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17
Jun-19
Monday

US retail sales create an upbeat outlook

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The NRF distributed a Reuters article reporting that US retail sales increased in May and sales for the prior month were revised higher. The fairly upbeat report from the Commerce Department on Friday last week followed a raft of weak data. Retail sales rose 0.5% last month. Data for April was revised up to show retail sales gaining 0.3%, instead of dropping 0.2% as previously reported. But sales at clothing stores were unchanged. Compared to May last year, sales advanced 3.2%. Excluding automobiles, gasoline, building materials and food services, retail sales climbed 0.5% last month after an upwardly revised 0.4% rise in April. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. We have to question why the NRF would promote month-on-month retail statistics, as industry insiders it should know that they're meaningless figures. Year-on-year comparison is the only material metric to measure retail performance.
14
Jun-19
Friday

In Search of Symbiosis: Q&A with Andrew Gorecki

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Andrew Gorecki, Co-Founder and Managing Director at Retail Directions, spoke with Power Retail where he discusses the benefits of finding the equilibrium between digital and physical channels for retailers, technological headaches and the power of the customer experience. You can read the full article here: https://www.powerretail.com.au/insights/in-search-of-symbiosis-qa-with-andrew-gorecki/ 

Bunnings to sell online across Australia by Christmas

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The AFR reported that while Wesfarmers' department store chains are struggling in a subdued retail environment, profit powerhouse Bunnings and office-supplies category killer Officeworks are going from strength to strength. Bunnings and Officeworks plan to increase sales by expanding into new categories and categories where they have low market share, and by offering more services, such as door and tap installations and computer repairs, while using technology to improve productivity. Bunnings expects to roll out its full e-commerce offer across Australia before Christmas - well ahead of its original September 2020 target. Bunnings is also investing heavily to increase trade and commercial sales and has flagged potential acquisitions to increase its share in categories such as kitchens, bathrooms, flooring and windows, eyeing an addressable market worth $78 billion in Australia and $14 billion in New Zealand.

Coles cuts 450 jobs from its Melbourne head office

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The AFR reported that Coles is cutting 450 jobs from its Melbourne head office in a major management shake-up aimed at offsetting rising labour costs and simplifying operations. Less than a week before Coles chief executive Steven Cain updates investors on the retailer's new strategy, the food and liquor retailer told staff on Thursday that 450 roles would go at the head office in Tooronga in Melbourne's east as part of a three-year program to cut costs and free up funds for investment in online and convenience. The redundancies represent about 10% of Coles' 4000 head office staff, although many of the roles to be made redundant are vacant, so the number of people losing their jobs will be less than 10%. The job cuts will inevitably add to speculation that Coles is coming under increased sales and margin pressure as same-store sales growth slows and operating costs rise.  

Wesfarmers downgrades Kmart and Target profit forecasts

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The AFR reported that Wesfarmers chief executive Rob Scott says he is more confident about the group's prospects than he has been in years despite a plunge in profits from department stores and a challenging outlook for the industrial and safety businesses. Mr Scott told investors on Thursday that although there had been no immediate rebound in consumer spending after the election he was confident personal tax cuts, record low interest rates and more political certainty could help boost the economy. Wesfarmers' remaining businesses – Bunnings, Kmart, Target, Officeworks and the chemicals, energy, fertilisers, industrial and safety businesses  – were well positioned to benefit. Despite Mr Scott's confidence, Wesfarmers shares fell 5.2% to $36.28, their lowest level for a month, after the group downgraded profit forecasts for Kmart and Target.

Money laundering probe: Afterpay shares tumble 11.5%

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The AFR reported that shares in buy-now, pay-later provider Afterpay fell by 11.5% after it was ordered by the financial intelligence agency to appoint an external auditor to scrutinise its compliance with anti-money-laundering laws. Thursday's announcement by the Australian Transaction Reports and Analysis Centre that it was concerned about Afterpay's compliance with anti-money-laundering laws, came just days after a $317.4 million capital raising and $100 million founder sell-down. AUSTRAC said it had ordered Afterpay to appoint an external auditor after a "period of ongoing engagement" where the agency identified concerns with Afterpay's compliance with anti-money-laundering laws. The announcement stunned investors in the market-darling stock that had more than doubled this year and had gained more than four times since the start of last year.
13
Jun-19
Thursday

The high cost of "friendly fraud"

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Stores.org reported on "Friendly fraud", a subset of card fraud. A hypothetical example of such an incident: “Mary orders a pair of red shoes online. She doesn’t like the color but doesn’t send them back or even contact the merchant. The bill arrives, she calls and tells the bank that issued her card she never got the shoes and wants a refund. The bank hears this, believes the consumer - without doing much checking to verify the story - and a chargeback goes to the merchant. Thus, the merchant has to prepare to fight the claim. Chargebacks were designed to protect users from unfair merchant practices and identity theft, but they are increasingly being used by consumers.  Estimates state that 28% of all e-commerce revenue today is lost to friendly fraud, which constitutes over 30% of total card fraud, up from just 18% in 2012. The impact varies by retail segment, he says, from about 10% or less for apparel retailers to as much as 90% for sellers of digital goods and services.  

Ted Baker shares plunge after tough start to the year

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The AFR reported that Ted Baker shares lost more than a quarter of their value on Tuesday after the British fashion retailer warned that underlying profit for the year would fall short of analysts' estimates after an "extremely difficult" start to 2019. The warning underlined the task facing Lindsay Page, who was promoted to permanent boss in April as the high street retailer sought to move on from misconduct allegations against its founder and leading shareholder Ray Kelvin. Shares in the retailer traded 26% lower at 990 pence after it also complained of the impact of unseasonably cold weather in North America, from where it derives almost a third of its revenue. The shares fell 43% last year and had lost another 14% in 2019 before Tuesday's opening. Ted Baker reported its first drop in annual profit since 2008 in March as traditional brick and mortar apparel chains suffered in the face of online competitors and British consumers reined in spending.

Consumer confidence falls despite RBA cut

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The AFR reported that the Reserve Bank's decision to cut rates to a record low has failed to boost consumer confidence, according to Westpac and ANZ. Westpac's consumer sentiment index dipped 0.6% in June from May. Meanwhile, ANZ's weekly consumer confidence index fell for the second consecutive week, down 2%. However, the measure remained above the long-term average. Confidence in current financial conditions, as compared to a year ago, and sentiment towards finances in a year's time fell 2.7 and 2.2% on the respective indices. Both banks pointed to weak GDP growth as a weight on consumer confidence. The Australian economy grew 0.4% in the March quarter, lowering the growth rate to 1.8%, which is the slowest pace since 2009 at the end of the global financial crisis. Eyes remain fixed on Reserve Bank governor Philip Lowe, who said in the June decision that the central bank would continue to monitor developments in labour markets and adjust policy accordingly.
12
Jun-19
Wednesday

Wesfarmers buys Catch Group for $230m

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The AFR reported that Wesfarmers has outlaid $230 million to buy one of Australia's oldest and largest online retailers, Catch Group, from founders Gabby and Hezi Leibovich. Wesfarmers, which is due to update investors at its annual strategy presentation on Thursday, said on Wednesday it had entered into an agreement to buy Catch Group for $230 million cash to accelerate the conglomerate's digital and e-commerce capabilities. Catch Group operates an online marketplace, owns sites such as Catch.com.au, Mumgo, Grocery Run, Brands Exclusive and The Home and runs two fulfilment centres in Victoria. It will operate as an independent business unit overseen by Ian Bailey, the managing director of Kmart, which is owned by Wesfarmers. The deal comes amid speculation Catch Group was planning a $200 million to $300 million initial public offering before the end of June after pulling the plug on a proposed $200 million float late last year.

Super Retail appoints new auto boss

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The AFR reported that New Super Retail Group chief executive Anthony Heraghty is under pressure to deliver improved results after shaking up almost his entire senior management team in less than six months. Mr Heraghty, who took the helm in February from long-serving chief executive Peter Birtles, has appointed a 20-year Aldi veteran to run the group's largest business, Supercheap Auto. Benjamin Ward takes over as managing director of Supercheap Auto on July 29 from Chris Wilesmith, who is leaving the group in August after 13 years, seven as managing director of the auto accessories business. Mr Wilesmith, who has overseen a 33% increase in auto sales and a 61% increase in earnings since 2012, was considered to be a potential candidate to take the reins from Mr Birtles. The latest management change means that all three of Super Retail Group's major divisions -  auto, sports and leisure - have new managing directors this year.

Afterpay executives to cash out $100m

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The AFR reported that Afterpay's chief executive, chairman and group head have cashed out more than $100 million worth of shares as institutional shareholders picked up all the shares on offer as part of a $330 million capital raising. Afterpay entered into a trading halt on Tuesday and by the afternoon the placement was fully subscribed at $23 a share, raising $317.4 million. This means a $47.15 million payday for each of the Rich Listers, chief executive Nick Molnar and executive chairman Anthony Eisen, who have decided to offload 2.05 million shares each. Afterpay shares closed at $24.17 on Friday, representing a 95% gain since January. Afterpay raised the capital to help fund its US venture, though it will be interesting to see how the share market reacts to its founders selling down, which is usually taken as a sign of low confidence.