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2
Mar-18
Friday

SFG leaning towards raising equity

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AFR reported that Specialty Fashion Group (SFG) is leaning towards equity raising rather than a fire sale.  Lazard Asset Management, the largest institutional shareholder, refused to sell its 13% holding to a potential bidder. SFG is under pressure as its earnings have fallen more than 60 percent since 2010.

Trump imposes tariffs on steel and aluminium

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The Wall Street Journal reported that the US President has decided to impose tariffs of 25 percent for steel and 10 percent for aluminium.  Markets tanked in response, expecting any action to impose tariffs to escalate tensions with China and other US trading partners. The Commerce Department has previously recommended tariffs on all steel and aluminium imports.

Not all millennials are comfortable with credit

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Bloomberg reported that US millennials who lived through the Great Recession are avoiding credit card debt. Only about one in three millennials carry a card, and the generation is more likely than older consumers to use cash or debit cards instead of traditional credit cards.

Will interest rates end US market recovery?

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The Wall Street Journal reported that by the end of February, the S&P 500 and Dow Jones Industrial Average were up 5.1% and 4.9%, respectively, from their February lows.  The big question remains about inflation and the related expected interest rate rises in the US – has this already been factored in by the markets, or are we in for another wild ride?
1
Mar-18
Thursday

Harvey Norman slump in profits due to IT misspending?

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According to AFR Harvey Norman blamed a slump in profits (19% down) on investments in e-commerce and IT systems.  It looks like yet another Australian retailer "took IT seriously" and in the process seriously wounded the business. When will the large retailers learn that 'expensive' usually guarantees trouble rather than success?  BTW: we got the above quote from a department store executive after they spent $500 million on IT.  We will report back once we see any benefits.

5G will make the NBN irrelevant

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The AFR commented in its editorial about the incoming 5G mobile technology.  It quoted Telstra's CEO that "5G or mobile technology is not going to replace NBN."  We beg to differ - the matters will be much worse.  5G will make the NBN unnecessary, so we will end up with 5G networks and a half-cooked NBN.  The smart people who channelled $50 billion of Nation's wealth into a black hole should be congratulated.

Walmart to launch first kids' apparel line

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USA Today reported that Walmart is launching four new private apparel brands, including its first kids' line, in a move that could “make the retail giant more top-of-mind when it comes to fashion”.  The article then stated that the move was also made to help Walmart gain ground in the race against rivals such as Amazon.  We think that USAT got their thinking upside down.  The only way a retailer can protect a product from online competition is to give it a unique brand.  So, this is absolutely the right strategy, but its core value rests in removing the ability to compare prices with Amazon.

Economic dysfunction: this too shall pass

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In his periodic reflection on the state of the world, George Friedman of Geopolitical Futures wrote that we have entered a period of economic dysfunction, slow growth and unequal distribution of wealth.  This will lead to domestic political tension and deep international friction. Countries will be focused on their own problems, and those problems will create trouble abroad. It is a world that can best be described as parochial, tense and angry.  The only hope, as George Friedman writes, is that like all the past difficult periods, this too shall pass.  “Twenty years means everything in our lives, but it means nothing in history.”
28
Feb-18
Wednesday

Toys R Us UK expected to tumble into administration

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The Guardian reported that Toys R Us in the UK is expected to tumble into administration next week, after last-ditch talks to find a buyer faltered.  The move will put 3,200 jobs at risk and follows the recent decision by its bankrupt American parent to try to sell the loss-making UK business as well its other European stores.

Nordstrom planning shift from public to private company

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According to Reuters, Nordstrom Inc’s founding family group is finalising plans to submit an offer to take the U.S. department store operator private.  Nordstrom is about to receive the offer as it prepares to report fourth-quarter earnings on March 1 and update investors on its financial performance during the key holiday season. Nordstrom’s stock has risen close to 30 percent since Thanksgiving, on investors’ expectations of solid profits.  Who said that department stores are doomed to fail?

Big brands capitalise on Toys R Us turmoil

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The Wall Street Journal reported that the biggest beneficiaries of Toys R Us' woes are likely to be Amazon, Walmart , and Target , which have already begun moving aggressively into the toy market. Amazon’s toy sales in the U.S. grew by about 12% last year, reaching $4.5 billion.  But, there are surprise beneficiaries - one is Best Buy , which has already fought back successfully against Amazon. Analysts expect the electronics chain to ramp up sales of increasingly popular robotic and other electronic toys.
27
Feb-18
Tuesday

Reece's sales up 10%

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Reece Ltd has a relatively small retail arm, with the majority of their business focused on trade.  Nevertheless, their just announced results dispel myths about headwinds and difficult trading conditions in the Australian economy.  True, conditions are difficult for some, but others continue to thrive. Reece's sales increased by 10% in the first half, as did their EBIT.  The exceptional result reflects high-quality management, focused on long-term objectives, internal culture, and innovation.