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12
Feb-19
Tuesday

Toy wars - Hasbro vs Mattel

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The Hustle reported that as Toys ‘R’ Us readies to officially put the nail in the toy chest, US toymakers like Hasbro continue to struggle. After Toys ‘R’ Us blew up in Q4, Hasbro’s projected holiday sales dropped 13% as brands like Nerf and My Little Pony underperformed. But Mattel, on the other hand, is killing it. Sales dropped 5%, but better-than-expected results from its Barbie and Hot Wheels brands caused the company’s stock price to jump 23%. Hasbro and Mattel have very different business models. Nerf and My Little Pony are a small fraction of Hasbro’s bread and butter. Its financial success relies mainly on Disney’s movie slate, and no Star Wars or Disney princess movies were released during the 2018 holiday season. In contrast, Mattel relies on its core franchises to bring home the bacon. Luckily for Hasbro, the Disney toy closet is jam-full in 2019.

Payless prepares second bankruptcy

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Bloomberg reported that Payless Inc. is preparing for its second trip to bankruptcy court with a plan that could drastically shrink the size of the discount shoe chain. The retailer is seeking a loan to get through bankruptcy proceedings and discussing plans to shutter a significant portion, and potentially all, of its North American stores. Payless would become the latest in a wave of retail bankruptcies during the past two years as online rivals and heavy debt overtake once-iconic brands like Toys “R” Us and Sears. Payless was founded in 1956 with the goal of selling affordable shoes in a self-service setting and says it’s the largest specialty footwear chain in the Western Hemisphere. The chain employs more than 18,000 globally and operates about 3,600 outlets worldwide, with more than 2,700 in North America.
11
Feb-19
Monday

JB Hi-Fi reports profit up 5.5% in first half

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According to results lodged with the ASX, JB Hi-Fi reported that strong growth in communications, games hardware, audio, fitness and connected technology categories over the first half of FY19 drove a 5.5% year-on-year increase in net profit after tax to $160.1 million. Group earnings per share reached $1.39 cents per share, a 5.4% increase, while total sales grew 4.2% to $3.8 billion for the six months ended 31 December 2018. JB Hi-Fi noted both the Australian and New Zealand arm of the business delivered sales and earnings growth, as well as recently acquired The Good Guys. While website sales saw strong growth, a drop in third-party marketplace sales led to online sales falling 2.4% to $70.7 million.  

Retail gloom and credit squeeze dominate property agenda

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The AFR reported that concerns about the retail sector are dragging down sentiment across the property sector, according to the latest quarterly NAB commercial property survey. At the same time for players in the property market, getting access to finance, both debt and equity, is more difficult than it has been at any time since NAB began its survey almost a decade ago. The unease in the retail sector moderated only slightly, from negative 20 points to negative 18 points. Looking ahead, property professionals expect both debt and equity funding conditions to worsen further over the next three to six months, the survey found.

Foot Locker invests US$100m into online sneaker company 

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The Hustle reported that Foot Locker invested US$100m in GOAT Group, the online sneaker marketplace for rare and high-end kicks. According to TechCrunch, the companies said that the investment will eventually lead to the two companies combining their efforts across their digital and physical retail platforms. Foot Locker is yet another store falling victim to the shifting retail sands, closing 110 stores last year and 147 in 2017. But, the investment in GOAT could be its shot at staying relevant. Founded in 2015, today GOAT has over 12m active users on the platform, up from last year’s 2.5m sneakerheads. Sneaker resale is incredibly hot right now, and these days it’s attracting more than your average hypebeast. Farfetch acquired online sneaker marketplace Stadium Goods for US$250m in December, and StockX hauled in US$44m in 2018.
8
Feb-19
Friday

David Jones CEO David Thomas departs

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The AFR reported that David Jones has been rocked by its second scandal in less than 10 years, with chief executive David Thomas resigning despite being cleared of a discrimination complaint, the fourth CEO to depart in five years. DJs said Mr Thomas' successor would be announced in due course and Woolworths chief executive Ian Moir will work directly with the DJs management team in the interim. On the trading front, the retailer has been discounting heavily to lure shoppers amid the worst discretionary retail conditions since the global financial crisis. DJs' sales tanked in the run-up to Christmas, with same-store sales growth slowing to just 0.9% in the 26 weeks ending December 23 after rising 2.4% in the 20 weeks ended November 11. This followed a 3.3% fall in same-store sales in the year-ago period.

Walgreens pioneers a freaky future for the frozen foods aisle

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The Hustle reported that after successfully testing out “smart cooler” screens in Chicago in the US, Walgreens will roll out face-recognising, eye-tracking screens to frozen food displays. Marketers have been looking for ways to bridge the gap between brick and mortar retailers and digital advertisers for years, and now Walgreens is betting that smart-fridge displays could be a chill solution. Powered by AI-powered cameras, the “smart” screens, which cover the front panel of cooler doors, display different ads based on age, gender, and even the outside temperature. For retailers like Walgreens, the screens provide a new source of ad revenue and also a quicker way to know when to restock. For big brands, the screens offer the targeting of internet-style advertising, in-store.
7
Feb-19
Thursday

France puts up food and drink prices under new law

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Reuters reported that France’s agriculture minister sought to reassure households that food shopping bills would not jump dramatically as a rise in minimum food prices aimed at raising farmers’ incomes came into effect last week. The government had postponed introducing the measure in December as France reeled from nationwide unrest and sometimes violent “yellow vest” protests over high living costs and the squeeze felt on household budgets. The new legislation includes a 10% increase in the price floor for food products and curbs promotional offers so that retailers cannot discount products by more than 34% of their value. The French government said the average household shopping bill would increase by just 50 cents to 3 euros a month. There is clearly something wrong with the French economy if the government was driven to enforce pricing laws telling retailers what they need to charge consumers.

Coles convenience earnings dive after Viva deal

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The AFR reported that analysts have cut profit forecasts for Coles by as much as 10% after the recently floated retailer signed a new fuel supply agreement with Viva Energy which will decimate earnings from petrol and force Coles to ramp up convenience-store sales. Coles expects earnings from its convenience division to fall to $50 million this year because of falling fuel volumes – compared with $190 million in 2017 and $133 million in 2018 – and managing director Steven Cain warned the business would barely break even in future if fuel volumes did not improve. Under the 10-year agreement, which was finalised on Wednesday after two years of talks and trials, Viva will set the retail price of fuel, collect the full retail margin and receive higher royalties on Coles Express convenience store sales. Viva will pay Coles $137 million in compensation next month – equivalent to Coles Express 2018 earnings – to reflect the value transfer.

Retail takes a blow in spending stall

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The AFR reported that discretionary retail is bearing the brunt of the December spending hit. According to recently released ABS figure for December, overall, retail trade fell by a seasonally adjusted 0.4% with clothing, footwear, and personal accessory spending proving to be a major drag by sinking 2.4%. NAB chief economist Alan Oster said these results pointed to a weak set of gross domestic product statistics for the December quarter. Deloitte national retail, wholesale, and distribution lead David White believes retail's Christmas decline had led to a shift in the way the Australian economy was perceived. Deloitte's latest CFO Sentiment report said "overall sentiment has shifted - from a glass half full on outlook and risk appetite, to more of a glass half empty" during the second half of last year. It attributed the fall in consumer spending to diving house prices and a tightening of credit after the financial services royal commission.

Denim is making a comeback

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MediaPost reported that consumers in North America and Europe are especially enthusiastic about denim. Consequently, Walmart says it is introducing Sofía Jeans by Sofía Vergara. Denim’s renewed appeal is also driving strong results at Levi Strauss. For years now, pundits have said that the rise of athleisure and those comfy yoga pants might signal a permanent disenchantment with denim. However, in a 12-month period ending July 2018, overall jeans sales rose 5% to US$16.4 billion, compared with gains of just 1% in the overall apparel market. Skinny jeans reigned supreme, up 6%, accounting for 40% of all women’s jeans sales.
6
Feb-19
Wednesday

Clearance sales triggering a "domino effect"

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The AFR reported that closing-down and clearance sales are triggering a "domino effect" on the discretionary retail sector and could force more shops to the wall, according to the administrator of menswear chain Ed Harry. KPMG partner Brendan Richards, who was appointed administrator to Ed Harry last month, says the sales are adding to pressure on rivals and contributing to promotional fatigue among consumers. For example, the administrators of cosmetics chain Napoleon Perdis, which went into voluntary administration last week, cut prices by 30% store-wide before closing 28 of its 56 stores on Monday. Half a dozen chains have handed control to administrators in the past six months, including Napoleon Perdis, Ed Harry, Roger David, Laura Ashley and Rugs a Million, and more are expected to follow in the next few months, using voluntary administration to close loss-making stores, cut costs and restructure debt.