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1
Mar-18
Thursday

Economic dysfunction: this too shall pass

16
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

11
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

13
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

10
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%

13
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.

Adairs Limited reports excellent results

10
Adairs Limited reported excellent results for the first year half, growing sales and EBIT.  This didn't stop the share market from dropping Adairs' shares by over 8%.  Unless the market knows something we don’t know, Adairs shares appear undervalued, with 4.6% dividend yield - fully franked.  The EBIT is just too good – the business should reinvest more of its profits, otherwise it will attract more competitors.

Billabong CEO pushes shareholders to approve takeover bid

10
The AFR reported that Neil Fiske, the CEO of Billabong International, has been pushing shareholders to accept a takeover bid by the backers of Quicksilver (Oaktree Capital).  He commented that market conditions continue to be difficult.  Billabong posted a loss of $18 million for the first half of 2017/18.  We don't agree with his assessment that there are broad-sweeping 'headwinds against retail'.  Some retailers are thriving.
 
25
Feb-18
Sunday

Toys “R” Us to close another 200 US stores

9
According to Wall Street Journal Toys “R” Us in the US plans to close another 200 stores.  Following its bankruptcy, the Company also walked back from a promise to offer severance to all affected employees.  However, this didn’t stop Toys “R” Us from paying millions in incentive bonuses to its top executives.  At the time of its bankruptcy is September 2017, the Company had 1,600 stores, half of which in the US.  It would be interesting to learn to what degree the Toys “R” Us’ business has been damaged by the Internet, which offers so many alternative past times for children.

NRF: Mobile apps dominate online sales

7
The National Retail Federation in the US reported that retailers with both shopping apps and mobile sites are now seeing a majority of their traffic, and two-thirds of online sales, originating from mobile devices. On mobile, apps account for nearly twice the number of sales as the web, the report found.

Accent Group reports solid results

8
Excellent results have been reported by Accent Group, lifting its profits for the first half of the year by 19% to over $25 million.  Sales have grown as well, although the performance of the various brands within the group (The Athlete’s Foot, Platypus, Hype DC, Sketchers, Vans) has been uneven.
22
Feb-18
Thursday

Beacon Lighting confirmed over $120 million profit for 2017/18

8
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.

Tradelink remains in limbo

10
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.