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Harvey Norman chairman Gerry Harvey is optimistic about retail spending into 2023, confident that the electronics and furniture retailer’s regional stores will power on despite fears of a slowdown.

The retailer showed further evidence on Thursday that Aussies are keeping up their spending on discretionary goods, revealing at its annual general meeting that there had been a 6.9 per cent jump in sales during the first four months of the 2023 financial year.

The company has also flagged a major expansion into the Malaysian market, with plans to grow there from 28 to 80 stores by 2028.

Harvey told this masthead that Malaysia’s population was bigger than Australia and its citizens were becoming increasingly affluent, meaning there was a big opportunity for the country to contribute significantly to Harvey Norman’s business in years to come.

“If you can get established in a country and be a number one retailer in that country in the products that we carry... then when that does happen, Malaysia in 10 or 20 years might be just as important as Australia,” the retail billionaire said.

Harvey said sales in the lead-up to the Black Friday special deals weekend and Christmas trading had been strong across the business.

“Everyone is out there advertising their head off [ahead of Black Friday]. The sales are very strong in our stores, and I expect they’re the same everywhere else,” he said.

While consumers could ease their spending in the new year, the impact might not be as strong as feared as regional town centres power on with strong employment and agricultural activity, he said.

“We are looking at it a bit optimistically because we have 65 percent of our stores in regional and country areas. Our country stores should be quite strong all next year.”

Investors didn’t seem to share his optimism, with Harvey Norman’s shares closed down 1.4 per cent to $4.17.

Meanwhile, rival furniture retailer Nick Scali also had good news to report, telling shareholders at its annual general meeting sales for the financial year to date were 74 per cent stronger than during the same time last year.

Shares in the company jumped 10.7 per cent trade at $10.34 in early afternoon.

E-commerce retailer Kogan was up 9 per cent at $3.74, with the stock advancing even though CEO Ruslan Kogan said at its annual general meeting that sales for the first four months of the financial year had dropped by 38.2 per cent during a period of “subdued sales activity in ecommerce”.

Despite this, he said the business would be able to return to its growth trajectory after it completed its sell-through of excessive inventory that it has been working through since it overestimated customer demand after COVID restrictions lifted earlier this year.

“We look to the second half of [the financial year] with confidence as the Kogan Group returns to being an agile, inventory-light business with strong operating margins,” he said.

Computers, technology, electronics and toys have been big sellers in the Black Friday to Cyber Monday sales, which are shaping up to break records as shoppers bring forward pre-Christmas spending to avoid future price rises and problems with supply chain disruptions.

Gerry Harvey, the executive chairman of retail chain Harvey Norman, said on Sunday that the Black Friday sales at the electronics, bedding and furniture chain set a record and the momentum continued over the weekend.

“All the bargain hunters are out there. The biggest sales are in computers and electronics. There’s still a lot of money out in the community and people are looking to buy now instead of waiting,” Mr Harvey said.

He suspected that shoppers spent more vigorously in the Black Friday period – which Harvey Norman labelled “Big Friday” in its marketing – than any other time in the retail calendar, including the traditional Boxing Day sales.

Mark Mezrani, founder and chief executive of educational toys chain Kidstuff, which has a network of 56 outlets, said business had been brisk over Black Friday and the weekend.

Kidstuff had a 30 per cent off sale and it had been very busy.

“Our Black Friday sales are very strong,” he said. “So far, so good, touch wood. It’s been very strong.”

He said it was a balancing act to try to maximise sales when the demand was there across the Black Friday period, which was now a huge event in the minds of shoppers. But some margin was sacrificed.

The consumer mind shift had been so significant over the past few years, it was a must for a serious retailer to be involved otherwise shoppers would go to rivals.

“This is an event that didn’t exist five years ago,” Mr Mezrani said. “There’s no doubt it’s the four biggest days of the year.”

Mr Mezrani said the two biggest selling items over the past few days had been a Squishmallow soft toy range, and a variety of different wooden toys as shoppers tried to shift away from plastic.

“There really is a big move to wooden toys, using recycled wood,” he said.

Carefully planned purchases

Paul Zahra, the former boss of department store group David Jones and now chief executive of the Australian Retailers Association, said shoppers were getting in quickly before future price rises, or supply chain disruptions caused stock availability issues.

“There’s no doubt that Black Friday has been fully adopted by retailers and consumers,” he said.

He said shoppers had carefully planned purchases before the sales event.

It was difficult to quantify how much had been pulled forward from the weeks leading up to Christmas.

“Some of it has been brought forward,” he said.

The ARA forecast that about $6 billion would be spent over the four days and records were likely to be set. “There’s still a day to go, but that’s what we’re seeing,” Mr Zahra said.

Some unique consumer psychology has also been at play. Many people want to spend up before Christmas gatherings, where they will finally be with family and friends in an unrestricted way after a very difficult time at the height of the COVID-19 pandemic.

“This is the first Christmas in three years when people are going to be able to fully get together and not have to do Zoom calls and things like that,” Mr Zahra said.

Although there were projections of economic gloom by many forecasters for 2023 as cost-of-living pressures bite and interest rates rise, they weren’t perturbed for now.

“They’re saying life’s too short,” Mr Zahra said, shrugging off any future rate rise pain.

“People aren’t worried about that just yet."

Foodland Supermarkets is set to open a unique “community-minded” liquor chain in South Australia early next month.

Dubbed ‘Local Cellars’ – the stores will sell local wines, craft beers and spirits depending on the region or location – while providing customers with what Foodland describes as “a premium shopping experience”.

Foodland Supermarkets CEO, Franklin dos Santos, said launching the liquor chain was the “next step” in the retailer’s growth pipeline.

“South Australia has some of the best wines, beers and spirits in the world and we want to encourage local producers in the community to prosper.

“The benefit of this approach is that we’re creating less emphasis on the need for transport which will minimise our impact on the environment.”

The first Local Cellars store will open in Renmark with more than 10 planned across the state before March next year.

In addition to local alcohol, the stores will also stock other South Australian complementary beverage brands and mixers. The stores will operate either next to a Foodland supermarket or as a stand-alone separate family business.

In November 2020, the retailer invested $300 million into a five-year plan to refurbish and add new stores in South Australia.

As the South African owners seek to progress a sale of David Jones, its full year 2022 accounts show that sales slipped slightly, and net profits were crushed by more than fivefold.

The latest filing to the corporate regulator by Osiris Holdings, the local vehicle that holds the department store, showed that sales for the 52 weeks ended June 25 reached $2.06 billion from $2.11 billion the year prior. That includes merchandise sales and concession commissions.

Profits after tax fell to just $14.53 million for the year from $84.26 million in 2021.

Profits from its share of its credit card alliance fell in 2022, and the retailer did not have the significant boost from the sale of property it achieved in 2021. Woolworths repatriated $90 million in special dividends in March.

Charter Hall snapped up the prized 12-storey Elizabeth Street flagship for $510 million in 2021. It also sold its Market Street store and its menswear site in Melbourne. David Jones still owns Melbourne’s Bourke Street store, which is mid-refurbishment.

David Jones chief executive Scott Fyfe said despite the 2.6 per cent fall in sales, it was a “tale of two halves” in 2022, and David Jones was now a profitable and self-funding business.

“It is a strong result, attributable to our continued focus on delivering on the Vision 2025 strategy, which includes space optimisation and cost-out initiatives, the rationalisation of the DJs food offering and, a focus on trade and omnichannel,” said the Scot driving the turnaround.

He added that David Jones was in a strong position to maximise profitability in the years ahead and be a leader in omnichannel retail.

Woolworths flagged early this month that sales increased by more than 55 per cent in the first 20 weeks of the new  year, with its flagship and CBD locations performing well ahead of expectations.

Trade was seriously hampered a year ago by extended lockdowns, resulting in relatively higher growth rates in the current period.

The ultimate parent of Osiris Holdings is Woolworths, which is listed in Johannesburg and is working with Goldman Sachs to explore a sale of the 184-year-old department store.

It is believed that Woolworths wants a deal by early next year. Any buyer would want to see pending Christmas trading.

The Australian Financial Review’s Street Talk revealed that Teoh Capital – the private investment firm of billionaire David Teoh and his family – joined the auction for the nation’s oldest department store chain which could spell the end of a rather painful era for its offshore owners.

Phil Cave’s Anchorage Capital Partners is also in talks with the seller and its bankers. It is believed to have lined up $150 million in working capital and $50 million in guarantees to help fund its likely bid.

Australian Christmas retail sales are predicted to exceed $60 billion, despite the impact of inflation and cost of living problems, according to research from the National Retailers Association (NRA).

Covering the pre and post-Christmas shopping periods, that figure would represent a 3.9 per cent increase over last year.

Quoting the organisation’s Consumer Sentiment Report, interim NRA CEO Lindsay Carroll said buyers are preparing for the holiday shopping season by modifying their spending habits in order to afford Christmas events and gifts.

“It’s clear people still want to feel special and have those great experiences but rather than indulging in costly goods and services, shoppers are planning ahead to score bargains in the upcoming sales events,” she said. 

Meanwhile, the Australia Retail Association (ARA) says Australian retail sales increased 12.9 per cent in October compared to the same time last year, with sales climbing 28.2 per cent on pre-pandemic levels.

“Retail performance this year continues to be outstanding, despite a dramatic drop in consumer confidence due to inflation,” said Paul Zahra, ARA CEO. 

Zahra said the Delta lockdowns of a year ago were a “driving factor” in the surge, and predicted the “strong sales momentum” is encouraging for the most important retail trade season of the year, Christmas.

Online retail anticipates another “strong” year of growth due to shifting consumer behaviour and the growing appeal of occasions like Cyber Monday. People want to finish their holiday shopping before December, and bargain sales events are becoming more common, enabling customers to research products and make purchases at any time and from any location.

Carroll said retailers should be encouraged that there are still customers out there willing to spend their money this season – “but more than ever they are looking for bargains, for great shopping experiences and for smooth transactions,” she said. 

However, once the Christmas festivities are over, the ARA forecasts sales will fall next year. The most pressing trading difficulties for retail right now, he said, are debilitating workforce shortages and managing ongoing supply-chain disruptions.

Retailers are overstocked and are ordering less from manufacturers as the economies of the United States and Europe slow markedly, and this will have a ripple effect on the entire global economy says the managing director of logistics giant Toll Group.

Alan Beacham, who was speaking to the Australian Financial Review Infrastructure Summit from Singapore, said Toll was already noticing lower orders from retailers in the US and Europe, which were adjusting inventory levels downwards as demand from consumers slowed.

“Retailers are overstocked, so they’re ordering less,” Mr Beacham said.

“This means you’re going to see an even further slowing next year in terms of those orders into the manufacturers, which kind of creates a ripple effect into global trade,” he said.

He said a “perfect storm” looms next year because inflation will still be a big issue as consumer demand declines. “Demand will be down, so we have that perfect storm of a lower top line and an increasing cost line,” he said.

The warning shows how the resolution of supply-chain bottlenecks that were exacerbated by hot consumer demand and product shortages during COVID-19 lockdowns is still leading to forecasting errors and complicating ordering decisions by consumer goods companies.

‘Not smooth sailing’

Mr Beacham also said a large amount of new shipping capacity is set to come into the industry from late in 2023 until 2025 as new vessels arrive, which is the equivalent of adding 30 per cent of the current global shipping fleet. That is coming on stream at a time when demand is likely to fall.

He said the costs of shipping and bringing in goods to Australia from offshore have dropped significantly compared with a year ago, but there are still disruptions in supply chains.

“It’s not smooth sailing yet,” he told the summit. He said reliability levels are still below 50 per cent, and industrial relations issues in Australia have exacerbated the situation. “It’s still a fragile supply chain,” Mr Beacham said. But shipping container index tracking shows a 70 per cent reduction in price from November 2021 to November this year.

“It has fallen very quickly,” he said.

Race to the bottom

Jon Davies, the chief executive of the Australian Constructors Association, told a panel examining the issues of rising costs and inflation that construction companies have been undervalued in Australia for too long and a race to the bottom approach – where margins are pushed lower and lower when tendering – needs to stop. “We’re almost looked upon as a commodity,” Mr Davies told the summit.

Having to accept low-single digit profit margins on large projects with significant risks needs to “fundamentally change”, he said.

Rebecca Hanley, managing director of engineering and construction group Laing O’Rourke, said if there was a slowdown in the economy and some projects were put on hold, it would reduce a “hyper escalation” of projects that had built up and make the pipeline of projects more sustainable.

“The peak just keeps shifting to the right, because we never reached that peak,” Ms Hanley said.

Australian-owned and operated sportswear brand LSKD is opening its third retail space this year, as part of a plan to expand its retail presence before peak period.

The 150sqm Westfield Chermside store – which has a custom-front design – is set to open on 3 December, and follows the opening of its Chadstone store, which had 20,000 customers walk through the doors when it launched in October. 

It follows the brand’s first store, which opened at its headquarters in Loganholme, Queensland, in January, and is part of a plan to open five stores across all major Australian cities – as well as a shop in New Zealand – over the next 12 months.

LSKD founder and chief executive Jason Daniel tells Inside Retail that its core value is to move fast and break shit. 

The business – which started as a wholesaler before transitioning to e-commerce in 2019 – achieved $50 million in sales over the last financial year, with Daniel explaining that it was in a position to utilise that growth, and grow its retail presence.

He says that the brand was motivated by its successful transition in e-commerce which, like physical retail, was uncharted waters.

“It was purely going back to our values. We were in a position where we could invest in the long term, as well as our community,” he said.

Daniel adds that the Chadstone launch was so successful in part because of its tights and shorts swap. 

The first 300 females and 300 males to enter the store were able to swap their shorts and tights with an LSKD model. It then worked with charity partner, Upparel, to donate the products that were handed in.

He said the initiative created a lot of energy and excitement over the shop launch, which saw lines forming from 5:30am on opening day.

“The best thing about retail is we can really connect and build community with customers,” he said.

“We’ll have two stores leading into this Black Friday, and three leading into Christmas.

“This time last year, we didn’t have any, so it’s really exciting.”

BMX origins

Daniel started the business, then called Loose Kid Industries, in 2002, when he was in high school. Its origin dates back to his nickname, as he would give everything a go on a BMX bike. He had ambitions of becoming a professional motocross athlete, before becoming a carpenter and building houses while working on the business.

In 2010, LKI became a full time job for Daniel. It produced a range of wholesale products, including life jackets, motocross gloves and socks and a bit of sportswear. It sold these products to retailers, including City Beach, which had over 66 stores across Australia.

In 2018, the business transitioned to LSKD, with Daniel explaining that it found its mission, which was inspiring people to ‘chase the vibe’ through sports, fitness and adventure. It pivoted to sportswear with a street aesthetic.

“I’m 35 now, and it was a 15-year learning experience that I was lucky to go through. We refined our products, and were very passionate about developing the best fabric in the world for our community, as well as the everyday athlete,” he said.

Daniel adds that the brand moved away from wholesale after launching its rep tights in July 2019, which was its best-selling product. 

The product took over 18 months to develop with the wants of its customers – rather than other retailers – in mind. 

When we closed our wholesale business down, we really just wanted to focus on our brand message and our customers,” he said.

“If we could really focus on them [we could] build something for the next 50-plus years.”

Giving back

Beyond plans to expand across the country and grow its New Zealand presence, LSKD is developing a United States team, and has recruited 175 new team members for its fulfilment centre to prepare for peak period. Daniel said it’s part of its growth plans, which is on track to grow another 50 per cent this year.

This growth is partly tied to the brand’s product development – in order to create the best sportswear in the world –  as well as its values, which includes an emphasis on sustainability, as well as work with charity partners. 

Its Project Earth initiative involves in-house commitments to reduce printing and paper by 20 per cent each year, as well as a focus on reusable and biodegradable packaging. Daniel says that he has used the brand’s ziplock packaging as a lunch esky, travel bag and gym bag. 

It also works with charity partners such as the Cystic Fibrosis Queensland, Wear It Purple and the National Breast Cancer Foundation. It raised $70,000 for the NBCF last month, and has ongoing products where 5 per cent of sales are donated.

They also have an in-house give-back crew, formed by its CFO, which allows the team to support local communities and organisations. 

Daniel says that it provides an opportunity for team members to support organisations that they care deeply about.

“There’s more that’s happening in this space that we’re going to share more of, because it can inspire other brands and our community [in terms of] how they can give back as well,” he said.

“Learned more from the mistakes I’ve made”

Working on LSKD since he was a teenager, and being in the role full-time since 2010, Daniel says the biggest learning moments have come through mistakes, which have helped to build the brand’s identity.

“If we had this growth 10 years ago, I don’t know how I would’ve handled it, because I was so young, and I’m not sure I was in the right frame of mind to learn from those mistakes,” he said.

“Our business was much smaller for many years, and as much as you want it to grow quickly, sometimes it doesn’t. Then we started to figure out that creating something bigger than ourselves – and standing for something more than just selling a product – was so important.”

Trans-Tasman retailer Strandbags has changed its brand name to Strand as part of a multi-year modernisation strategy to attract new customers.

The company will follow up the name change by investing in improving customers’ omnichannel experiences including modernising all systems, introducing automation and streamlining operations.

Strand Group CEO Felicity McGahan said the brand’s legacy needs to “evolve” and attract a new generation of shoppers.

“For 95 years, Strandbags has been a consistent and reliable presence in the lives of thousands of Australians and New Zealanders. Our new purpose is to elevate all of life’s journeys – whether you’re planning a trip around the world, or simply popping out to the shops.”

Earlier this year, the retailer launched two private labels – Evity and Nere – which she said have both exceeded revenue targets. Evity alone is set to achieve sales in excess of $100 million in its first year.

“The success of these brands proves the efficacy of our modernisation strategy, and demonstrates the positive progress made to develop products that are fit for purpose and relevant to our growing customer base,” said McGahan.

As part of the brand’s evolution, its Melbourne-based Highpoint flagship has been transformed into a Boutique Service Model complete with Mobile POS, “trained handbag stylists and expert luggage advisors”. The store will open to the public on December 10.

Boots and bush clothing maker RM Williams lifted sales by 17 per cent in the 12 months ended June 30 to about $220 million, and is preparing to become a “greener” company under owners, iron ore billionaire Andrew Forrest and his wife Nicola.

Chief executive Paul Grosmann, who was hired from Nike to take the helm of the 90-year-old company last year, says there has been “solid momentum” in the first four months of the new financial year but expects trading conditions to become tougher.

One element which RM Williams has behind it is the long life span of a pair of its boots. “There is longevity behind it. It’s a long-life purchase and a considered one, that’s not a fast fashion purchase,” he says.

Mr Grosmann is hoping that will be a shield against any economic slowdown, but acknowledges that RM Williams’ items are a discretionary purchase.

RM Williams lifted the prices of its boots by about 8 per cent in June as it passed on rising input costs. The core range of high-quality boots went from a price tag of about $600 to $650

“That was the first price rise in about three years,” he said.

The boots, clothing and belt maker was acquired by the Forrests’ investment company, Tattarang, in October 2020 for $190 million. Film star and entertainer Hugh Jackman sold his 5 per cent stake in RM Williams to Tattarang under the deal.

Mr Grosmann says there is a multi-pronged push to enhance the sustainability of the business. It will step up a repair and re-use push where customers can return an older pair of boots to retail stores and online.

“We actively repair the boots and sell them at a discount”.

The company is also cutting the use of plastic packaging and has programs to ensure leather is being sourced from tanneries which are the most efficient, and use the least amount of water.

It is also stepping up a drive to reduce the amount of waste leather in the bootmaking process. “We do the whole process ourselves”.

By reducing the amounts used in the cutting and production process, small savings can be made.

The long life of high-quality boots is a plus in the overall push for “greener” credentials.

“That definitely is an area where we have a head start,” Mr Grosmann said. The company aims to reinforce the high-quality and longevity of its products with a marketing blitz under the “Crafted for Life” banner.

RM Williams has a workforce of about 1200 people, including 500 at the Adelaide manufacturing plant and distribution centre in the suburb of Salisbury, where the boots are made.

Mr Grosmann said a decision would be made within six months on plans to expand the production footprint.

The Salisbury plant is likely to remain at the core, and RM Williams is doing due diligence on other potential sites. “It’s most likely in the same area. We want to keep the team together.”

Last month, the business set a record for the production of boots, with an average daily rate of 1600 pairs. It produced 280,000 pairs in 2021-22, up from 250,000 the year before.

Mr Grosmann said improving sustainability was something that customers expect, but was also being given an added push by the company’s owners.

“It’s just the right thing to do. It’s important for the Forrest family,” he said.

Mr Forrest, Australia’s second-richest person from iron ore profits at Fortescue Metals, has spruiked green hydrogen around the world and made ambitious promises to try to decarbonise iron ore and the steelmaking process.

He set up Fortescue Future Industries, a wholly owned subsidiary of Fortescue Metals Group, to be the flagship entity for his green push and hired former Reserve Bank of Australia deputy governor Guy Debelle as chief financial officer.

Mr Forrest has been attending the COP27 climate conference at Sharm el-Sheikh in Egypt.

RM Williams has 71 retail stores and a growing online business. Legendary bushman Reginald Murray Williams started the business in 1932.

KMD Brands, owner of Kathmandu and Rip Curl, has appointed Zion Armstrong as a non-executive director.

Armstrong has over three decades of experience in the global sportswear industry, including 24 years at Adidas.

He stepped down as North America president in early 2022 to return to New Zealand.

Armstrong commenced his career with Adidas in New Zealand as footwear product manager in 1998 before moving to the headquarters in Germany in 2002.

From 2005 to 2014, he held various leadership roles in Asia-Pacific including president and managing director for Adidas Group South Korea.

Since 2015, he served as GM of North America and in 2018 was promoted to president.

KMD Brands chairman David Kirk welcomed him to the board. 

“We are thrilled that Zion has agreed to join the board of KMD Brands. He brings extensive background and capability in global branded sports apparel and footwear.

"His experience and proven capability in global brand management, product development and multi-channel distribution is a perfect fit for the next stage of growth for KMD Brands.

"North America and Asia are important long term growth markets for our brands and Zion’s experience in these markets will be invaluable as we move forward on our strategic pillar of building global brands”.

As required by the company's constitution and the NZX Listing Rules, Armstrong will hold office until the annual shareholders’ meeting of the Company following the effective date of his appointment, at which time he will resign and stand for election.

Armstrong has agreed to join the company as a non-executive director effective December 1. 

Retail sales at Westfield malls have bounced higher, by an inflation-beating 15.6 per cent in the September quarter on their pre-pandemic levels, as cashed-up shoppers are confident enough to keep on spending.

The third quarter trading update from ASX-listed Scentre, the owner and manager of 42 Westfield malls around the country, is the first from its new chief executive, former chief financial officer Elliott Rusanow, who said the surge in sales figures augurs well for festive season trading.

Specialty sales picked up 12.9 per cent in the first three quarters of the year, compared with 2019, indicating retailers’ trading results have accelerated in the last quarter alone. All that activity at the till comes as customer visits surged, up 16.7 per cent to 391 million so far this year, compared with a year earlier.

Mr Rusanow expects individual visits across the malls portfolio to hit 500 million by the end of the year, promising a strong fourth quarter for the Westfield portfolio.

“This is going to be the first festive season in three years where people won’t have restrictions placed on them,” he told The Australian Financial Review.

The lift was less a case of “revenge shopping” and more the result of a “structural improvement” in what Westfield customers were doing with their time and money after two years of rolling lockdowns, he said.

And if freedom from restrictions is what is pulling more shoppers into its malls, then the push, according to Mr Rusanow, is the fact that other discretionary spending options such as travel are now relatively more expensive.

“We compete very well in that competition for the time and attention of people because we in effect offer free entertainment as well as a place to go to around the festive season,” he said.

“The level of savings that has been accumulated over that two-year period over 2020 and 2021 is a very large amount of money. It’s not all being redeployed back into other things that they might have traditionally been spending on. The consumer is in a very healthy position.”

That level of spending has flowed through the financial health of Scentre’s tenants. The shopping centre owner has collected $1.92 billion in rent this year, an increase in $235 million over the comparable period last year. The rent collection tally represents more than 100 per cent of billings, a sign Scentre is catching up on rent owed.

While the strong sales figures themselves incorporate some impact from inflating prices, Mr Rusanow is confident that consumers will keep up their level of spending in Westfield even as living costs rise.

“They are concerned about the rising cost of living but the impact of that on our business is less than what it might be on other forms of spending,” he said.

Scentre’s leases are set up to include CPI-linked increments, giving the landlord a buffer against inflation, but also putting pressure on its retailers to maintain their sales growth sufficiently to support their rents.

Scentre does not update its re-leasing spreads – a key metric showing the difference between old and new leases – at the third quarter, but Mr Rusanow said they were continuing to improve.

Scentre has reconfirmed its earnings guidance for a 14.2 per cent growth in funds from from operations to 19¢ per security for 2022, with distributions of at least 15¢, up 5.3 per cent.

“Scentre’s guidance looks conservative on the back of today’s positive metrics,” Morgan Stanley analysts wrote.

Amazon.com is the world’s first public company to lose a trillion dollars in market value as a combination of rising inflation, tightening monetary policies and disappointing earnings updates triggered a historic selloff in the stock this year.

Shares in the e-commerce and cloud company fell 4.3 per cent on Wednesday, pushing its market value to about $US879 billion ($1.37 trillion) from a record close at $US1.88 trillion on July 2021. Amazon and Microsoft were neck-and-neck in the race to breach the unwelcome milestone, with the Windows software maker close behind after having lost $US889 billion from a November 2021 peak.

While technology and growth stocks have been punished throughout the year, fears of a recession have further dampened sentiment in the sector. The top five US technology companies by revenue have seen nearly $US4 trillion in market value evaporate this year.

The world’s largest online retailer has spent this year adjusting to a sharp slowdown in e-commerce growth as shoppers resumed pre-pandemic habits. Its shares have fallen almost 50 per cent amid slowing sales, soaring costs and a jump in interest rates.

Since the start of the year, co-founder Jeff Bezos has seen his fortune dwindle by about $US83 billion to $US109 billion, according to data compiled by Bloomberg.

Last month, Amazon projected the slowest revenue growth for a Christmas quarter in the company’s history as shoppers reduce their spending in the face of economic uncertainty.

That sent its market value below $US1 trillion for the first time since the pandemic-fuelled rally in tech stocks more than two years ago.

As customers return to malls in the post-Covid ‘new normal’ Scentre Group says it is now focused on “creating places more people choose to come, more often, for longer”.

In the three months to September 30, the group achieved AU$6.4 billion in sales from 42 Westfield Living centres across Australia and New Zealand – up $2.7 billion more than last year.

Scentre’s business partners – tenants – achieved $18.4 billion in sales, up 23.6 per cent compared to the same period last year while portfolio occupancy has risen by 98.8 per cent highlighting strong demand from businesses.

About $670 million has been collected in rent as of September 30 which is an increase of $235 million compared to the same period last year. The group membership program has now exceeded 2.9 million members – an increase of 200,000 during the quarter.

CEO Elliot Rusanow said the business is confident in its customer-focused approach and strategy to become essential to the people and communities.

The Daily Edited (TDE) has been pulled out of liquidation with a sales process commencing for the accessories brand. 

KordaMentha Restructuring is seeking Expressions of Interest in the sale of TDE, which collapsed in September owing $2.8 million to creditors.

KordaMentha Partner Kate Conneely said she expected a lot of interest in the sale from potential buyers. 

“The Daily Edited is already a favourite of fashion-conscious consumers, both locally and overseas. It is well known for the quality of its products and beautifully curated shopping experiences, both in-store and online,” she said.

“The fundamentals for a high-performing, boutique fashion business are in place. This is a great opportunity for a buyer looking to build on an established brand with loyal and engaged consumers, and set it up for future success.”

TDE traded personalised accessories, retailing leather goods that consumers could customise with monograms.

Its product range included bags, purses, wallets, organisers and phone and laptop cases for both men and women.

TDE has a flagship store in the Queen Victoria Building in Sydney’s CBD, an online shop and shopping enabled on its popular social media platforms.

The brand is also well known for its collaborations with international influencers and fashion personalities, such as Hailey Bieber and Amber Valletta.

Prior to its collapse, the business outlined a strategy for future growth including changes to production and brand. 

Myer has released its annual Christmas marketing campaign, with catchlines including 'Grab Christmas by the baubles'.

Myer CCO Geoff Ikin said the creative encourages Australians to embrace the chaos of the Christmas season. 

“The campaign has been created to cut through the noise in typically the most cluttered media environments at Christmas," he said.

"It's fun, engaging, irreverent and offers what our customers love – a little surprise and delight. Australians love to celebrate Christmas, and so do we!”

The campaign, 'Let the Season be the Reason', launches with a film that is set on Christmas eve.

The assets will be delivered across TV, BVOD, OOH, digital, social, online, in-store VM, gift wrapping and team member uniforms.

Campaign tag lines include; ‘Stuff the turkey, stocking and self-control’, ‘Grab Christmas by the baubles’, and ‘Deck the halls, kitchen and living room’.

"When it comes to Christmas no one does it better than Myer," Ikin said.

This year we’re approaching the festive season with more confidence than ever knowing Myer is unmistakably the trusted home of all Christmas gifting and entertaining needs. 

“From our much-loved Melbourne Christmas Windows, which will feature iconic scenes in celebration of Disney’s 100 years of wonder, to our national Santalands, curated Giftoriums and our Myer one VIP shopping nights, we are there to help our customers celebrate this festive season.”

Wesfarmers chief executive Rob Scott says retail trade remains robust so far this year, but shopping patterns indicate some customers are becoming more price sensitive as they try to manage squeezed household budgets and rising energy costs.

The Western Australia-based conglomerate owns key retail brands Bunnings and Kmart, but also is pushing into lithium in its $1.9 billion Mount Holland project and new health division. 

Mr Scott told shareholders at the group’s annual meeting in Perth on Thursday Australian consumer demand continued to be supported by low unemployment and high levels of accumulated household savings, but rising interest rates and the impact of inflation were starting to affect consumer behaviour.

Mr Scott said Wesfarmers was well-placed to meet shoppers’ needs as they looked for value, and the combined sales growth for Kmart and Target in the year-to-date was strong, even when adjusting for the impact of lockdowns a year ago.

“Kmart’s market-leading value and low price points position it to meet customer needs and profitably grow its market share in an environment where shoppers are more focused on value,” he said.

“Target continues to benefit from good progress in delivering on quality and style at affordable prices.”

Mr Scott said at hardware giant Bunnings, sales in recent months had been hurt by the wet weather, but overall sales growth for the year-to-date remained resilient and supported by strong demand from commercial customers. DIY sales growth was positive, but moderated from the high levels experienced through COVID.

Officeworks’ sales for the year-to-date remain broadly in line with the prior year, while the industrial and safety division has continued to improve, with sales growth recorded across all business units through the year-to-date.

Sales at Catch marketplace have declined so far this year following a surge in pandemic-led spending a year ago for most online players. But Catch was a serious underperformer for Wesfarmers in its first half of 2022 when sales fell 4.3 per cent and earnings were hit by more discounting.

The newly appointed Catch CEO, Brendan Sweeney, joined this month and will focus on improving the customer offer while managing the ongoing investment program to support scalability and growth.

Mr Scott called the 2023 year “foundational” for the OneDigital division as the vertical invests in systems and capabilities to support its data and digital ambitions. Wesfarmers expects OneDigital to post an operating loss of $100 million for the financial year, excluding Catch.

Mr Scott said the chemicals, energy and fertilisers division had continued to benefit from strong customer demand and elevated commodity prices, and development of the Mount Holland lithium project was progressing well.

In about two years, Wesfarmers will be selling lithium hydroxide, refined at Kwinana in Western Australia, to support the accelerating global uptake of electric vehicles.

“Each year, the production from our lithium hydroxide project, on a 100 per cent basis, will be equivalent to powering 1 million battery electric vehicles, resulting in annual savings of around 1.8 million tonnes of emissions,” Mr Scott said.

Chairman Michael Chaney said hopefully there would not be a recession in Australia, albeit “we will likely have a slowdown in economic activity from next year”.

Mr Scott warned that elevated supply chain costs, rising wages and surging utilities, together with a weak Australian dollar, would impact the group’s businesses in the 2023 financial year.

But overall the Wesfarmers’ balance sheet is strong and holds a diverse portfolio of high quality, cash-generative businesses, so it is well-placed to weather any storm next year.

“While there are some risks on the horizon – including elevated inflation, rising interest rates and geopolitical tensions, I continue to believe that Wesfarmers is well positioned for this environment and has the capacity to effectively manage a range of economic scenarios,” he said.

Speaking after the meeting attended by almost 900 shareholders, Mr Scott said rising power bills were a key component of the cost pressures being faced by Australian households.

“The cost pressures on consumers are increasing, and energy cost are a key part of that and I think that is why we are already starting to see consumers be more value conscious,” he said.

Asked if he expected Bunnings earnings to come under pressure with inflation hitting 7.3 per cent, a softening in house prices and post the DIY boom during COVID-19 lockdowns, Mr Scott said the hardware chain had shown itself to be resilient business through economic cycles.

“In tough markets, consumers put a greater focus on price and value so often in the tougher markets Bunnings tends to outperform,” he said.

“Like any retail business, we are not immune from a slowdown in the economy, but we feel Bunnings is a very resilient business and well-prepared in a downturn.”

Myer has commenced its “biggest transformation” in store technology in recent years, with the move set to see a 20% reduction in transaction times. 

The 18-month transformation will deliver new Zebra TC57X mobility devices and new NCR point of sale to all stores.

The mobility devices are aimed at improving receiving and dispatch, stock take, online fulfilment and inventory enquiry/pricing.

Its “One Device Strategy” will see all core business applications bundled into the Mobility device, including a new Push-To-Talk application which will connect team members across the store.

The NCR point of sale registers will be rolled out in FY23 with new software, which is expected to enhance customer experience at the checkout.

This is in addition to Myer’s leading M-Metrics team member application, which provides team members with real-time digital communications, product knowledge and performance recognition. The app displays customer feedback and provides a wide range of learning moments, including video content.

“Myer is embarking on our biggest transformation of store technology in recent history, ensuring a better experience for customers in store,” Myer GM of retail operations Gary Stone said.

“Our new registers will ensure simpler and quicker transaction times – approximately 20 percent faster, and through our new Zebra devices we can provide on-the-spot assistance with stock availability, as well as team members being able to connect to provide faster service and assistance to our customers.

“This step-change in technology will ensure Myer remains Australia’s favourite and most trusted department store into the future.”

Store transformations

As well as improving in store technology, Myer is also preparing for continued refurbishments and strategic footprint reduction in FY23.

Toowoomba and Albury stores have recently seen refurbishments, with a re-layering taking place at Chadstone and Fountain Gate. There is further space optimisation planned at an extra 17 stores in FY23.

Through strategic footprint production, Myer has closed Knox and Blacktown in 2022, with space reductions conducted in Toowoomba, Chermside and Eastland stores.

Its Frankston department store has been scheduled for closure in January 2023.

In total, Myer has exited or announced a reduction of 119,534 square metres GLA (11.1%) of space since the first half of 2018, with a further 69,000 square metres in preparation.

The company cites the reducing of CODB as the reason for these strategic store closures.

The Medibank cyberattack has taken the heat off a data breach at Woolworths’ new online marketplace, MyDeal, but retailers remain on high alert after a string of hacks that have stolen the data of more than 16 million consumers in a month.

With their reams of personal and credit card data from loyalty schemes, e-commerce sites, online marketplaces, subscription-based delivery services and point of sale systems, retailers have emerged as irresistible targets for hackers.

The shift from cash to credit cards and digital wallets, and the implementation of multiple technologies as retailers digitise their operations and move from bricks and mortar to online, have given cyber criminals ever more ways to exploit the sector’s defences.

Cybersecurity experts say the $400 billion sector’s so-called “attack surface” – the outward-facing parts of their business that can be accessed and exploited – is growing as retailers seek to boost sales by making more targeted offers to customers, collaborate with suppliers and partners, and reduce costs by implementing new data-driven technologies.

“The breaches we’ve seen recently are a wake-up call for all businesses to ensure they’re doing everything they can to safeguard customer information,” says Australian Retailers Association chief executive Paul Zahra. “Cybersecurity remains a huge focus for retailers and will require ongoing attention.”

Arjun Ramachandran, principal at cybersecurity firm elevenM, says retailers are being specifically targeted because they hold large stores of valuable data, and their data protection and cybersecurity systems might not be as robust as those in other sectors such as banking and telecommunications.

“Retailers have always had to hold and handle financial and transactional data like payment information and credit cards, but the recent breaches have illuminated the broader value of the customer data they hold to hackers and attackers,” Ramachandran says.

While four million Medibank Private customers are understandably worried about the theft of confidential health information, major retailers such as Woolworths, Coles, Wesfarmers, Endeavour Group and Myer are storing vast amounts of customer data that is equally sensitive, ranging from their names, addresses, phone numbers, drivers’ licences and date of birth to the pharmaceuticals and health care products they use, the amount of alcohol they consume and even the size of their bras and underpants.

Retailers claim their loyalty data is de-identified, but if their systems can identify customers by name and email address and track their spending, it’s not hard to imagine increasingly sophisticated hackers will find ways to put two and two together.

“De-identification is not a panacea,” says Ramachandran. “There’s plenty of research showing that information that’s been purportedly de-identified has been very readily re-identified. That’s an incredible risk.”

Ten years ago The New York Times published an article revealing that US retailer Target was using predictive analytics to pinpoint when customers became pregnant – even before they had told their families – and predict their due date based on changes in their spending habits. Target sent them coupons and offers including discounts on maternity wear, vitamins and nappy bags.

Most large retailers are now using predictive analytics to track and forecast customer spending, but to do so accurately they need more customer data. This data is gold in the hands of cybercriminals, who sell the information on the dark web, rack up bills on credit cards, steal identities to commit other crimes, or withhold the data and hold companies to ransom.

Customers trust their data will be protected and when this trust is broken, they are likely to stop scanning loyalty cards – depriving retailers of precious insights – or stop shopping with the retailer altogether.

Hackers moved too quickly

It’s too early to tell if the cyberattack on online marketplace MyDeal, barely a month after Woolworths acquired an 80 per cent stake, will deter customers and lead to a decline in sales.

Woolworths’ chief security officer Pieter van der Merwe, told The Australian Financial Review last week the retailer had started strengthening MyDeals’ cybersecurity systems after identifying areas of weakness during due diligence for the acquisition.

But the hackers moved too quickly, breaching MyDeal’s customer relationship management system in mid-October. About half of the 2.2 million customers affected had their email addresses exposed. For the other half, names, phone numbers, addresses and birthdates were exposed, but no payment details, passwords, drivers’ licences or passport details were accessed.

Woolworths chief executive Brad Banducci apologised at the annual meeting on Wednesday, saying the retailer took cybersecurity and data privacy seriously.

“We were weeks away from all the remedial action being done to lift it to the standard we would expect at Woolworths. It wasn’t that it was a poor standard, but there were things to be done,” Banducci said.

“But as a major public company, we are going to be targeted. Going forward, if we ever found ourselves in this situation again, we’d make sure that at the point of completion it was at our standard, the work was under way to get to our standard. So, it has been a real lesson for us.”

Woolworths is doubling its spending on cybersecurity and core IT, testing APIs (the apparent entry point hackers used to penetrate Optus’ defences), testing penetration protections and reviewing all its datasets and data retention policies.

“This is an area we have to be absolutely vigilant over all the time and you can’t relax,” said outgoing Woolworths chairman, Gordon Cairns.

Coles is also reviewing cybersecurity following the MyDeal, Optus and Medibank and Vinomofo attacks.

“As soon as something happens we look at what’s happened and are we exposed in the same way or not,” says Coles chief executive Steven Cain.

“It’s a continuous investment program. No one is bulletproof. The hackers are becoming more sophisticated over time as well.”

Many major companies, including Coles, benchmark themselves against the Australian Cyber Security Centre’s Essential Eight framework, which outlines a minimum set of preventative measures designed to make it harder for adversaries to compromise systems.

However, Essential Eight will not mitigate all cyber threats and the ACSC says organisations may need to implement additional measures and security controls where they are warranted by their environment.

The Essential Eight mitigation strategies include patching applications and operating systems, restricting administrative privileges, regular system backups and implementing multifactor authentication, including one-time codes to supplement passwords and usernames.

“A lot of organisations recognise its value and commit to applying it, but many find it difficult to achieve full maturity against all eight measures,” says Ramachandran.

It appears that in the Medibank and MyDeal attacks, data was accessed by unauthorised users using “compromised” or through stolen credentials. This suggests multifactor authentication was not implemented, or the hackers found ways to bypass these protections, perhaps by accessing the details of a contractor or supplier with access to systems.

Nine years ago, US retailer Target’s point-of-sale systems were breached when the user account of an air-conditioning mechanic was compromised. The attackers used his account to work their way through other systems, eventually stealing customer credit card details.

Many retailers rushed to digitise and enable employees and suppliers to work from home and access their systems remotely during the pandemic, opening up more potential points of attack.

“Supply chain security is really hard one – it’s hard enough for organisations to understand their own organisation’s security and fix it, now they have to think about the suppliers they’re using as well,” says Ramachandran.

Experts say multifactor authentication is crucial, but retailers also need to invest in training so employees, contractors and suppliers are aware of risks such as phishing emails designed to steal passwords and suspicious behaviour, such as staff seeking more access to sensitive information and systems. Retailers should also adopt the concept of least privilege, where individuals only have access to systems they need to do their jobs.

While MyDeal, Medibank, Optus and Vinomofo have attempted to absolve themselves of blame, pointing the finger at cybercriminals, consumers will hold businesses accountable for safeguarding the data they hold and will punish those that fail to protect it.

If the loss of customer trust isn’t punishment enough, hefty remediation and compensation costs, the potential loss of precious customer data and new fines ranging from $50 million to as much as 30 per cent of revenues might prompt retailers to take cybersecurity even more seriously.

Multi-brand fashion retailer Mosaic Brands says sales have increased 64 per cent since the start of this financial year driven by the rebound of in-store shopping.

The group owns labels including Katies, Millers, Noni B, Rivers, Rockmans, Crossroads, Autograph, W Lane, EziBuy and Beme.

In an ASX filing, the business reported in-store comparable sales for the first quarter were registered at 22 per cent, as sales momentum was unimpeded by the impact of Covid-related lockdowns.

“Notwithstanding our strong rebound of in-store shopping, we have seen our online brands, excluding EziBuy, buck this national trend and achieved comparable sales flat to the previous corresponding period or the first quarter.”

Last year, the business agreed to purchase the remaining 49.9 per cent of EziBuy for $11 million. EziBuy is one of the largest multi-channel retailers in Australia and New Zealand, generating approximately NZ$135 million of revenue, of which over 80 per cent is through its digital platform.

“The EziBuy brand has performed in line with its peer pureplay online retailers, with year-to-date sales up 42 per cent.”

The business says it is “well-positioned” for the Christmas trading period and is well-stocked with fresh summer collections in line with expected trade demand.

Amazon on Thursday forecast a slowdown in sales growth for the holiday season, disappointing Wall Street and warning that inflation-wary consumers and businesses had less money to spend.

Amazon’s 12 per cent extended-trade stock drop erased about $140 billion in its market capitalisation, greater than the entire value of companies such as Morgan Stanley, Netflix and Lockheed Martin.

For months, the world’s biggest online retailer has fought against troubling macroeconomic tides. It hosted not one, but two cornerstone sales events in a year: Prime Day in July, and the Prime Early Access Sale this month.

For the summer event, it sold more items than ever before to its Prime loyalty shoppers, and, meanwhile, the company sought revenue from higher Prime subscription fees and a surcharge on some merchants.

Net sales were $127.1 billion in the third quarter that ended Sept. 30, still a little lower than the $127.5 billion analysts expected, according to IBES data from Refinitiv.

But the macro outlook has not brightened. In a call with reporters, Amazon Chief Financial Officer Brian Olsavsky said the company was bracing for slower economic growth.

“We are seeing signs all around that, again, people’s budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues,” he said. “We are preparing for what could be a slower growth period, like most companies.”

European consumers in particular have spent less than their American counterparts, pinched by the war in Ukraine and higher fuel costs, which likewise increased Amazon’s expenses, he told reporters and analysts. The company’s international-segment operation loss widened to $2.5 billion in the third quarter from $0.9 billion a year prior.

While Amazon would continue to fund earlier-stage businesses like its lucrative cloud-computing and advertising divisions, it would question costs elsewhere and proceed carefully on hiring, Olsavsky said.

Wedbush Securities analyst Michael Pachter said, “It’s possible that retail sales will decline year-over-year. I don’t actually believe that will happen, but the market definitely doesn’t like it.”

Amazon forecast net sales of between $140 billion and $148 billion, or growth as little as 2 per cent from a year earlier. Analysts were expecting $155.2 billion.

Prior holiday quarter sales growth was 9 per cent in 2021 and 38 per cent in 2020.

Cloud misses

Across the retail sector, US online sales are expected to rise at their slowest pace in years this holiday season. Consumer goods company Unilever PLC likewise believes “sentiment in Europe is at an all-time low,” its chief financial officer said earlier.

Results in the tech industry were just as poor this week for cloud-computing rivals Microsoft Corp and Alphabet Inc’s Google, adding to recession fears. US consumer confidence did a U-turn in October.

“Big tech companies are not impervious to slowdowns in the economy, particularly if they are consumer driven,” said Rick Meckler, partner at Cherry Lane Investments in New Jersey.

Amazon Web Services (AWS), the company’s lucrative data-storage and computing division serving enterprises, only helped so much. While it provided much-needed operating income, just like rival Microsoft’s Azure cloud, Amazon fell short of estimates.

Amazon’s cloud sales growth has ticked down consistently in the past year. Net sales there grew 28 per cent in the July-September period versus 39 per cent a year earlier, when adjusted for changes in foreign exchange.

Paolo Pescatore, analyst at PP Foresight, said, “With so much unpredictability there is huge concern, which is impacting confidence among enterprises to invest. In turn, it is hitting the broader cloud sector and companies such as AWS and Azure.

Facing high inflation and receding consumer demand, Amazon’s Chief Executive Officer Andy Jassy has raced to control costs across the company’s vast array of businesses.

Amazon has slowed warehouse openings and refrained from filling some open positions. It announced it would shut down its virtual healthcare service by year-end, and it is scaling back a long-touted effort to deliver goods via small autonomous sidewalk cars

Still, worldwide shipping costs grew 10 per cent in the third quarter to $19.9 billion. Amazon’s net income also decreased to $2.9 billion in the third quarter, while beating analysts’ average estimate of a $2.2 billion profit, according to IBES data from Refinitiv.

In a statement, Jassy said, “There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.”