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6
Apr-18
Friday

Deceptive voice?

26
The NRF commented about a recent study showing that consumers want personalised voice experiences, but are wary of brands being more present on their voice devices. The report states that families are the biggest users of voice-enabled technology and, while more consumers are attempting to shop using voice, a lack of visual confirmation, high potential for mis-ordering and the inability to easily compare prices and availability are key barriers.
5
Apr-18
Thursday

Fast fashion woes

20
The Australian Financial Review published interesting statistics about the fast fashion segment in Australia.  Three global fast fashion chains (H&M, Uniqlo and Zara) generate about $1 billion annually in Australia, but pre-store sales in the segment have dropped dramatically.  If the AFR figures are to be believed, H&M per store sales dropped by about 25% (6% total sales drop while store numbers grew from 23 to 32).  AFR also mentioned Dotti pre-store sales dropped by around 9% and store closures by Forever 21, GAP and Top Shop.  Clearly, the market is undergoing a major reshuffle.  Some try to blame it on e-commerce, but it looks more like just a simple case of market overcrowding.

AfterPay questions?

25
The Australian reported that AfterPay shares slumped nearly 6%, seemingly in reaction to claims that its services could be easily used by minors and even people with a fake identity.  We think that the share movement had more to do with speculation whether the original owners will start selling their escrow holdings (23%) when the escrow expires on 8 May.

NBN fiasco continues

24
Mainstream media reported the departure of the NBN CEO, focusing on his remuneration package and progress in NBN rollout.  The NBN-killer, 5G networks have been barely mentioned.  We warned repetitively that this White Elephant Network will cause grief for all involved and will make Australia about $50 billion poorer. Pity to see our predictions come true.
4
Apr-18
Wednesday

Blue jean revival?

22
Bloomberg commented that some of the leading brands are hoping for a blue jean revival.  The jean making industry has been distressed in the recent years as jeans have struggled to beat back more comfortable styles such as leggings and yoga wear. Last year, imports of elastic knit pants surpassed those of jeans for the first time, according to the US Census Bureau.  However, there are signs of a rebound. The jeans maker Levi Strauss posted an 8 percent increase in revenue in 2017, thanks to a significant revamp of its women’s range - its strongest annual growth since 2011.  Ralph Lauren reported similar increases and other leading jeans brands also commented on encouraging results.

Lovisa loses another C-level executive

18
The AFR reports that Lovisa has lost its second C-level executive in just over six months, following the announced departure of CEO Steve Doyle and former CFO Graeme Fallet last September. The news was delivered alongside a trading update to reassure shareholders that Mr Doyle's departure is not due to performance issues. Lovisa booked a 7.4 per cent increase in comparable store sales for the first half of FY18 and top line sales growth of 18.8 per cent compared to the prior corresponding period.    

Housing approvals still at record high

27
The ABS released housing approval statistics, which show that while apartment approvals have slowed down, houses continue to be approved at a rate of 10,000 units per month.  This will lead to high level of completions and fit-outs.  It is also reinforced by a record high value of house renovations.  These numbers indicate a robust economy, but, at the same time, average house prices have dropped e.g. in Sydney by 2%.
3
Apr-18
Tuesday

SFG restructure about to happen?

13
Specialty Fashion Group (SFG) has announced to the ASX that Anchorage Capital Partners has made a $100 million cash offer to acquire the plus-sized City Chic and Autograph brands.  However, the announcement mentioned a “range of outstanding issues”.  According to the announcement, SFG’s Independent Review Committee is considering a number of options to “improve shareholders value.”

Bunnings' UK pain

18
AFR reported that Wesfarmers confirmed it was working with investment bank Lazard, to find a way out from its troubled Homebase chain.  Selling the business is one of the options under consideration.  Apparently the expected cost of the ‘UK expedition’ will be up to three times higher than the original purchase price ($700 million back in January 2016).  In 1993, Wesfarmers bought the McEwans chain in Victoria and were able to use it as a launchpad for Bunnings.  One of the assets that McEwans brought to the table was the design for large format stores, which were actually built by Wesfarmers as Bunnings.  The lesson here is obvious: what worked once, may not work in another place and another time.  It is worth remembering what W Edwards Deming, the pioneer of Total Quality Management, once said: “Everything is one of a kind.”

Coles is fighting for chairs on a sinking ship

25
The AFR commented that according to the Coles’ MD, Coles is regaining market share from Woolworths.  We have said many times that Coles’ core problem is not Woolworths, but highly efficient operators such as Aldi and Costco.  Fighting for chairs on a sinking ship is not helpful.  Coles should start assessing its KPIs against Aldi rather than Woolworths and a different story will emerge.
2
Apr-18
Monday

Australian landlords under pressure

14
The Age published an article titled ‘Vacant space like a cancer in malls’, commenting on Macquarie Bank’s list of retailers winding back their store commitments.  The list translates into nearly 350,000 square metres in vacancy, roughly equivalent to 1.5 Chadstone centres.  A number of large retailers have also announced their intention to exit leases that have become too expensive.  In the past, we have commented repetitively about rents and rent increases well in excess of CPI being unrealistic.  It looks like finally landlords may get the message and will start questioning the value of their retail space.