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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.

Home Depot sales up 7.5% in the last quarter

7
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.

Walmart e-commerce sales stall

9
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.
21
Feb-18
Wednesday

Wesfarmers’ first half profits down 80%

6
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…

Steinhoff Asia Pacific secures vital funding

6
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.