Inside Retail reported that Beacon Lighting confirmed over $120 million profit for 2017/18.  Under the leadership of Ian Robinson, Beacon Lighting has been going from strength to strength for decades.  A strong focus and fully controlled supply chain still matter in retail.

The Australian Financial Review quoted the CEO of Fletcher Building, who said that their 260-branch Tradelink plumbing supplies business was unlikely to be put up for sale.  The AFR commented that Tradelink competes against Reece, forgetting to mention that Tradelink used to be much larger than Reece and has progressively shrunk to about half of Reece’s size.  A comment that Tradelink ‘fails to compete’ against Reece would have been more precise.  We don’t see Tradelink having much chance to arrest the decline.

Bloomberg reported that Home Depot (the US ‘inspiration’ for Bunnings) grew its sales by 7.5% in the last quarter.  This is a consequence of the expanding renovation market and a few natural calamities, the Puerto Rico hurricane included.  Another growth driver stems from millennials finally buying homes and starting families.  Interesting to see whether this will also be the case in Australia.

The Wall Street Journal reported that Walmart suffered a slowdown in e-commerce sales in the fourth quarter. The company’s shares fell more than 10% in response to the news - the stock’s biggest one-day drop in more than two years - wiping more than $31 billion from the market capitalization of the world’s largest retailer. We find this reaction bizarre, as Walmart’s overall sales notched their 14th consecutive quarter of growth! Retail success is measured in top and bottom line growth, irrespective of how orders are taken and how they are fulfilled.  Over the counter sales are still the most profitable.

Inside Retail also reported that Wesfarmers’ first half profits sunk by more than 80% as a consequence of the $1.3 billion impairment related to their UK hardware venture and Target in Australia.  The operating profit fell slightly, by 2.7%.  It looks like the overseas venture wasn’t that well thought through…

Inside Retail reported that Steinhoff Asia Pacific (APAC) has secured funding from its existing banking partners, with a $300m banking facility provided by its existing syndicate of six local and international banks.  This allows Steinhoff to continue its operations without obstacles, given that the new banking facility has been struck on normal commercial terms based on the strong financial performance of Steinhoff APAC in 2017, and will secure its funding requirements for the next 12 months.

According to the National Retail Federation consumers are doing about 20% of their fashion spending online, and about 30% of apparel and footwear purchased online is returned. This trend forces some fashion retailers revamping their returns policies and testing new programs like a Zara pop-up where online shoppers can pick up and try on purchases and do on-the-spot returns and exchanges.

USA Today reported that Amazon now gives Prime members a 5% discount when they shop at Whole Foods Market stores using their Amazon Rewards Visa Cards. Amazon Prime members pay a $99 annual fee for benefits including free shipping and video streaming, and the Rewards Visa comes with other perks including 5% discounts on Amazon purchases.  We are watching with interest to see when Amazon realises that by applying their ‘who cares about profit’ philosophy they are progressively destroying their newly acquired subsidiary…

According to the Wall Street Journal, Facebook is feeling the heat after the US indictment of Russian citizens for interfering in the 2016 election.  According to the Journal’s Christopher Mims, Facebook’s networks, like others throughout history, formed quickly by leveraging new communications technologies—and then just as swiftly were taken over by a handful of people who consolidated their influence over millions of people.  Democracy as we know it is in peril and in decline.  This is having, and will continue to have, massive impact on the social fabric and the economies of the developed world, Australia included.

The Australian Financial Review reported that the vacuum cleaner retailer Godfreys have stopped paying dividends as a new chief executive embarks on a business revamp.  Godfreys has over 200 stores in Australia and New Zealand and its sales have been dropping by substantial numbers (nearly 9% in the first half of 2017/18).  The problem we see is the gargantuan scope of work in front of the new CEO – according to the AFR practically everything in the business needs to be changed.  Businesses don’t have capacity to make such massive shifts.

According to The Australian Financial Review, Oroton will be sold to its majority shareholder, Will Vicars.  Oroton is fighting a hard battle with its landlords to bring rents down to a reasonable level.