The week that was
Company rethinks, portfolio consolidation and a mixed-bag of sales results punctuated another busy week in retail – here’s looking back at this week’s headlines.
Slow trading across the Priceline Pharmacy network over Christmas tempered parent company Australian Pharmaceutical Industries’ half-year profit guidance, which is now expected to be 9 per cent lower than the prior corresponding period.
In a trading update, API said it expected net profit after tax (NPAT) for the half-year ended 28 February to be around $26.5 million, and full-year 18 NPAT marginally above the $54.2 million it booked for FY17.
Chief executive Richard Vincent also told the company’s annual general meeting that the company will look for “smaller, scalable acquisitions” and digital transformation would take top investment priority in the current fiscal year.
Growth in Kogan mobile and strong trading over Christmas have positioned Kogan.com to deliver better-than-expected earnings and revenue growth for the first half of fiscal 18.
Kogan said its trading momentum accelerated in the second quarter, with half-year earnings before interest, tax depreciation and amortisation (EBITDA) now likely to be more than the 58.3 per cent year-on-year growth it previously reported for the first four months of FY18.
Kogan also announced it has added life and funeral insurance to its suite of services.
Good news for outdoor apparel retailer Kathmandu Holdings, which anticipates a 20 per cent lift in first-half profit after “healthy earnings growth” during the Christmas trading period.
Kathmandu expects group net profit after tax for the first-half of FY2018 will be no less than $12.0m (1H FY2017 $10.0m) while total sales for 1H FY2018 will be approximately $204 million compared to $196.3 million for the comparative prior period.
Jewellery retailer Michael Hill (MHJ) is exiting its US operations and reconsidering the future of subsidiary brand Emma & Roe, following a strategic review.
The complete exit of its loss-making retail operations in the US comes after continued poor performance saw same-store sales drop a further 10 per cent in the retailer’s most recent trading update.
Retail Food Group announced the creation of a new chief executive role to oversee the embattled Australian store network that includes Donut King, Gloria Jean’s and Brumby’s Bakery.
RFG said Richard Hinson, a former executive at supermarkets wholesaler Metcash and confectionary maker Wrigley Pacific, had been hired for the role to help improve support for franchisees.
David Jones’s South African owner Woolworths will take a $713 million writedown on the value of the department store chain as Australia’s tough retail market bites harder into the business.
Woolworths told the Johannesburg Stock Exchange that it will take a $712.5 million non-cash impairment on the carrying value of David Jones.
The future of a potential shareholder class action against Woolworths is now uncertain after litigation funder IMF Bentham announced that it will discontinue its support for the legal action.
On a more positive note, CKE Restaurants Holdings, Inc. (“CKE”), parent company of the California burger brand Carl’s Jr., announced it will open 30 Carl’s Jr locations in Victoria through its partnership with CJs Victoria.
Meanwhile retail landlord Vicinity reported a valuation gain of $408 million for its network portfolio with its Chadstone Shopping Centre investment in Melbourne providing a major boost.
Vicinity said 42 of its 74 directly-owned retail properties (56 per cent by value) have been independently valued and the remaining properties have been subject to internal valuations resulting in a net valuation gain for the overall portfolio of $408 million, a 2.6 per cent increase for the six month period.
JB makes it three
JB Hi-Fi’s inaugural entry into the Top 250 largest global retailers by revenue marks the first time three Australian retailers have made the cut for Deloitte’s Global Powers Retailing report.
Now in its 21st year, the report stated following electronics retailer JB Hi-Fi’s acquisition of The Good Guys and a consistent year-on-year comparative sales growth with an annual revenue of A$5.9 billion, the retailer made it to 218, cracking the list for the first time.
A glimpse of the future
Amazon No cashiers, no lines, no registers – this is how Amazon sees the future of in-store shopping.
The online retailer opened its Amazon Go concept store to the public, selling milk, potato chips and other items typically found at a convenience shop. Amazon employees have been testing the store, which is at the bottom floor of the company’s Seattle headquarters, for about a year.
The public opening is another sign that Amazon is serious about expanding its physical presence. It has opened more than a dozen bookstores, taken over space in some Kohl’s department stores and bought Whole Foods last year, giving it 470 grocery stores.
And that’s a wrap – enjoy the long weekend!
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