The week that was
Another big global name hits our shores
Earlier this week saw international off-price retailer, TK Maxx confirm its plans to Inside Retail that it’s coming to Australia in April this year.
TK Maxx will convert all 35 existing Trade Secret stores to TK Maxx from April 2017, with a handful of new locations also planned for opening throughout the year. Both TK Maxx and Trade Secret are operated by The TJX Companies, Inc., which is a leading off-price retailer of apparel and home fashion in the U.S. and worldwide, headquartered in the United States and operating over 3,800 stores around the world.
Tessa Buenen, TJX spokesperson, said there are opportunities within the discount department space in Australia. “Our off-price model is unique to the market,” she said.
Elsewhere, UK retail heavyweight, JD Sports, will begin its battle with Rebel Sports in April with the opening of its first Aussie store in Melbourne.
IRW understands JD, which bought the Glue youth fashion stores in September last year, will open their first store in Melbourne Central, with hoarding already up as the store is fitted out, ahead of another six stores by the end of the year.
Other international news saw Italian designer Giorgio Armani announce plans to consolidate his various collections under three labels as the fashion company undergoes an internal restructuring.
Armani stated he will cease the Armani Collezioni and Armani Jeans brands. He said there will only be three lines: Giorgio Armani, Emporio Armani and A/X Armani Exchange labels starting with the spring-summer 2018 season.
Meanwhile, as America’s department store industry crisis continues, the JC Penney store network is to be culled by 14 per cent.
Of the company’s 1014 stores in the US and Puerto Rico, some 140 will be shuttered – and 6000 staff will be offered redundancy packages.
Like rivals Macy’s, Sears and Kmart, JC Penney is struggling to maintain sales as buyers shun traditional shopping malls in favour of shopping online and niche retailers like TJ Maxx and Forever 21 chip away at traditionally strong department store categories.
In some positive local news, a property firm has proposed a new three-level Tiffany & Co. flagship store as the jewel in the crown of a mooted new luxury shopping precinct in Sydney’s CBD, slated for completion by 2018.
DEXUS Property Group (DEXUS) last week announced that it has lodged a development application (DA) for a new Tiffany & Co. flagship store at 175 Pitt Street, in the Sydney CBD, activating a city retail development opportunity in the property group’s portfolio.
Reporting season has hit full swing, with retailers’ half years offering a typically dichotomous snapshot of the industry.
Apparel retailer, PAS Group, reported a 7.3 per cent increase in retail sales to $71.9 million driven by new stores that opened during FY2016 and a 39 per cent rise in online sales.
The company posted a 4.6 per cent increase in sales for the half year ending December 31, 2016 to $135.7 million compared to the previous corresponding period.
EBITDA fell 5.1 per cent on the first half to $11.6 million. Investment in retail infrastructure, new stores opening in FY 2016 and investment in JETS growth resulted in an incremental increase in costs.
“Considering the environment, the group showed solid progress serving our existing customer base and reaching new shoppers demonstrated by continued expansion of our loyalty program across all brands and strong online sales growth in the first half of the year,” said Eric Morris, PAS Group CEO.
Meanwhile, personal grooming products retailer, Shaver Shop, saw shares tumble nine per cent after it warned that earnings for its first financial year as a listed company could fall short of its prospectus forecast by as much as 18 per cent.
“Despite strong Boxing Day trading, we have found the last two months to be challenging with unprecedented same store sales volatility in recent weeks,” chief executive Cameron Fox said.
RCG Corporation recorded a 34 per cent rise in profit for the half to $23.3 million, but the result was tempered by the company reducing its full-year guidance citing challenging trading conditions.
The owner and operator of brands including The Athlete’s Foot, Hype DC, Platypus Shoes and Timberland also saw EBITD rose 42 per cent to $42.9 million, with underlying diluted earnings per share up 17 per cent to 4.3 cents.
However despite the rises in revenue and profit, the footwear retail specialist has reduced its full-year EBITDA guidance from $90m to be $85 to $88m, citing “challenging trading conditions since Boxing Day”.
Specialty Fashion Group has posted a 37 per cent rise in profit to $12 million, despite revenue falling one per cent to $430 million in the six months to December 31.
It’s been a busy week for the retailer, which owns Rivers and Katies, who also provided an update on the takeover bid from Al Alfia Holding, with a snag currently halting proceedings.
“Due to the unforeseen circumstances relating to the death of the father of the sole shareholder of Al Alfia, the funding has been temporarily restricted in probate. Al Alfia has advised they are addressing the probate issue however has not been able to confirm when this will be resolved.”
Strong retail spending in a buoyant housing market has helped furniture and electrical goods retail heavyweight Harvey Norman make a record first-half underlying profit.
Excluding net property revaluation adjustments, underlying profit before tax for the six months to December 31 jumped 20.6 per cent to $290.5 million, representing the best first-half trading result in the group’s 30-year history.
Online surf wear retailer Surfstitch has narrowed its losses in the second half, but has revised its loss forecast for the full year amid slowing sales in Q3.
Losses from continuing operations, excluding the recently offloaded Surf Hardware business, were $5.6 million for the half year ended December 31, representing an $8 million improvement on the previous period.
The past week has seen a raft of interesting news for one of the industry’s most competitive sectors.
Mexican fast-food chain Guzman y Gomez (GYG) is set to venture into the drive-thru space, announcing plans to open 38 new restaurants over the next 18 months.
GYG said 24 of the new stores will include drive-thru functionality, and an additional four stores will be opened in partnership with Caltex petrol stations in NSW and Victoria.
“GYG is here to shake up fast food and we’re showing customers they don’t have to compromise on quality for the sake of convenience and speed,” said GYG founder and managing director, Steven Marks.
There’s also been political upheaval, with fast food businesses such as McDonalds and KFC no longer be able to sponsor foreign workers on temporary visas unless they can prove a specific need, the federal government has announced.
“Australian workers, particularly young Australians, must be given priority,” Immigration Minister Peter Dutton said in a statement on Thursday.
Dutton has ended the Fast Food Industry Labour Agreement, introduced by the Gillard government in 2012, which allowed hundreds of foreign workers take jobs at fast food outlets across Australia.
Wages mea culpa
The chairman of Australia Post has admitted to a Senate committee his board made a mistake by not disclosing publicly a breakdown of the salaries it pays senior management.
John Stanhope made the admission while defending the $5.6 million pay packet of outgoing managing director Ahmed Fahour, who is calling it quits after a seven-year stint.
Stanhope argued Fahour didn’t just run a postal service but rather an e-commerce company.
“We need our salary packages to be commercially competitive to attract and retain talented people in a competitive, executive talent market,” he told a Senate hearing in Canberra on Tuesday.
But Stanhope conceded the CEO’s remuneration was inconsistent with community expectations.
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