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Lifeline for Metcash?

The AFR reported that Metcash has signed a new long-term agreement with Foodland Supermarkets and multiple Foodland stores including Romeo's and Chapleys in South Australia. Foodland has committed to being supplied from Metcash's proposed new distribution centre in Adelaide for a decade. The deal is a lifeline for the grocery wholesale after supermarket chain Drakes announced earlier this year that it will leave the Metcash supply chain, which resulted in a $125 million off-market buyback, which reduced the business's issue capital by about 5.3%.

Michael Hill loses its sparkle

The AFR reported that the closure of its US and Emma & Roe stores dragged jewellery retailer Michael Hill International's net profit down 86% to $4.6 million. Overall, group sales rose 4.4% to $575.5 million but the $25.5 million in one-off restructuring costs materially impacted the retailer's bottom line, along with investments aimed at boosting online sales in Australia and New Zealand.

Adairs off to a strong start in 2019

The Australian Financial Review reported on homewares retailer Adairs' plans to deliver another year of record profits, driven by a new range of boho-syle bed linen. The business has forecast same-store sales to rise between 5% and 8%, compared with 14.3% in 2018 and negative 1.4% in 2017. The retailer closed three poor performing concessions in Myer this week but plans to open between 7-10 standalone stores in 2019, lifting its network to more than 170.

Toys 'R' Us Australia e-comm up for sale

The sale of Toys 'R' Us Australia's (TRUA) e-commerce business and assets is covered in the AFR today. It's noted that TRUA's online store contributed $39.5m of FY17 revenue, around 14% of the TRUA group's total sales. If profit was material in the deal it would've been mentioned. Interestingly, it's not.

Aldi retains title of fastest growing UK grocer

The Retail Gazette reported that Aldi has maintained its position as the UK’s fastest growing grocer amid a summer of huge growth in the sector thanks to the hot weather. According to the latest figures from Kantar Worldpanel’s UK Grocery Market Share analysis, the UK's grocery sector grew 3.5% over the period. All of the UK's Big 4 grocers enjoyed growth: Morrisons with a sales increase of 2.7%, Asda reported 2.6% growth, Tesco at 1.8%, and Co-op at 7.8%. However, the German discounters dominated the market with Lidl's sales increasing by 8.6% and Aldi's sales spiking 12.6% (bringing its market share to 7.6%).

EBOS Group coming to terms with massive Chemist Warehouse deal

The AFR reported that the EBOS Group has vowed to maintain standards servicing his pharmacy clients as the company comes to grips with the mega Chemist Warehouse contract it recently won from rival Sigma Healthcare. The pharmacy and animal healthcare company in early July said it had won a five-year contract to supply more than 400 Chemist Warehouse and My Chemist stores in Australia. EBOS CEO told the AFR that its customers wanted to make sure they would not be neglected in favour of the company's big new customer, which is expected to add $1 billion in sales over the next five years from July 1, stating "We are highly confident in our ability to serve all our customers." While EBOS will gain the revenue, will they make any profit? Such ‘super’ deals usually come at a heavy price (unavoidably for its current base of clients too).

Could the worst be over for David Jones?

The AFR reported that David Jones' profit plunged 50% in 2018, highlighting tough conditions in the department store sector. However, a rebound in same-store sales suggests the worst may be over. Sales in the first seven weeks of 2019 rose 3.7% (with online sales up 75%) after growing 2.2% in the second half of 2018. This was a big turnaround from the first-half, when total sales fell 3% and same-store sales fell 3.3%. Excluding $76 million spent on strategic initiatives including the rollout of David Jones' new food offer and costs associated with the refurbishment of the Market Street and Elizabeth Street stores, profits fell 35% to $102 million. The 2018 underlying result excluded a $712.5 million goodwill writedown, which slashed David Jones $2.1 billion book value by one third and sent Woolworths plunging into the red for the first time in 16 years. Woolworths CEO said, "It was a hugely disruptive year, but the major transformational initiatives were now complete and sales momentum was improving in David Jones stores."

Afterpay targets UK expansion

The AFR reported that Afterpay has announced it will enter the UK after a strong start in the US, citing a "retail-led global expansion opportunity" for the payments company. In its first three months in the US, Afterpay has acquired 150,000 customers and 800 US merchants, half of which are currently live with the service. To kickstart its UK focus, the company is raising $108 million in new equity and has acquired UK payments company ClearPay. Afterpay shares have doubled since the start of July sending its market capitalisation to more than $4 billion. Boom times for the millennial shopper favourite.

Woolworths faces $1b backpay claim

The Australian Financial Review reported that The Retail and Fast Food Workers Union has launched legal action to terminate Woolworths' enterprise agreement (EA) and make the grocer liable for an estimated $1 billion in alleged underpayments to staff. The union says that the bulk of Woolworths' 100,000 workforce is paid less than the award and claims that the Fair Work Commission relied on misleading material when approving the EA back in 2012. Coles faced a similar action in 2016, which was ultimately settled. Looks like Woolies could be in very costly trouble.

Lovisa shares take a hit as sales growth slows

The AFR reported that despite posting double-digit growth in net profit for FY18, jewellery retailer Lovisa has taken a hit on the stock market, posting its biggest share price drop in two years after a slowdown in same-store sales growth in the first few weeks of 2019. Until this week, the business had enjoyed a strong run on the ASX with shares rising almost three-fold to more than $11, but the stock fell as much as 9.7% yesterday after the MD revealed same-store sales growth had more than halved since year-end.

Wesfarmers' charred remains in the UK?


The BBC reported that Wesfarmers' failed UK DIY foray, Homebase plans to close 42 stores and cut 1,500 jobs. Restructuring company Hilco, which bought the DIY chain for £1 in May, confirmed it was planning a Company Voluntary Arrangement (CVA). The retailer, which has 241 stores, said the affected outlets would be shut over the next 16 months. A CVA is an insolvency procedure used by struggling firms to close underperforming shops.

Retail spending soars across Australia

The Brisbane Times reported that Queensland is leading the charge as retail spending soars across Australia. Queenslanders are spending on cars, holidays, hotels, motels and retail goods at the highest level in four years. Overall, according to a Commonwealth Bank business sales index report, spending at retail stores has consolidated over the past three months, rising 0.8% a month over the period, with sales up by 16.6% over the year to July 2018, the strongest annual growth rate in 12 years. The report notes that consumers are benefiting from retail deflation, low-interest rates, and job security.