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Super Retail Group announces new CEO

According to an ASX announcement, Super Retail Group has appointed Anthony Heraghty as CEO, effective 31 March 2019. He will replace outgoing chief executive Peter Birtles. Heraghty is currently the group’s managing director of outdoor retailing, and is responsible for the BCF, Rays, and Macpac businesses. In a statement to investors, Heraghty said he aims to modernise Super Retail Group to compete in a changing retail environment.  

Coles closes the gap with Woolworths

The AFR reported that new Coles managing director Steven Cain is quickly making his mark at Australia's second largest supermarket chain, getting a tick of approval from suppliers and closing the gap with rival Woolworths. According to UBS' latest supermarket supplier survey, Coles has lifted its game in 26 key measures closely linked to sales growth including working with suppliers, in-store theatre, private label, management calibre, and staff morale and has narrowed the gap with Woolworths in 24 of the 26 categories. Woolworths lifted its score in 25 of the 26 categories including pricing strategy, promotional cut-through, and private label, but with its overall score approaching 12-year highs and with Coles lifting its game, UBS questioned whether Woolworths had peaked.

New Look sets the restructuring benchmark

Bloomberg reported that Britain’s New Look Retail Group Ltd. has reached an agreement to restructure its debt. The debt-for-equity deal gives the chain of fashion stores crucial breathing space, cutting gross borrowings to about 500 million pounds (US$643 million) from 1.35 billion pounds. New Look appears to have set a benchmark for how to respond to the storm engulfing the industry. Rather than embarking on piecemeal closures, the retailer shuttered stores in one fell swoop. It entered a company voluntary arrangement in March, allowing it to reduce its rent bill. What’s more, this was accompanied by a turnaround plan: It tackled clothing ranges that weren’t appealing to older customers. It reduced costs, pulled out of China, and focused on profitable sales rather than absolute revenue.  

Dec '18 spending up 5% over previous year

According to the latest Commonwealth Bank Business Sales Indicator, economy-wide spending grew 0.4% from November to December 2018, driven by the purchase of “little luxuries”. The report found that business conditions and confidence are generally good and noted that consumers spent more in December 2018 than the previous year. Spending in December 2018 was up 5.3% compared to 2017. This is in contrast to Illion’s recently published analysis of business expectations, which recorded the lowest level of business confidence since the December 2017 quarter, and Westpace-Melbourne Institute’s Consumer Sentiment Index, which last week measured pessimistic consumers outweighing optimistic ones for the first time in 13 months. It's refreshing to see YoY figures, which generally paint a much more balanced picture of performance.

Zip finds investor favour

The AFR reported that while shares in Afterpay Touch have doubled in the past 12 months, some investors are hoping its major rival, Westpac-backed payment provider Zip Co, can follow that lead. Regal Funds Management chief investment officer describes Zip as a "high-growth company that is in the sweet spot of moving from start-up losses to very high earnings growth". The renowned fund manager used to own Afterpay, but now prefers Zip on valuation grounds. Zip shares have gained 30% in the past year to give it a market capitalisation of $359 million. That is about 10% of Afterpay's. To ensure a frictionless customer experience in terms of buy now, pay later solutions, we've seen many retailers adopt both Zip and Afterpay rather than make their customers choose between the two.  

Gymboree files for bankruptcy protection

Reuters reported that children’s clothing retailer Gymboree Group Inc filed for Chapter 11 bankruptcy protection, the second time in almost two years, and said this week it will close more than 800 Gymboree and Crazy 8 stores. The San Francisco-based company said it will also sell its high-end line, Janie and Jack, as well as its intellectual property and online platform. More than 20 US retailers, including Sears Holdings Corp and Toys R US, filed for bankruptcy since the start of 2017. The media sentiment is that they succumbed to the onslaught of fierce e-commerce competition from companies like Amazon Inc, however other bricks and mortar retailers have soared during the same period. This suggests that the e-commerce narrative is only part of the story.

DJs reports that sales tanked in the run-up to Christmas

Trend World News reported that David Jones is the latest retailer to reveal that sales tanked in the run-up to Christmas as consumers, rattled by falling house prices and struggling with higher living costs, stayed away from shopping centres or shopped online. DJs' lacklustre sales follow recent downgrades from Wesfarmers’ Kmart, outdoor clothing chain Kathmandu and womenswear retailer PAS Group and are likely to add to fears about the upcoming profit season and outlook for the full year, following an unprecedented fall in foot traffic in December. Analysts have warned against reading too much into the foot-traffic data, saying it is not highly correlated with Australian Bureau of Statistics retail sales figures, and that the fall in traffic partly reflects the fact more consumers are browsing and shopping online instead of in-store.

Souring Apple sales hurt Kogan

The AFR reported that e-commerce pioneer Ruslan Kogan has blamed Apple and overseas websites dodging GST for a 47% collapse in sales of global brands in the December-half. In a trading update on Thursday, Mr Kogan said sales of Apple products including the new iPhone halved during the six months ending December, offsetting growth from brands such as Samsung, Google, and Garmin and exacerbating the impact of the new GST regime. Excluding Apple, Kogan's sales from global brands, which account for about 40% of group sales but just 18% of profits, rose 8.5%. After previously playing down the threat from changes to the GST-free threshold, Kogan revealed in October that global sales had fallen 27% since the new GST regime came into effect on July 1. Momentum has deteriorated since October, with weak demand for Apple contributing to the slide.

Hayne blamed for retail spending stall

The AFR reported that weak retail spending is another "unintended consequence" of the royal commission, as consumers worried about the value of their homes and small businesses struggling to borrow money cut back on discretionary purchases. Families are now in a situation where they are potentially seeing the value of their house, at least in major metropolitan areas, fall 10 to 15 or even 20%. Foot traffic fell an unprecedented 23% in the last week of December, highlighting consumer uncertainty and the shift away from bricks and mortar to online stores. But, analysts say conversion rates are higher. Pessimistic consumers now outweigh optimistic ones, according to the Westpac-Melbourne Institute Consumer Sentiment Index, which fell 4.7% in January to 99.6 points - the biggest monthly fall in more than three years.

Back to the future

The Hustle reported that Nike has finally achieved its decade-long dream: an auto-lacing smart shoe. For the last 3 years (and much longer from concept-to-product), Nike has been developing a smart shoe with power lacing technology. Next month that shoe hits the market. But the Nike Adapt BB (for ‘basketball’) isn’t just another gimmick to make Marty McFly fans swoon. It’s the world’s first high-performance, digitally connected shoe. Described by Nike’s engineers as an “iPhone that lives under your foot,” the shoe is designed (using a mix of sensors, software, and a connected platform) to actively shapeshift the shoe to each player’s needs. Per Fast Company, the shoe’s hardware will reportedly collect an “unprecedented” amount of data that will allow the next few generations to adapt to your foot in real time, not just through presets.

Shaver Shop on M&A hunt

The AFR reported that the Shaver Shop appears intent on trying to box its way out of a corner. Despite its shares languishing at record lows, the company has been scouting for acquisitions with the help of long-term adviser Canterbury Partners. One potential target is believed to be Hairhouse Warehouse, which is privately-owned and sells all kinds of hair products and asscessories via a network of 130 stores across Australia. Shaver Shop's shareholders would be expected to welcome such an M&A deal provided it could be negotiated on favourable terms. So, it seems it's just a matter of when the retailer will strike in the market.

L'Occitane acquires Elemis for US$900M

Bloomberg reported that luxury cosmetics firm L’Occitane will acquire beauty and skincare brand Elemis for about US$900 million, as the maker of organic lotions looks to expand in the US and UK with its biggest deal on record. The deal is the latest in a spate of acquisitions of high-end skincare brands, with demand for natural beauty products on the rise in Asia - a trend that has also lifted cosmetics giant L’Oreal. L’Occitane said the acquisition will bolster the group’s growth globally, with plans to bring the Elemis label into new markets. The brand has been popular among millennial and Generation X consumers.