regional HQ at Burleigh Heads, Queensland and an office at Torquay, Victoria. It has about 300 corporate staff and 1200 working in retail at its 157 stores.

Some brand owners keep tight control of the brand designs and ethos by centralising design and specification while other owners allow local licence holders have more flexibility in terms of localising product design.

“There are no hard and fast rules. It will be interesting to see how they try to make this work regionally,” said one retail boss, who wished to remain unnamed.

“They need to find a middle ground. They need enough relatively locally to sell products because there are differences in countries and regions.”

It is unclear if Boardriders CEO Arne Arens will remain in the business, but his role would be significantly reduced given the operational break-up. He said in a statement that it was great to find a home for Boardriders with Authentic, one of the world’s premier brand owners and marketing platforms.

“Our brands and business have strong equity and an established and profitable organic growth strategy in place. We are confident that Authentic will bring the expertise and resources required to drive the next phase of Boardriders’ journey,” he said.

Australia’s retail sector is bracing for a jolt from changes in consumer spending as shoppers return to their pre-pandemic patterns and take a more cautious approach to household consumption.

Online-only brands and big-ticket homewares sellers could come under the greatest pressure as consumers let go of online shopping habits developed over the past three years, while retailers focused on dining and drinking at home are better placed.

A quarterly consumer survey from investment bank UBS shows alcohol is one of the few spending areas where consumers plan to cut back, while intentions to shop online plunge as bricks-and-mortar store trading continues to rebound.

While Australians overall are still happy to open their wallets – particularly wealthy consumers with strong job security – low and middle income earners are feeling the heat, the survey of 1000 shoppers found.

This pressure is likely to last, according to the International Monetary Fund’s economic outlook statement released this week, which predicted global growth would be feeble for the rest of the decade and higher costs of living would persist.

The online slowdown threatens the outlook for pure-play stocks such as Temple & Webster, Adore Beauty and Kogan, UBS’s equities team said. These three companies have all had steep share price losses over the past 12 months after reporting a slowdown in consumer demand.

The number of consumers saying they intended to shop online at stores such as Bunnings, Kmart and JB Hi-Fi are at their lowest levels since 2021.

UBS reiterated its preference on Wednesday for stocks exposed to spending from affluent earners, who have deep savings and may own their own homes, and younger consumers who have fewer financial commitments. Stocks such as Treasury Wine Estates and youth jewellery brand Lovisa are likely to stay resilient because their core consumers have the strongest spending intentions.

While overall Australians remain optimistic about their spending capacity in the next year, middle income earners have started to become more cautious, giving retailers such as Wesfarmers an advantage as shoppers “trade down” to more budget purchases, analysts said.

UBS retail analyst Shaun Cousins said consumers were also being more discerning about eating and drinking outside the home.

“The consumer is managing the higher cost of living with deliberate category decisions of where to spend. In alcohol, as well as food, we expect a shift to more at home, and less out of home, consumption, given the lower cost of at home consumption,” Cousins said.

“For Endeavour Group, this is a negative for its hotels division yet a positive for its retail division, reflecting its diversified position within the alcohol industry.”

Monthly household expenditure data from the Australian Bureau of Statistics released on Wednesday showed that through-year spending increased in all categories except for alcohol and tobacco sales, which declined by 12 per cent in February.

Overall household spending rose 11.8 per cent, driven by growth in non-discretionary purchases as households spent more on food and transport.

Major supermarkets Coles and Woolworths have previously flagged they expect more consumers will dine at home instead of at cafes and restaurants as more budget-focused shoppers feel the pinch.

A cost of living survey of more than 9000 Coles customers for March, released on Wednesday, showed that 66 per cent of shoppers reported cutting back on dining out and eating fast food.

The supermarket giant said young singles and couples were among those now starting to curb everyday expenses, with 86 per cent of shoppers saying they were now changing how they shopped to reduce their grocery bills.

The Iconic chief executive Erica Berchtold is moving from high fashion to the value end after being appointed to run discount chain Best & Less.

Ms Berchtold has headed Australia’s largest online-only fashion and lifestyle retailer since 2019, during which time the business has grown to over $700 million in revenue. She now will need to look after 248 physical stores as well as an online platform at ASX-listed Best & Less.

Ms Berchtold will join Best & Less on September 4. In the interim, Jason Murray will remain executive chairman before returning to his role as non-executive chairman.

“After an extensive global search, I am delighted to announce Erica Berchtold as the next CEO of Best & Less Group,” Mr Murray said.

“Erica’s strong retail experience and track record of delivering profitable growth in a variety of retail markets, alongside her proven leadership skills, makes her the ideal candidate to lead the business through its next phase of growth. The board has been extremely impressed by Erica’s passion for our customer and category, and her value creation mindset.”

n February, former chief executive Rodney Orrock decided to leave the retailer to focus on his health and recover from his treatment for lymphoma.

Before The Iconic, Ms Berchtold was managing director of Super Retail Group’s Rebel sporting goods division, and she also worked for Specialty Fashion Group as general manager for Crossroads and Autograph, two women’s fashion apparel brands.

She started her career in technology sales and distribution before swapping into retail and joining Harvey Norman as a product manager in 2000. She then moved to Rebel, then owned by Harvey Norman as head of merchandise and marketing. Furthermore, she helped reposition the business ahead of its sale to private equity in 2007.

Under her leadership, The Iconic expanded beyond apparel and entered into partnerships with the likes of AirRobe, where shoppers could begin offering resale as an optional service at the point of sale.

Ms Berchtold said she was excited by the challenge of taking the retailer through its next phase of growth.

“Best & Less’ brands are synonymous with quality and value and having a close affinity with mum and her family,” she said. “As a mother of three young children myself I can personally attest to that, and I look forward to deepening that relationship further to move us closer to our goal of being the number one choice for mums.”

Ms Berchtold takes the helm at a tricky time in retail with the lower socioeconomic segment of consumers being hit harder by rising cost of living and higher interest rates.

In its latest half-year results, the retailer flagged that profits and sales were weaker than expected in the first half, with foot traffic and demand “weaker than anticipated”. Net profit after tax fell 31.8 per cent to $13.7 million for the six months ended January 1.

LVMH, Europe’s largest company by market value, has now made it to the world’s top 10.

A first-quarter sales beat sparked a 5 per cent increase in the share price on Thursday (Paris time), giving the luxury powerhouse a 29 per cent rally for the year.

That, along with a gain in the euro against the dollar, lifted LVMH’s market capitalisation to $US486 billion ($716 billion), briefly ranking it as the world’s 10th biggest company. Should it reach $US500 billion, it would become the first European company to achieve that milestone.

“This illustrates the rise of wealthy people across the world, of a polarised society,” said Gilles Guibout, head of European equity strategies at AXA Investment Managers. “The luxury sector is therefore experiencing strong growth.”

For a growing crowd of investors, LVMH and its French luxury rivals are to the European stock market what big tech has been to the United States: dominant businesses whose growth holds up even as the economy waxes and wanes.

Shares of LVMH and Hermes International have on average returned more than 20 per cent annually the past decade, and Kering has returned 16 per cent. The Stoxx Europe 600 Index lags at 8.3 per cent annually.

“We have always invested in tech and in luxury, but the advantage of luxury on tech is that, while there are risks, disruption and obsolescence are lower,” said Guibout.

The robust sales of Louis Vuitton handbags and Moet & Chandon champagne that have lifted LVMH’s share price also have bolstered the wealth of its founder, Bernard Arnault. He’s the world’s richest person, with a $US198 billion fortune, according to the Bloomberg Billionaires Index.The catalyst for this year’s luxury gains, as in many recent years, is China. Coming out of the world’s strictest lockdowns, Chinese shoppers are splurging on luxury handbags and jewellery. LVMH’s soaring sales shows that demand for highly priced goods remains unabated even as a global economic slowdown looms.

Hermes International’s quarterly sales jumped as the maker of Kelly bags continued to see strong demand from Chinese customers. First-quarter revenue was up 23 per cent, Hermes said in a statement on Friday. Analysts had expected a gain of 16 per cent. Asia-Pacific excluding Japan was up 22.5 per cent. Hermes said it had a “very good” Chinese New Year.

The rally in luxury shares has cemented Paris’s standing as Europe’s biggest stock market, eclipsing London. The benchmark CAC 40 Index is on a record-setting spree, with gains of more than 15 per cent this year, outpacing other major markets.

The recent gains have taken LVMH’s valuation to 26 times forward earnings, twice that of the CAC 40. That doesn’t bother Nicolas Domont, a fund manager at Optigestion in Paris.

“It has become a must-have stock,” said Domont. “If it continues to deliver, I don’t have any problem paying the premium.”

LVMH shares closed 5.7 per cent higher at 883.9 euros on Thursday.

Sceptics say the durability of luxury sales in recent years has yet to be tested by a long economic downturn. In a recession, all but the wealthiest of shoppers are likely to curb their spending, they say.

“I have been dead wrong advising clients to stay away from luxury, but I am convinced [and stubborn] that something has to give in and that the risk-reward is still unfavourable,” Laurent Lamagnere, equity sales at Alphavalue in Paris, wrote in a note to clients on Thursday.

“I still don’t buy the idea that luxury is immune to consumption.”

Australian specialty pet care provider Greencross Pet Wellness Company is set to acquire Habitat Pet Supplies.

Habitat Pet Supplies is a family-owned business that sells a range of pet products including bowls, toys, collars and treats along with in-store pet grooming services.

It has five stores in Melbourne across Altona North, Burwood, Chirnside Park, North Melbourne and Port Melbourne, and sells online.

The deal, which is subject to the approval of the Australian Competition and Consumer Commission, will merge Habitat Pet Supplies’ business with the company’s Petbarn brand.

Co-founder Dean Pantalleresco said the business has “focused” on being at the forefront of pet retailing, adapting to industry growth and the evolving needs of customers.

Petbarn’s COO, Scott Charters, said the business will “continue the legacy” the Habitat team has built with its customers in the Melbourne community.

“Under the Petbarn brand, we will continue to provide exceptional customer service and education to local pet parents.”

Until the transaction is completed, the company will trade normally with no immediate changes to its suppliers or store teams.

Australian online marketplace Kogan has slashed its inventory by more than half and returned its net cash to black compared to this time last year.

Kogan said the reduction reflects the significant right-sizing of inventory levels to match prevailing levels of demand. This includes rationalising inventory categories, renegotiating supplier contracts and recalibrating marketing spend.

As at March 31, 2023, Kogan’s inventory sat at $78.3 million (comprising $68.2 million in-warehouse and $10.1 million in-transit), down from $193.9 million (comprising $169.5 million in-warehouse and $24.4 million in-transit) as at March 31, 2022.

The etailer also accrued a net cash (after loans and borrrowings) of nearly $49.1 million, compared to -$(6.3) million in March 2022.

The reduction in cash since December 31, 2022 was offset by a corresponding reduction in Trade Payables, according to Kogan. As of today, all debt within Kogan.com has been repaid, while a small advance remains drawn within Mighty Ape.

Founder and CEO Ruslan Kogan welcomed the positive results despite subdued sales activity in the third quarter of FY23.

“After a series of challenging periods, I’m proud that Kogan.com has returned to sustained underlying profitability, reflecting the efforts of our brilliant team and the agile and robust business we have built,” Kogan said.

“The journey to get here has been one of the toughest in our 17-year history, but also one of our most rewarding.

“It goes without saying – we are a far stronger Company today than ever.”

Meanwhile, Kogan’s gross sales of $188.7 million declined 28% year-on-year, which it said reflected soft market conditions caused by interest rate rises and inflationary pressure.

Its gross profit of $34.3 million was impacted by soft topline performance mentioned above.

Kogan’s gross margin increased 6.5pp to 31.6% over the quarter, reportedly driven by the conclusion of significant discounting to sell-through aged inventory at the start of Q3 FY23 and an increased proportional contribution from the Marketplace, Verticals and Kogan First commission streams.

Its variable and marketing costs as a percentage of gross sales reduced to 8.1% from 10% in Q3 FY22.

It’s earnings before interest, tax, depreciation and amortisation (EBITDA) was $4.4 million, up from -$(4.0) million in the prior corresponding period.

Kogan ended the period with 2,296,000 active customers, with its NZ etailer Mighty Ape reporting an active customer base opf 760,000

Kogan First subscribers grew by 24.3% to over 407,000 as at March 31, 2023.

“In these current tough economic conditions, we are a proven and loved shopping destination that helps millions of shoppers save on products and essential services,” Kogan said.

“We are dedicated to helping our customers live life to the fullest.”

Peter Alexander is finalising a cross border eCommerce partnership, which will grow the sleepwear brand internationally across 35 countries.

Peter Alexander has more than doubled its sales over the past four years, with another record result in the first half of the 2023 financial year. The brand delivered $261.7 million in sales for the period, up 15.1% on 1H22 and up 80.7% on 1H20.

Parent company Premier Retail is now finalising the cross-border agreement to allow fast and simple online shopping for international customers. The launch in 1H24 will be supported by digital marketing programs in select countries.

Peter Alexander has also identified 20 - 30 opportunities for both new or larger format stores in the near term to showcase an expanded product offering. 

"Today, Premier Retail is uniquely positioned to continue to deliver with our brands identifying key growth paths for the future, whilst leveraging synergies within the Group’s global operations.”

Premier Investments has delivered $174.3 million in first half profit, with Jacqui E securing its highest ever sales result in over a decade.

Premier Retail reported global sales of $905.2 million for the first half of the 2023 financial year, up 17.6% on the same period last year. Earnings before interest and tax (EBIT) grew 12.2% to $221.8 million.

Premier Retail is the parent company to Australian fashion retailers Peter Alexander, Jay Jays, Dotti, Jacqui E, Just Jeans and Portmans.

Premier Retail CEO Mr Richard Murray confirmed a strong start to the second half, with total sales for the first six weeks through February and into March up 7.7% on 2H22. 

“We have opened the second half strongly and are well-positioned to drive growth from our powerful retail model. We remain focused on continuing to deliver relevant and quality products, enhancing our digital offering, optimising our store portfolio and identifying new store opportunities to support growth."

Across its portfolio, Peter Alexander reported the largest percentage growth in sales for the half against pre-pandemic, up 80.7% to $261.7 million. Against 1H FY22, its overall sales increased 15.1%.

Peter Alexander has identified 20 - 30 opportunities for both new or larger format stores in the near term to better showcase a wider product offering that has been developed in recent years.

The brand is also planning for future offshore market opportunities, including a partnership agreement with a global cross border e-Commerce platform provider to grow Peter Alexander internationally across 35 countries.

The launch in 1H24 will be supported by digital marketing programs in select countries.

Premier Investments' other apparel brands collectively delivered $452.8 million in sales for 1H FY23, up 14.3% on 1H FY22 and up 15.1% on 1H FY20.

Just Jeans, Portmans and Dotti all delivered record sales in the first half of $162.6 million, $87.6 million, and $59.5 million respectively.

Jacqui E delivered its highest first half sales result in over a decade of $43.5 million, while Jay Jays delivered its second best first half sales result in the past decade of $99.6 million.

Online sales across the group hit $170.9 million, down 12.5% on 1H22 but up 75.8% on ‘pre-COVID’ 1H20.

For Solomon Lew it’s all about timing. And this time around the multibillionaire is about to embark on another of his trademark counter-cyclical plays.

Faced with a very likely slowdown in consumer spending as central banks drive up interest rates, Lew isn’t about to retreat – he is attacking. It follows Lew’s habit of picking up stakes in names from Breville to Myer when no one else would touch them. It also comes from seeing the potential in low profile brands to turn them into global names.

The retailing boss and his chief executive Richard Murray are pivoting. They are now embarking on a push to open dozens of new stores for his two powerhouse franchises Smiggle and Peter Alexander. The openings extend to here and offshore, consolidating both brands as longer term drivers of growth for retailing empire Premier Investments. The expansion flies right against the trend across retail that had set in even before Covid to cut store numbers and use online to drive distribution.

Between the two brands as many as 60 new stores are planned and for pyjama king brand Peter Alexander there is also a push to open big box stores as well as rolling out the online offering into 35 countries, giving a huge footprint.

The brand, which is turning over more than $520m in sales on an annualised measure has positioned itself at the top of the gifting market and so this puts it on the radar during events periods: Black Friday. Christmas, Easter, and Mothers and Fathers Day, so the settings need to be just right in meeting the surge in demand.

Meanwhile, kids stationery retailer Smiggle which counts stores in the UK and Singapore is expanding again after shutting down Smiggle stores that were hit hard through the Covid pandemic lockdowns.

The store openings are about longer term moves for Premier, which counts Just Jeans, Jay Jays and Dotti as more mature brands in its portfolio.

“We’re seeing opportunities that suit the market,” Lew says. “Unfortunately I think there are some difficult times coming for a lot of companies that are just not capitalised enough or have the management to execute”.

“We’ve got great leadership in our businesses from our perspective and from our board’s perspective, we see real opportunity,” he adds.

For Lew and Premier the expansion is also partly to bolster his position in the never-ending battle against shopping mall landlords over high-priced rents. Lew has a history of playing hardball with his store network and here seizing the chance to pick up prime outlets left vacant by other brands on the cheap. Indeed landlords will be ready to strike a long term deal on rental costs while momentum is moving against them. At some point the cycle will turn, which means Lew will be positioned several steps ahead of rivals.

Lew finally found a use for the cash that was building up on Premier’s balance sheet – sending it back to shareholders as Lew declared a first half dividend of a full 70 cents a share, including a 16 cent per share special dividend. It came after Premier delivered a first half profit of $174.3 million, up 6.5 per cent. While sales momentum is likely to slow following the burst of catch-up consumer spending after Covid, the company is on track to top $2bn in annual sales within the next two years.

Murray, the former boss of JB Hi-Fi, says as a retailer the aim is to focus on the things you can control. This includes working with suppliers to make sure there is new stock and trends to keep consumers coming back. “There’s a lot of things in our control to make sure we juggle all the complexities of whatever sales momentum is thrown at us,” he says.

Online push

The investment in stores comes at the same time as Premier’s online offering is also being built out. Premier has just switched on a multibrand offering across its Australian websites which means someone buying jeans can also buy some Peter Alexander pyjamas on the same website using the same checkout and the items will be shipped in a single delivery.

Here Lew is leveraging the benefits of the massive distribution centre that was opened in 2015 for a cost of almost $30m. At the time Premier purchased the site in the city’s west and built its own warehouse, helping to lower costs and cutting out a long term rent cost which would have gone to a commercial landlord. Crucially the move to a single site gave Premier better control over its supply chain allowing Premier to better manage surge periods. Online sales represent 19 per cent of Premier’s total sales, and each item gets a better profit margin. Indeed online is Premier’s most profitable channel.

Meanwhile, Lew wouldn’t be drawn on his intentions for his 25.8 per cent stake in Myer but the department store operator can expect the billionaire to tighten its grip by up to 3 per cent every six months under the creep acquisition rule.

BOQ’s holding pattern

By the time 2025 rolls around, regional lender Bank of Queensland would have had five chief executives and three chairman over a decade. Each one has brought with them their own strategy.

If – and a big if – reinvigorated Victorian regional Bendigo Bank hasn’t yet made its buyout approach as The Australian’s Bridget Carter has written then BoQ faces a market in two years time where ANZ-owned Suncorp will be doing everything to retain customers in the state.

That’s going to be a bloody banking battle in Queensland as others also look to disrupt ANZ’s momentum.

Digital competition will be fierce. Banks from Bendigo, Macquarie to the big four all having their fast online loan approvals in place. Higher interest rates around the world, for longer, means funding will carry a premium while rising costs will force a hard rethink around the role of branches in supporting a bank.

This is the reality of the world BOQ faces, but rather than tackle the issues now with a permanent management team, executive chairman Patrick Allaway is looking backwards by installing himself as CEO for the next two years. There’s been a reshuffle on the BoQ board, with former Colonial boss Warwick Negus stepping up as chairman.

Allaway has awarded himself the role of CEO until December 2024 to provide “stability and continuity” for the regional bank. But his actions do just the opposite. It puts BOQ in a strategic holding pattern, leaving it ripe for a takeover.

Allaway brutally moved on his previous CEO George Frazis last November when he saw alleged governance slippages. At the time, they gave the market nine months to get a new CEO in place. We are not even through month four.

But the message is Allaway and his international executive search have clearly come up short – even with internal candidates.

Instead, Allaway has made the wrong decision to install himself to lead a short term management team. In any race, this leaves BOQ two years behind and facing a stopgap strategy until a yet another CEO and another strategy can be found. It also sends the wrong message to the market around internal contenders including BOQ’s retail banking boss and former head of ME Bank, Martine Jager.

Allaway’s executive experience extends to UBS frontrunner and Citigroup, although this was a lifetime ago in banking. More recently he has been a non-executive director on boards from Fairfax Media, Nine Entertainment, Woolworths South Africa and Metcash. He is not an experienced retail banker of the likes of Suncorp’s current CEO Clive van Horen.

All this leaves BOQ in a weakened state just as funding markets are turning against smaller lenders given the global stresses caused by Silicon Valley Bank.

Bendigo CEO Marnie Baker meanwhile is fully focused on the slither of opportunity of moving on Suncorp bank if ANZ’s $4.2bn friendly buyout is knocked back by regulators. A decision on this is expected by the end of June.

Bendigo has publicly played its card of saying it has ambitions of a bigger balance sheet and growing in Queensland. As an investment banker, Allaway should know better – he has just strengthened Baker’s hand – if she does come knocking.

Higher interest rates and cost-of-living pressures are forcing households to ease up on non-essential spending, with new data showing retail sales have not grown at all in five months, despite modest gains in February.

Retail sales increased 0.2 per cent last month, according to data released by the Australian Bureau of Statistics on Tuesday.

But at $35.1 billion, the value of monthly sales was the same in February as it was in September, showing the pandemic-era period of rapid growth in retail spending has come to an end.

Given both the population and the price of retail products increased between February and September, the fact that the total value of sales has not grown implies households are buying fewer things.

ABS head of retail statistics Ben Dorber said sales had levelled out after a period of heightened volatility, caused by shifting seasonal spending patterns, including the emergence of Black Friday sales in November.

“On average, retail spending has been flat through the end of 2022 and to begin the new year,” Mr Dorber said.

“Spending in food-related industries continued to grow steadily in February, with cafes, restaurants and takeaway food services up 0.5 per cent, while food retailing rose 0.2 per cent.

“Non-food industry results were mixed as consumers continue to pull back on discretionary spending in response to high cost of living pressures.”

Hospitality still strong

Commonwealth Bank chief executive Matt Comyn said internal bank data showed spending remained strong in areas such as hospitality, while parts of the retail sector were experiencing weaker conditions.

“We don’t see a rapid deterioration in conditions coming,” he told The Australian Financial Review Banking Summit on Tuesday.

The retail trade figures were one of four major data points that RBA governor Philip Lowe said would be pivotal to next month’s rates decision.

The first two data points were stronger than expected: the unemployment rate fell back to a near 50-year low of 3.5 per cent in February and surveyed business conditions remained close to historic highs.

While markets expect the RBA board to keep the cash rate on hold at its April 4 meeting, most economists expect the central bank to deliver an 11th consecutive rate rise, amid persistent inflationary pressures.

BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said the slowdown in retail spending had been expected for some time, due in part to consumers shifting spending towards services, which are not fully captured in the retail trade figures.

“Moreover, higher interest rates are working to dampen consumer spending,” he said.

Mr Langcake said future RBA interest rate decisions were “lineball”, meaning each data point was being increasingly scrutinised for signs that higher interest rates were having their intended effect.

“There is nothing too surprising in these data about how the anticipated slowdown in consumer spending is unfolding,” he said.

“There are signs that goods price inflation is cooling, as is consumer spending more broadly. But the ongoing pickup in hospitality spending is a sign of persistence in services demand and inflation.”

JPMorgan economist Tom Kennedy said the pullback in retail spending was pronounced, and was reflective of the broader slowdown in economic activity caused by higher interest rates.

“Today’s outcome is particularly underwhelming relative to the prior inflation backdrop which has offered nominal supports to the retail sector,” Mr Kennedy said.

Commonwealth Bank economist Belinda Allen said she expected consumer spending to moderate further over coming months.

“The impact of higher interest rates will continue to intensify. Together with negative real wages growth, this will impact households’ available cash flows,” she said.

Scotch & Soda has been acquired by New York-based brand management firm Bluestar Alliance after filing for bankruptcy for its Dutch operations last week. 

The value of the deal has not yet been disclosed, but the closing of the transaction is expected to take place within weeks. 

Despite recording €342.5 million (US$369.42 million) in revenue last year, the fashion brand was unable to keep its operations afloat due to “severe cash flow issues” caused by the pandemic, along with the impact of the war in Ukraine and inflation.

Bluestar Alliance said the acquisition will allow Scotch & Soda to continue its operations and products across key markets, including the Netherlands. The brand’s products are distributed by 7000 retailers globally and it operates 252 of its own stores outside its home market.

“Bluestar continues to strategically build its portfolio and we see Scotch & Soda as a unique fit,” said Joseph Gabbay, CEO of Bluestar Alliance. 

Founded by Gabbay and Ralph Gindi in 2006, Bluestar Alliance’s portfolio of brands includes Hurley, Bebe, and Tahari. The company manages a current portfolio of more than 300 licensees.

“Our goal is to continue Scotch & Soda’s luxury retail distribution strategy, while also introducing the brand to more trendsetters, especially those looking to express their personality through their clothing,” said Gindi, who is also the COO of Bluestar Alliance. 

The retailer group representing Coles and Woolworths has called for a 3.8 per cent increase in minimum and award wages, the highest of all the employer groups.

A submission by the Australian Retailers’ Association (ARA) to the annual wage review argues a 3.8 per cent increase would account for a forecast drop in inflation by June 2024, as well as the 0.5 per cent rise in superannuation.

The wage increase would flow on to 2.6 million award workers as well as hundreds of thousands under retail and fast-food agreements, which tie their annual wage rises to the minimum wage decision.

But the Shop Distributive and Allied Employees Association is supporting the ACTU’s call for 7 per cent, arguing its members are experiencing hardship that has surpassed the global financial crisis, and retail profits mean they can afford a real wage rise.

The ARA submission, spearheaded by chief executive Paul Zahra based on membership consultation, said it supported a “sustainable increase” that helped retail workers keep pace with rising cost of living and that it should be “based on the underlying inflation rate”.

“The ARA therefore recommends an increase of 3.8 per cent in the minimum wage to take effect from July 1, 2023 based on the current rate of trimmed mean inflation at 6.9 per cent less the 0.5 per cent increase in superannuation and less the projected 3.1 per cent decline in inflation through 2023-24,” it said.

“We believe an increase of this magnitude strikes the balance between an employer’s ability to keep pace with the rising costs of doing business, against an employee’s expectation that wages grow in line with prices.”

It follows Australian Chamber of Commerce and Industry calling for a 3.5 per cent increase – its highest in decades – and the Australian Council of Trade Union pushing for a record 7 per cent increase.

The Consumer Price Index as of the December quarter was 7.8 per cent, with underlying inflation at 6.9 per cent. But monthly CPI indicators suggest headline inflation fell to 6.8 per cent in February.

The ARA said it would update its claim when the March figures are released but it argues the Fair Work Commission should not base its decision just on past inflation rates but also the year ahead.

It cited Reserve Bank forecasts that underlying inflation will fall to 4.3 per cent by the end of the year and 3.3 per cent by June 2024.

Worker ‘despair’ worse than GFC

However, the SDA said that a study by University of Wollongong Associate Professor Martin O’Brien found the proportion of retail employee households assessing themselves as “just getting along” and “poor” had increased from 26 per cent to 30 per cent in 2022.

“The SDA has not seen in any recent past decades, this level of hardship among its members,” the union’s submission said.

“Not even the GFC caused such significant distress or despair from members.”

A female assistant department manager described herself to the union as “working poor” and said mortgage, car and phone bills took up her entire pay.

Another 55-year-old female retail worker quoted in the submission said she was now paying bills in instalments and her situation was “desperate”.

The SDA points out that the top 10 retailers’ earnings before interest and taxes grew by 51 per cent since 2019 and sales grew for eight of them last year.

However, the ARA warns anything higher than 3.8 per cent should be offset by productivity gains to reduce inflation risks and avoid “over-stretching smaller retailers who have limited reserves to incur higher labour costs, in addition to higher costs of doing business”.

The ARA said there were early indications that economic growth was slowing, with retail reporting the first month-on-month declines in trade for more than a year in December 2022.

“Analysts report that retail sales volumes are flat and that growth in retail trade is being driven by increases in prices, not volumes,” it said.

According to an ARA survey of 141 members, nearly 75 per cent had passed on higher costs to consumers as higher prices but more than 50 per cent said they had suffered higher prices by reducing margins.

When Tania Austin walked away from Cotton On, a company she grew from just a handful of stores to a retail powerhouse alongside former husband Nigel Austin, she had three children under the age of four. She could be forgiven for taking time out to regroup.

Instead, she bought five women’s fashion stores under the Decjuba (pronounced De-Cuba) banner, throwing herself into the business that 15 years later is one of the country’s most successful retailers.

Boasting 140 stores across Australia and New Zealand, it’s turning over more than $170 million a year. Her success has made her a fixture on the Financial Review Rich List.

Austin, who’s held a job ever since she was 12 years old when she’d lick stamps and send envelopes with concert tickets at Perth’s former Entertainment Centre, tells The Australian Financial Review’s Female Founders podcast that she was given a rare moment to figure out what she wanted to do with her life. And working was critical.

“I thought, ‘what sort of role model do I want to be for my children?’ And what are the role models I’ve had around me, and particularly female ones? I’m going to be a single mum for the foreseeable future. What do I want that to look like?” she says on the podcast.

“And I think that, for me, working was really a big part of that puzzle. I wanted my children to know that I am many things, a mother being one of them, and that it’s important that they could see that I had other aspects to me and that they know growing up that that’s the life they can choose as well. They can bring to the surface whatever they want to be as well.”

She jokes that at first she thought she could get away with working one day a week, a Monday, after buying Decjuba. Afterall, it was just five stores and when she’d left Cotton On it had 400.

But in reality, it was never a one-day a week gig. “It became all consuming because the passion is no different regardless of if there’s one store or 400 stores. The passion, the energy, the ideas and what you want to do is still the same.”

Austin grew up in the working-class Perth suburb, Warwick. She studied psychology at The University of Western Australia, before moving to Melbourne to build Cotton On. In the early days, it was all hands on deck – she was sweeping floors, buying and unpacking stock and driving it to stores.

These days, Austin is pushing the limits, challenging her 165-strong head office team (plus more than 2,000 people employed across the store network) in the pursuit of growth. Businesses need clarity of vision, she says.

For her, it took four to five years to nail down a simple strategy. “Make our customers look and feel amazing.”

“Once we had settled on that everything else became so much easier. I want our customer to look and feel amazing, so now how do we do that? So, how do you stay focused, how do you make sure Plan A is right? It is having something like that, that is so crystal clear, that you can continually come back to it.”

Growth has come with a razor sharp focus on the company’s bottom-line and operating with a small business mindset.

“We have never grown at a rate faster than we can finance,” she says.

“There’s been a huge discipline about that. But what it has meant is that when we’re doing those leasing deals, there is not an extra cent to give, there just isn’t.

“In many ways, we have quite a small business mindset in the way we operate. We don’t look for the flashy option. We’ve never spent on marketing along the way. I’m a big believer in that the brand, and the product need to stand on its own two feet. We’ve never spent money that we’ve never had.”

‘Do you. You’re going to be judged anyway’

That doesn’t mean the 51-year-old isn’t a risk-taker. During the depths of the pandemic, when her fellow retailers were riddled with fear and pulling back, she doubled-down.

“Lots of retailers were closing down and I saw that as an opportunity to go and open stores and double the footprint of our stores. The team were really nervous about that. I had to push them on that and challenge them and explain the ‘why’ behind it.

“I often consider the business as a three P business. We’ve got product, which is obviously what we produce, we’ve got our people, which is incredibly important. And then we have our property. There was just a huge opportunity through that time, while everyone was sort of thinking they needed to shut stores. It was going to go one of two ways. The world was imploding, or there was going to be a recovery at some point. And life was going to emerge in a different way, but it was going to happen.”

A retail career spanning three decades has given Austin plenty of perspective. She tells the Female Founders podcast if she could go back 15 years to when she started she would tell herself, “do you”.

“You’re going to be judged anyway, whether you’re divorced or single, have three children or no children, have a business or not have a business,” she says.

“Who I am, how I show up, what I do and what’s important to me, is what I would tell myself to focus on because you’re going to be judged whatever you do.”

The other thing she’d tell herself is something she thinks gets easier to do as you get older, so it would have be good to hear it when she was younger: “Embrace change.

“I see it time and time again that people just get caught in doing things because they’ve done them and not challenging it.

“Some of the greatest things that have happened in my life wouldn’t have happened if I kept doing things the same way.“

Scentre Group has reported 125 million customer visits in the first 13 weeks to April 2, 2023.

This is 17 million more visits compared to the same period last year, according to the shopping centre operator. 

Scentre Group CEO Elliott Rusanow credited the result to a strategy of driving customer visitations through activating Westfield destinations. This includes a recent collaboration with Disney, celebrating its 100th anniversary through special events across its portfolio.

“Our Westfield destinations continue to be the most efficient platform for our business partners to connect with customers," Rusanow said. "Seven of our Westfield destinations generate more than $1 billion in annual sales including Chermside, Bondi Junction, Fountain Gate, Sydney, Miranda, Carindale and most recently Doncaster.

“We remain focused on activating our destinations and creating reasons for customers to visit us. So far this year, we have hosted more than 2,500 events and improved the experience for our customers."

Total business partner sales for January and February 2023 are 17% higher compared to the same period in 2022 and 10% higher than 2019, according to Scentre Group. 

“Progress continues to be made on the Group’s strategic customer initiatives including our membership program which now has 3.4 million members, an increase of 1.2 million since the start of 2022," Rusanow said. 

In a separate update, Scentre Group also announced the impending retirement of chair Brian Schwartz on September 30. Schwartz has been the Group’s chair since 2016.

The Board has endorsed Ilana Atlas AO as chair-elect. Atlas was appointed to the Scentre Group Board in 2021.

Schwartz said it was the right time to step down.

“I am delighted Ilana will succeed me as chair. Her leadership will add greatly to the future success and growth of our company. I look forward to working closely with Ilana, board directors, and our CEO Elliott Rusanow over the coming months to complete a seamless transition.”

Atlas said Schwartz had guided the business through a critical time. 

“I would like to thank Brian on behalf of the directors and securityholders for his outstanding contribution to the Group since its inception nine years ago and his leadership of the board for the past seven years.

"In particular, I would like to acknowledge his leadership of the board through the successful CEO and CFO succession." 

US-headquartered brand management company Authentic Brands Group has made a binding offer to acquire sports and lifestyle company Boardriders – including Australia’s 80-strong Surf Dive ‘n Ski chain of stores.

Boardriders designs produces and distributes branded apparel, accessories and footwear for boardriders globally and its portfolio includes Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element, VonZipper and Honolua.

Jamie Salter, the founder, chairman and CEO of Authentic Brands Group, said the acquisition would help “accelerate and expand” Boardriders’ branded retail stores, wholesale and e-commerce network worldwide.

“Along with the great brands and impressive global reach that will come with this acquisition, we see Boardriders’ potential as a thriving online marketplace under Authentic’s ownership.”

Arne Arens, CEO of Boardriders, said under Authentic’s ownership, the brand is “uniquely positioned” to expand and reach more consumers.

The deal is subject to the consultation of certain Boardriders employee representatives and is expected to be finalised in the third quarter of this year.

Salter said that as an early believer in the global and commercial appeal of action sports, the acquisition takes him back to the roots of his early career.

Few items fit the definition of “essential spending” better than prams, cots and baby clothes.

These infant goods are ASX-listed retailer Baby Bunting’s bread and butter, and the business has become a major force in selling the basics – and extra bells and whistles – to Australians for their little ones.

But while the company’s core products are some of the least likely victims of a spending slowdown, Baby Bunting has been flagging tough conditions. Profits for the first half of this year collapsed by 67 per cent and its share price is down by more than 57 per cent over the past 12 months.

Sales grew strongly during the lockdown era when Baby Bunting stores were allowed to remain open when many other retailers shuttered. Now the business has to adjust to the post-pandemic trading environment, where families are being increasingly savvy when it comes to kitting out their nurseries.

The company is also on the search for a new boss, confirming when it delivered its half-year results that long-serving managing director Matt Spencer will leave his post later this year.

After a turbulent few months, stock watchers are trying to work out whether the market has been too tough on the company, which still has national growth plans in the works.

Industry: Baby and nursery goods retail.

Main products: Prams, car seats, baby clothes and accessories.

Key figures: Chief executive Matt Spencer (who will exit the company this year), chair Melanie Wilson.

How it started: The business was founded when the Nadelman family opened a single baby goods store in the Melbourne suburb of Balwyn in 1979. The company had grown to more than 20 stores before its share market float in 2015.

How it’s going: The business listed on the ASX in 2015 with an offer price of $1.40. Shares closed at $2.06 before Easter but went as high as $6.58 in April 2021 thanks to the company’s COVID lockdown boost.

The bull case: Optimistic observers are looking through Baby Bunting’s short-term challenges and towards its future aspirations.

The company told investors at its February update that shoppers were spending less on consumer staples like clothing and toys, and directing more of their spending towards discount department stores like Kmart for these purchases.

Wilsons analysts still see the company as a dominating force in the baby goods market, though, and say the business can reach $1 billion in annual sales once it completes plans to open another 50 stores in the coming years.

“We believe Baby Bunting has been oversold, and provides attractive value for investors able to look through near-term headwinds and recognise the opportunity with strong revenue growth, gross margin expansion and earnings growth medium-term,” analyst Tom Camilleri said when initiating coverage of the stock at the end of last month. Wilsons has an overweight rating on the company and a price target of $2.70.

Citi’s analyst team says the outlook for the company is uncertain, particularly because the macroeconomic environment is continuing to weaken, but also sees long-term potential in the business.

“Baby Bunting still has a number of long-duration growth strategies, which appear intact,” Citi’s equities team said after the company reported its half-year numbers.

The bear case: More cautious stock watchers have their eye on same-store sales growth at Baby Bunting, and are trying to predict how the business will perform if shoppers direct a larger portion of their spending on infant goods to other retailers, like discount department stores.

Back in February, the company told investors that comparable store sales were down by 2.1 per cent year-to-date. The business reaffirmed its profit guidance, saying it expects net profit after tax for the full year to come in at between $21.5 million and $24 million.

Macquarie’s analysts said the retailer’s run rate was below their forecasts, and noted that the numbers suggest the company is relying on a strong second half to meet their targets. “We remain cautious given the significant 2H23 earnings skew required to meet guidance,” they said.

The composition of sales was also a concern, with click-and-collect orders dropping by 30.2 per cent in the first half. The Macquarie team also noted the drop in “consumer staples” sales, like clothes and nappies, and softening demand for toys and “play time” goods.

“This category includes Playgear, which is high margin, with management noting this category is further normalising post-COVID,” Macquarie’s retail team said.

Globetrotting holidaymakers are fuelling strong sales momentum at Rip Curl and Kathmandu operator KMD Brands, with the group’s boss bullish on expansion plans in Australia and overseas despite economic uncertainty.

The ASX-listed outdoor lifestyle outfit recorded a $NZ14 million ($13 million) profit for the six months to the end of January – a 352 per cent improvement on the same time last year, when pandemic interruptions led to the company recording a $NZ5.1 million loss.

Sales at outdoor clothing maker Kathmandu were up by 51.2 per cent to $NZ194 million, while wetsuit and surfwear brand Rip Curl grew by 18.8 per cent to $306.4 million.

Chief executive Michael Daly said that sales had continued to surge in February, and were up by 31.9 per cent across the group compared with last year.

The return of international travel and tourism is helping to lift the retailer, as holidaymakers in places like Hawaii and Queensland drop in to buy travel supplies, clothing and T-shirts and make last-minute purchases before they jump on a plane.

Daly said that while it was hard to predict what would happen to spending confidence across the globe for the rest of this year, the company was well positioned because it sold ″⁣products for a purpose″⁣ and catered to shoppers who were still on a strong financial footing.

Rip Curl stores outside of Australia would continue to see strong demand, he said.

“With our stores being in places like Hawaii, Auckland CBD and the west coast of France, I’m not sure we’re selling necessarily to those that are going to really feel mortgage stress.”

Daly is optimistic about expanding Kathmandu’s bricks-and-mortar reach further across Australia and around the world.

Three years on from pandemic disruptions, he says there’s more than enough room for the brand to open between 40 and 50 new stores in Australia in coming years.

“If you look at our penetration in New Zealand, [we have] nearly 50 stores for 4.5 million people. And we’ve only got just over 100 stores in Australia for 25 million people. So we think we are underrepresented relative to population and relative to other retailers,” he said.

And the iconic Kathmandu puffer jacket has set sail across the globe, after the brand made its first deliveries of stock to wholesale partners in Europe and Canada at the end of last year.

The business has a goal of reaching $NZ100 million in annual sales in international markets – a big jump on the $NZ1.7 million it has today.

Daly says the company is keen to open physical Kathmandu-branded stores overseas, but is still crunching the numbers before it decides where is the best place to set up shop.

“We’ll be very targeted. And when we have that data, we can make that decision. We can be a little more aggressive then and have a go,” he said.

KMD Brands declared an interim dividend of NZ3 cents per share, to be paid June 30.

Shares are up 1.1 per cent to 95 cents in afternoon trade.

Australia's economy is still holding up on the back of household spending, but there are warning signs that a severe downturn may be nigh, with business confidence falling and consumer confidence at sustained lows not seen since the 1990s recession.

Melbourne butcher Madina Halal Meats has already seen a shift in behaviour.

Customers are trading in prime steaks and poultry in favour of "mince, cheaper cuts of steak [and] casserole dishes".

"That's mainly due to the higher cost of living," manager Amoon Dennaoui said.

She said the shop's customers were spending about 10 per cent less per order, and she had noticed the downturn take hold since the middle of last year when the Reserve Bank of Australia started raising interest rates to tackle soaring inflation.

It is an early manifestation of the plunge in consumer confidence since rates started rising in May last year.

The widely watched Westpac-Melbourne Institute survey of sentiment came in below 80 for the second month in a row — 100 is the level where optimists equal pessimists.

"Runs of sub-80 reads have only been seen during the late 1980s/early 1990s recession and in the 'banana republic' period of concern in 1986, when the Australian dollar was in freefall after the federal government lost its triple-A rating," noted Westpac's veteran chief economist Bill Evans.

Delaying major purchases

Things are shaping up to be even tougher for businesses that sell big-ticket items.

Tony Dagher works in a furniture and home appliance shop on Sydney Road, the same street as Ms Dennaoui's butchery, and has sold fewer beds, couches and electrical goods than this time last year.

"Last year, I was working full-time hours. Now I'm working far less," Mr Dagher said.

But it is not just in Melbourne's north where consumers are holding off on big purchases, according to Westpac's survey, which found most people thought now was a bad time to buy a major household item.

"Apart from two brief tumbles during the global financial crisis — both monthly falls that were quickly reversed — this is the lowest read on this component in the history of the survey going back to 1974 — weaker than the poorest reads during the recessions of the mid-1970s, the early 1980s and the early 1990s," Mr Evans said.

Data released by the Commonwealth Bank also saw a marginal decline in the spending intentions of households by 0.1 per cent, led by a drop in spending on entertainment, retail and travel — categories that saw a major increase post-pandemic.

CBA noted, however, that while people were spending about the same amount of money, there were telltale signs "consumption is beginning to slow" due to higher prices and interest rates.

This emerging change in spending habits also helps explains results from NAB's business survey, which found business confidence entered negative territory in February, falling to -4 index points despite "solid" business conditions for retail and personal service businesses.

"Confidence has been volatile over recent months," NAB chief economist Alan Oster said.

"Confidence fell late in 2022 as concerns about the global economic outlook increased. There was a respite in January as those concerns appeared to ease, but the decline in February suggests the outlook remains clouded."

Even in the current economic climate, people are still looking to enjoy themselves — but many are turning towards cheaper alternatives.

Centrestage Costumes owner Mary Gurry has seen several recessions during her 40 years of running the shop. She remembers the downturn in the 1990s as the worst for her business.

"I have weathered every storm since 1980," she said.

While she believes costume shops are somewhat recession-proof because "people love to party" especially when times are gloomy, she expects another downturn to hit her business later this year.

"We will see a downturn in the next 18 months … there's no doubt because there's mortgage stress out there already," she said.

But Ms Gurry's suspicions of a business downturn are not just a hunch. Mr Oster said they were likely to become a reality.

"We continue to expect a more material slowdown in demand later in the year when the full effect of rate rises has passed through," he warned.

Signs of tougher times ahead

ANZ senior economist Adelaide Timbrell, who has been tracking consumer confidence and spending, said Australians had weathered the RBA's interest rate hikes well so far.

But she warned tougher times were ahead, with mortgages set to come off ultra-low fixed rates onto much higher variable ones later this year.

She said initial signs of a downturn had been patchy until now, and people with savings had been spending on things they were unable to enjoy during years of rolling lockdowns and closed borders.

"If people want to shop on a luxury right now, they're making it travel post-pandemic, rather than an expensive dress or TV," Ms Timbrell said.

The data backs this up. ANZ figures show people are spending 87 per cent more at travel agents than a year ago. This suggests forward spending too, as people book these trips in advance.

But Ms Timbrell said the downturn hitting specific sectors, such as furniture, could also be linked to the housing-market decline, which was seeing fewer people buy new homes and therefore fewer new products for them.

ANZ data suggests people are switching to buying second-hand items to reduce the amount of money they are spending.

"We're seeing a bigger focus on the part of consumers to the cheapest products, and that generally means larger businesses," she said.

"Small businesses are going to be a little bit more impacted by an economic downturn because they don't have the scale to fall back on."

Consumer finance provider Latitude Financial has been forced to stop adding new customers from clients such as Apple, Harvey Norman and JB Hi-Fi as it tries to contain the damage from hackers that are still active in its computer systems.

The attack is now the subject of an Australian Federal Police investigation.

In an update to the ASX on Monday, Latitude confirmed the hackers had stolen the personal details of at least 330,000 finance customers, with 96 per cent of the theft relating to copies of driver’s licences or licence numbers, and 4 per cent relating to passports. The company expected the number of victims to grow.

Latitude said the AFP was now investigating the attack. The company said it was working to contain the attackers and take some of its systems offline, which meant it would be unable to add new customers.

Latitude’s finance services include the no-deposit, interest-free payment option offered by Harvey Norman stores.

“I sincerely apologise to our customers and partners for the distress and inconvenience this criminal act has caused. I understand fully the wider concern that this cyberattack has created within the community,” said Latitude chief executive Ahmed Fahour, who retires at the end of this month.

He said the company’s focus was on protecting the ongoing security of its customers, partners and employees’ information, and supporting those who had their data stolen. He also acknowledged the disruption to its new customer business.

“While we continue to deliver transaction services, some functionality has been affected resulting in disruption. We are working extremely hard to restore full services to our customers and merchant partners and thank them for their patience and support. We understand the frustration,” Fahour said.

Latitude said it would begin contacting affected customers on Monday, and has engaged services to help them, including a dedicated contact centre.

Last Thursday, Latitude revealed it had been the victim of a hacking incident and that 328,000 customers had identification documents stolen.

The company said the details were stolen from its service providers. The company did not clarify further, but this is believed to refer to companies that provide corporate services to Latitude.

Latitude said described the hack as “a malicious and sophisticated cyberattack” and said it had removed access to some customer-facing and internal systems.

Unusual activity was noticed on its network earlier last week, originating from a major vendor it uses, it said.

“While Latitude took immediate action, the attacker was able to obtain Latitude employee login credentials before the incident was isolated,” the company said last week.

Latitude is working with the Australian Cyber Security Centre and said it had alerted relevant law enforcement agencies.

Latitude provides consumer finance services to Harvey Norman, JB Hi-Fi, The Good Guys, Apple and recently signed David Jones.

“No David Jones customer data have been compromised in the course of this incident because we have not yet transitioned our card program to Latitude. That will happen in 2024,” a spokesman for David Jones said.

Latitude was placed into a trading halt last Thursday and will remain suspended until Wednesday while further updates are made about the hack. Its stock last traded at $1.20. Investors paid $2.60 for shares when it listed on the ASX less than two years ago.

The attack follows recent major cyberattacks at Optus and Medibank.

Optus was the victim of a major breach in September, when hackers obtained the data of 10 million of its customers.

The Medibank attack in October was more serious, as criminals accessed basic account details of 9.7 million current and former customers as well as health claims data for about 160,000 Medibank customers, 300,000 customers of its budget arm, ahm, and 20,000 international customers.

The hackers began leaking some stolen data onto the dark web. Medibank still faces lawsuits and an investigation by the Office of the Australian Information Commissioner over its handling of the incident.