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Rip Curl has revealed a host of ESG targets for 2025 and beyond, including extending its wetsuit recycling program and increasing the use of sustainable fibres. 

Speaking with Ragtrader, Rip Curl’s environmental, social and governance manager Shasta O’Loughlin said the company’s product teams have already made strides in this process.  

“By 2025 we aim to ensure a minimum of 50% of our products are using preferred sustainable fibres,” O’Loughlin said. “This percentage will increase year on year with aggressive yet achievable 2030 targets.”

“Sustainable practices have always been a part of our offering from the beginning, like offering great warranties, wetsuit and watch repair centers on-site to ensure our product will remain in use for as long as possible.”

Included with the targets, Rip Curl has outlined a number of circular fashion initiatives.

This includes upgrades to global repair centers which will extend product life on its wetsuit recycling program, as well as using 30% recycled materials on all polybags.

Rip Curl will move to 100% recycled materials on all polybags in the next 12 months.

The surfwear retailer will also move to ensuring all product trims are made from sustainable materials, which includes partnering with Arch and Hook for recycled ocean plastic hangers.

At a sourcing level, Rip Curl will ensure overseas partners are partnering with Higg Index for transparency and it will become a BCI Cotton member. 

“These are just some of the many sustainable initiatives that expand our sustainable footprint offering an end-of-life solution to our customers," O'Loughlin said. “There is always more to be done and Rip Curl is dedicated to continuing to strive forward in this space.”

The sustainability challenge

While the pathway to sustainability can present challenges, O'Loughlin revealed there are specific hurdles for sportswear and performance brands. 

“Generally, more sustainable practices come at a higher price and can often be to the detriment of performance,” O’Loughlin continued.

“We are currently dedicating our focus to finding innovative ways to ensure we meet our customer's expectations for performance and functionality along with being more sustainable.

“Unfortunately, the quickest and cheapest practice can often be the most wasteful. This is something we would like to avoid.”

Specifically in the sourcing of sustainable materials, the global surf brand has found that certain necessary materials do not offer much sustainable options.

“Polyamide and Elastane, which are the main fabric components in swimwear, have limitations with regard to supplier certifications. These fabrics are also not progressing as quickly as other materials in the sustainable space."

Despite these challenges, O’Loughlin said the brand is commited to find fibres and construction techniques that can be durable in salty and chlorinated environments.

“We continually strive to find solutions to the harsh demands of our environment.

“To do this we partner with ECONYL for our top performance (Mirage) and volume driving (Classic) ranges. The goal being to focus on durability and performance.

“We have also implemented LYCRA® XTRA LIFE™ and CREORA® Highclo™ across 90% of our collections to ensure maximum performance and long lasting materials with a lifespan significantly longer than regular Spandex."

O'Loughlin said being a sustainable business extends beyond just production.

“To truly be sustainable you need to support people and communities, embed circular principles into your design, and reduce operational waste, which will then reduce our company footprint to support our planet.

“Investing in community projects like Planet Day, working with Surf Rider for beach clean-ups and supporting grass-roots surfing events like the WSL, GromSurf and boardrider clubs is so important to our company by giving back to the comummites in which we operate.”

Amid the changing work, shopping and economic environment triggered by the COVID-19 pandemic, investors, landlords and developers are confident that by the end of the decade, Sydney will be a place where shopping centres are the new high streets, fostering community and social interaction.

A CBRE report has revealed that augmented reality will be central to the consumer retail experience, alongside unique in-store experiences, while warehouses will be hyperconnected, harnessing robotics to ensure speed and agility.

This vision was borne out by Peter Allan, outgoing chief executive of Scentre group, the country’s largest retail landlord at the results in August, who said its Westfield living centres were evolving into hubs with swimming pools, medical and bank branches and large-scale “experience-based” tenants.

CBRE’s NSW executive managing director, Andrew Roy, said that as Australia emerges from the pandemic, Sydney’s position as a global gateway city and investment hub is firmly back in focus.

Despite the current climate of uncertainty, Roy said the outlook was positive across all major commercial property asset classes.

“At a more fundamental level, Sydney is expected to be at the forefront as ESG considerations, consumer expectations and technological advancements reshape the property industry and investor decision-making,” he said.

Roy and the author of CBRE’s Future Sydney report, Sass J-Baleh, said that by 2030 Sydney would be entrenched as a global tech and life sciences hub, aided by the rise of technology-related businesses and the city’s competitive advantages.

Early evidence of this can be seen in the development of the $3 billion Central tech hub by Dexus and Frasers Property Australia, anchored by the Atlassian tower.

“To accelerate the tech sector in the precinct, the NSW government is providing rebates on rents and fit-outs for ‘scale-up’ businesses who move there,” J-Baleh said in the report.

“The pandemic created significant disruption for office users, with lockdowns and an increased adoption of hybrid working once Sydney reopened.”

JLL’s tenant representation NSW senior director, Sadaf Mayar, said technology-focused companies had overseen significant growth during the pandemic and wanted to increase their office footprints in Sydney’s CBD.

“Gaining an edge in the war for talent, improving brand image, cost efficiencies and a better working environment are the key benefits these firms want from high-quality real estate,” Mayar said in JLL’s Tenant Perspectives report.

Another significant change in outlook for property concerns the area known as ESG – environment, sustainability and governance – which will be at the heart of corporate decision-making as net-zero carbon buildings become the norm.

Roy said company brands would be intrinsically tied to how they affected society, and climate tech was the largest venture capital vertical.

Population growth would also be a critical driver in getting the economy back on track.

“Population growth alone will drive demand for an estimated 450,000 square metres of office floor space, $1 trillion in discretionary and non-discretionary retail goods and 2.3 million square metres of industrial and logistics floor space between now and 2030,” J-Baleh said.

This will be essential, as the latest office occupancy survey by the Property Council of Australia showed. It found the number of people going back to the office plateaued in August. The data revealed that office occupancy levels in Sydney for August were 53 per cent, with most people going to their workplace on Tuesdays, Wednesdays and Thursdays – known as the TWATS.

In response, the property council’s NSW deputy executive director, Lauren Conceicao, called for the state government to continue to support the CBD to “ensure the welfare of our economic engine room remains strong, vibrant and attracts people from across the world”.

“It is promising to see the upcoming ‘Flow and Glow’ festival by CBRE soon take place as part of Sydney CBDs revitalisation package,” Conceicao said.

Australian dog owners are investing heavily in their four-legged companions driving online sales by almost 50 per cent in the past year, according to new data.

Shared by third-party logistics provider Estore Logistics and premium dog food brand Petzyo ahead of International Dog Day on August 26, the data shows pet owners shopped for a range of sustainable and nutrient-dense superfoods and designer wear products along with accessories like collars and leads.

According to Animal Medicines Australia, dog owners spent $20.5 billion last year alone.

Petzyo founder, David Latimer, said the demand for gourmet treats is largely “fuelled” by a growing number of health-conscious Gen Z and millennial dog owners in Australia.

“The huge spike in demand for our superfood dry food range year-on-year is driven by pet owners who are more conscious about what ingredients go into their pet food, with a strong preference for sustainable and natural options.”

Between July and December last year, sales of Petzyo’s Salmon & Oceanfish dry food surged 318 per cent, and of its Chicken & Turkey dry food by 232.

The company says online sales have jumped 77 per cent between January and July this year. The retailer revealed that dogs with “better taste buds” than others included cavoodles, staffies, golden retrievers and labradors.

Paul Sciberras, director of Estore commercial solutions, said the spike in sales can be attributed to pet adoptions during Covid and people spending more time with their dogs now.

“With traditional retail stores closed during lockdowns, dog owners became more accustomed to buying for their pets online. This trend shows no signs of slowing down, particularly as we know dog owners will look for any excuse to pamper their pups.”

Big business is on a collision course with unions at the Jobs and Skills Summit, after the second-biggest private employer warned that the Australian Council of Trade Unions’ push for multi-employer pay deals would hurt investment and wages, as Labor ministers openly consider the proposal.

Wesfarmers chief executive Rob Scott, who will attend the summit next week, said the historically low 3.4 per cent jobless rate and skill shortages must be used as a “burning platform” to fix the broken enterprise bargaining system to increase productivity and deliver real pay rises for workers without fanning inflation.

Mr Scott, who is also a board member of the Business Council of Australia, said “flexibility and innovation cannot be unlocked with collective bargaining or industry agreements”.

“In practical terms, in businesses that means that we need to invest in more productivity-enhancing technology.

“We need to work with our team to find new ways of working more efficiently.

“And that flexibility that we require can really only be unlocked, through enterprise agreements that are company-specific.”

Wesfarmers employs more than 100,000 workers across enterprises including Bunnings, Kmart, Target, Officeworks and Priceline. The conglomerate unveiled an annual profit of $2.35 billion, down 1.2 per cent.

Mr Scott said inflation pressures were likely to persist for the next six months, but a recent fall in the wholesale cost of timber, cotton, copper, aluminium and plastic were likely to help ease prices on store shelves for shoppers next year.

A shortage of workers and cost pressures were making it hard to commit to investing in projects, he said.

Business has been spooked by Industrial Relations Minister Tony Burke who said he was “interested” in the ACTU’s proposal for “multi-employer bargaining” to boost wages, which had failed to rise much despite the low jobless rate.

Business, economists and the Reserve Bank of Australia are increasingly confident wage growth will pick up to around 3 per cent in the second half of this year.

Some business community summit participants are anxious that the unions’ aggressive pre-summit public relations campaign has outmanoeuvred business, and left companies vulnerable to union-friendly industrial relations changes under Labor.

There is general agreement between the government, business and unions on increasing the 160,000 permanent immigration cap, investing in skills and the principle of increasing productivity to lift wages, which are likely to be agreed to at the summit in Canberra.

In urgent need of repair

Treasurer Jim Chalmers, who will chair the summit, struck a more conciliatory tone than Mr Burke by urging business, unions and community groups to “come together” and find “common ground” to “deal with the challenges in our economy”.

“There won’t be unanimous agreement around any of those, but let’s see if we can find some common ground in areas like migration, participation, skills and training, industrial relations, all of these important issues,” Dr Chalmers said on Friday.

“How can we tackle the gender pay gap and the issues of women’s participation in the labour market?”

Wesfarmers chairman Michael Chaney told shareholders in the company’s annual report that the “labour relations system is also in urgent need of repair”.

“Increasingly, employers are abandoning the higher productivity-achieving enterprise bargaining system in favour of awards,” Mr Chaney wrote.

“Enterprise agreement processes have become excessively complex and legalistic and the ‘better off overall’ test has lost its original, intended meaning.

“All parties need to attend that gathering with the common goal of finding reforms and ideas that benefit both employers and employees – the former with increased productivity and the latter with higher real wages.”

Dr Chalmers and Prime Minister Anthony Albanese have both said the enterprise bargaining system is “broken”, without supporting or rejecting the union push for multi-employer pay deals.

Mr Burke and others in the Labor Party have been more publicly supportive of the union push.

A business source said there were growing concerns that elements within the Albanese government, such as Mr Burke, were pushing a “Whitlam-esque” industrial relations agenda from the 1970s when wage rises for unionised and public sector workers exacerbated inflation.

In contrast, at the 1983 economic summit hosted by Labor prime minister Bob Hawke, unions agreed to moderate their wage claims to reduce inflation, while receiving superannuation and more social services for workers as a quid pro quo.

Woolworths chief executive Brad Banducci said he was looking forward to talking at the summit about increasing immigration before Christmas and the “link between productivity and wage growth”.

“We are believers in wage growth,” he said.

“We just need to make sure we get the right productivity conditions.

“I think the key to that, of course will be modernising the awards system in general for the retail industry, which is the one we’re mainly focused on.

“I think we also need to talk very constructively and openly on the topic of flexibility which our customers want and our team want.

“We need to make sure that we have the right protections around it, but that we do not constrain flexibility for people so they can choose how to best balance their lives.”

The thorny issue of enterprise bargaining, on which the Morrison government came close to securing business and union agreement, is expected to be passed to a labour market white paper to be worked on after the summit being held next Thursday and Friday at Parliament House.

No public unified front

In the spirit of co-operation that Dr Chalmers spoke of, Business Council of Australia chief executive Jennifer Westacott will appear in a joint interview with ACTU secretary Sally McManus on the ABC Insiders television program on Sunday.

Peak business groups have been loosely coordinating behind the scenes, including the Business Council of Australia, Australian Chamber of Commerce and Industry, Australian Industry Group, Small Business Council of Australia, Minerals Council of Australia and Master Builders Australia.

While they agree on the high-level principles on IR and other labour market matters, there has not been a public, unified front on the finer details.

The Council of Small Business Organisations Australia flagged this week it is open to discussing sector-wide bargaining rights with unions as a way to simplify the award system, going against the strong opposition from major employer groups.

Some business groups are wary of the BCA getting together with unions, and of the potential for a split among business groups like there was during negotiations over industrial relations with the Morrison government.

The BCA, ACTU and then attorney-general Christian Porter blindsided other business groups in 2021 with an agreed proposal to give preferential treatment and more flexibility to union-backed enterprise bargaining agreements.

Master Builders Australia chief executive Denita Wawn said: “There is an agreement across the board among unions and business that enterprise agreements need fixing, but the question is how?

“We’re all trying to achieve the same outcomes.

“Ultimately, we want to see productivity improve through the IR lever, but our concern is you can’t preclude one sector of the economy that is not unionised in having flexibility.”

In the lead up to the summit, business groups, unions and community groups have been meeting government ministers and departments.

Australian fashion retailer Forever New has launched its first store in Woolworths in South Africa, as part of an international expansion strategy. 

The brand reports it has debuted its Spring collection in concession spaces in seven Woolworths stores in the African nation.

“With a strong reputation for quality, value, service and responsibility, Woolworths is an excellent fit and aligns well with our brand,” said Carolyn Mackenzie, Forever New MD. “We look forward to this week’s launch and hope to open even more stores over the next year.”

Forever New operates 139 stores across Australia and the brand is looking for a partnership with David Jones as well as expanding its presence in the UK with its key concession partners, Brown Thomas, Fenwick’s, Morley’s, and Ulster Group.

Forever New also continues its expansion in Canada, opening a new standalone store in Laval, Montreal, and strengthening its partnership with Hudson’s Bay. The brand will expand into six more Hudson’s Bay locations next month, taking the total to 30.

Higher interest rates and soaring inflation have not dampened households’ enthusiasm for opening their wallets, with new data showing Australians spent a record $34.7 billion at stores in July.

Retail sales climbed 1.3 per cent last month, according to the Australian Bureau of Statistics, well above market forecasts of a more modest 0.3 per cent gain.

Markets are now pricing the Reserve Bank’s cash rate will peak at 4 per cent in July 2023, up from Friday’s 3.8 per cent forecast.

The monthly retail figures do not reveal how much of the increase in turnover came from higher prices rather than consumers buying more items.

The July figure marked the reversal of a gradual slowdown in monthly spending growth that began in February.

Overall, Australians spent $34.7 billion at retail outlets in July, a $430 million increase on June and a 16.5 per cent increase over the year.

ABS head of retail statistics Ben Dorber said turnover increased in five of the six retail industries included in the release.

“This shows that, despite cost-of-living pressures, households are continuing to spend,” he said.

Spending at department stores increased by 3.8 per cent in July, while purchases of clothing were up by 3.3 per cent. Spending at cafes and restaurants rose by 1.8 per cent.

BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said the data would “do nothing to dissuade the RBA from raising interest rates by another 50 basis points at the September meeting”.

“Momentum in retail sales looked to be faltering over the last few months, but today’s data are ahead of expectations and suggest household spending remains resilient to mounting headwinds,” Mr Langcake said.

Markets are tipping the RBA will increase rates by another 50 basis points next week to 2.35 per cent and the cash rate is forecast to hit 3.2 per cent by the end of the year.

JPMorgan chief economist Ben Jarman said higher rates and falling asset prices would not have a material effect on spending in the next few quarters thanks to elevated levels of household savings and growing incomes.

“In the early days of the hiking cycle, which are also the months most at risk of abrupt adjustments given the pace of normalisation, the belt-tightening narrative has not been borne out so far in the labour market or spending data,” Mr Jarman said.

Commonwealth Bank senior economist Belinda Allen said there was a three-month delay between an increase in the cash rate and higher repayments being deducted from a CBA customer’s bank account.

“Between August and December this interest rate impact quadruples based on the already announced policy changes. This impact will lift again depending on what the RBA does to the cash rate in September and beyond,” Ms Allen said.

Household goods was the only industry that experienced a decline in spending in July, with sales falling by 1.1 per cent, which was the sector’s third decline in four months.

Ms Allen said spending on household goods was closely linked to housing market conditions, so the softness was not surprising given property sales volumes had trended lower since November.

Victoria and the ACT experienced the biggest increase in sales, posting monthly growth of 1.8 per cent.

KPMG senior economist Sarah Hunter said economic data over the past month had been “patchy”, but generally suggested the economy was cooling.

“But with the economy still operating at near-full employment and price pressures building, today’s data will confirm the RBA’s view that inflationary pressures are broad-based and will reinforce the need for another rate hike in next week’s meeting,” Dr Hunter said.

Brett Blundy-chaired jewellery retailer Lovisa is the latest business to reveal robust consumer spending, with revenue up by close to 60 per cent for 2022 as shoppers across the world splashed out on accessories.

The fast fashion brand’s boss Victor Herrero told analysts on a call on Monday that Lovisa’s product offering was resonating with consumers during a period of wobbly consumer confidence.

“At this moment, we are very happy with the product offering we have on a global basis. It is something that is capturing the attention of existing markets and new markets,” he said.

Analysts had been waiting for Lovisa’s results as an indicator of the strength of consumer spending, given the stock had been affected by lockdowns across the world over the past year. The stock had been sold down in the first half of 2022.

But the company’s numbers surprised on Monday, with net profit after tax up 116.3 per cent to $59.9 million.

Revenue was up 59.3 per cent to $458.7 million, and while the costs of doing business increased in the face of inflationary pressures, Lovisa was able to keep costs at 58 per cent of sales, below what it was in 2020.

Herrero said sales momentum had stayed strong in the first weeks of the new financial year, up 66.1 per cent on the same time last year.

Lovisa’s growth strategy involves expanding its bricks-and-mortar store network right across the world, and the business now has 629 stores.

Herrero said the company managed to open a net 85 new stores throughout 2022, and had worked hard to find efficiencies in spite of rising costs and construction delays in a range of markets.

Shares jumped 6.2 per cent higher on the back of the results closing at $19.82.

Lovisa was not the only ASX-listed jewellery retailer pointing to strong consumer sentiment.

Michael Hill also surged at the open, up 9.3 per cent to $1.12 after the business reported a 13.9 per cent jump in profit to $46.7 million. Its shares closed at $1.06.

The company, which has undergone an extensive strategic overhaul including the shuttering of underperforming stores, saw sales up 13.4 per cent for the first weeks of 2023. Sales were up 18.5 per cent overall, but the same period last year was impacted by retail lockdowns.

Chief executive Daniel Bracken told The Sydney Morning Herald and The Age that while the business had been classed as a discretionary retailer in the past, many of the purchases that consumers made with the brand were not optional.

“You can’t propose to your loved one without an engagement ring, whereas you can go out to a party without a new dress,” he said.

While bricks-and-mortar sales were booming, online cosmetics retailer Adore Beauty released earnings on Monday that suggested e-commerce sales were slowing.

Adore revealed on Monday that trading in the first seven weeks of the new financial year was down 28 per cent on this time last year.

The business reported an 11 per cent jump in revenues for 2022 to $200 million, but warned conditions were challenging.

Outgoing chief executive Tennealle O’Shannessey said that despite tough trading conditions, Adore’s product range was unmatched by any other local retailer and the business had a strong cohort of premium beauty customers.

“They very much view it [beauty products] as an essential,” she said.

Adore Beauty shares slipped as low as 15.7 per cent Monday’s session. They closed at $1.64.

Gerry Harvey, the chairman of retailer Harvey Norman, says consumers are still spending on big-screen televisions, computers, ovens, new beds and sofas and there is no sign of any slowing even though cost-of-living pressures are rising.

Mr Harvey said the negativity of constant headlines when bank economists make predictions of heavy house price falls as the Reserve Bank of Australia liftsinterest rates to stomp on inflation, is at odds with what his stores are doing in daily sales in late August.

“We question what the hell is going on,” he said. The negativity needs to be tempered. “It feeds on itself,” Mr Harvey said.

He expects the low jobless rate and high levels of household savings will keep underpinning solid sales in the group’s stores, although he acknowledges that future steep increases in energy bills is a wild card that could affect confidence. But for now, trading is at solid levels.

“It’s right across the board. It doesn’t matter what department we’re talking about,” he said. He said the tradie shortage across Australia was causing some heartburn with the group’s “pending” deliveries at the highest levels ever in warehouses.

Customers who had bought new cookers, fridges and other appliances ahead of an expected finish date for their renovation or new home build were ringing up and saying the delivery date needed to be pushed further into the future.

The retailer’s Australian franchisees had a 10.7 per cent rise in sales since July 1, compared with the year-earlier period when lockdowns and restrictions curbed growth.

Mr Harvey, who is a regular on The Australian Financial Review’s Rich List, said sales were particularly strong in stores in regional locations where farmers were having very good seasons. “They’re very bullish at the moment,” he said.

On a comparable store basis, sales growth rose 10.3 per cent in the first two months of 2022-23, but the company emphasised that did not factor in the lockdowns and restrictions on the eastern seaboard in particular, which hurt sales in July and August a year ago.

Net profit fell 3.6 per cent to $811.5 million in the year ended June 30 with COVID-19 restrictions in the December half in major markets of Sydney and Melbourne a large handbrake, even though trading picked up substantially in the June half, the company told the ASX.

Earnings before interest, tax, depreciation and amortisation slipped 1.4 per cent to $1.44 billion. Revenue fell by $163 million to $9.56 billion. The group is paying a final dividend of 17.5¢, up from 15¢ a year ago.

Mr Harvey said supply chain disruptions were starting to lessen. “Supply is getting better,” he said. He estimated that price tags on most items had risen by between 5 and 20 per cent over the past two years as the group passed on inflationary rises from manufacturers, and higher freight and transport costs.

On August 15, JB Hi-Fi, Harvey Norman’s biggest competitor, reported a record full-year profit and said many younger consumers would further spend on technology, phones and computers because they are deemed as essential in the modern world.

JB Hi-Fi’s record sales revenue was propelled by consumer electronics and home appliances, helping to push its bottom line up 7.7 per cent to $544.9 million.

Analysts think that appliance retailers could be in for a more difficult time in the next few months because of rising interest rates and cost-of-living pressures.

Harvey Norman shares on Wednesday traded 2.8 per cent lower to $4.22 in late trade. They were at $5.71 on March 30.

Jarden analyst Ben Gilbert said overall, Harvey Norman looked to have reported “a good set of numbers” although the trading update for July and August was a little bit softer than rival JB Hi-Fi. He has a 12-month target price on the stock of $4.30.

The company has 109 overseas company-owned stores across New Zealand, Slovenia, Croatia, Singapore, Malaysia, Ireland and Northern Ireland. The overseas retail stores generated 25 per cent of total pre-tax profit excluding net property revaluations.

Harvey Norman also has an extensive network of property and land holdings. At June 30, 2022 the freehold property portfolio was valued at $3.74 billion, an increase of 10.9 per cent on a year earlier. The group said it had 544 Australian franchisees.

Mr Harvey said even if the Reserve Bank lifts interest rates a few more times in this cycle, those rates needed to be viewed in context. “They will still be historically low”.

Despite trading through another difficult year, marred by lockdowns and Covid-19 resurgences, David Jones has delivered a relatively strong full-year result: with the losses of the first half largely balanced out by the successes of the second. 

The department store giant’s adjusted operating profit rose 85.5 per cent in the second half, smoothing out its full-year figure to an overall decline of 0.6 per cent. 

Turnover for the full-year fell 2.6 per cent, with international owner Woolworths Holding putting the blame on the lockdown restrictions still in place at the beginning of the year.

Conversely, the business’ online sales jumped 28.7 per cent, making up almost 23 per cent of the business’ total turnover.

Additionally, Country Road Group performed well. Sales grew 3.1 per cent over the course of the year off the back of strong sales in Country Road, Trenery and Politix. Adjusted operating profit fell 22.3 per cent, however, due to a slimmer profit margin.

David Jones chief executive Scott Fyfe told Inside Retail that despite the slow start to the year, foot traffic across its stores is improving steadily. 

“It’s still not back at the levels of FY19, but customers are coming back and are enjoying our new assortment and services. It’s a really great result,” Fyfe said. 

And, with the support of the new leadership team he’s put in place, Fyfe is confident that David Jones has a new lease on life.

A four-pronged approach

The business’ new approach is built on four key principles according to Fyfe: Knowing your customers, delivering a strong omnichannel experience, ensuring seamless service, and future-proofing the business’ capabilities. 

The first principle, knowing your customers, is incredibly important to a luxury department store business like David Jones, Fyfe said. 

“We’ve got a relatively low customer base, so we want to attract, inspire and retain our customers,” Fyfe said. The way David Jones intends on doing that is by executing on the remaining principles.

“[We’re an] omnichannel retailer of world-class brands, and we’ve seen really strong momentum in women’s and men’s fashion, footwear and accessories, home and kids, and beauty.

“We’ve been really focused on what we need to do and we’re showing really good progress there.”

Additionally, since the onset of the Covid-19 pandemic, the business has improved its online offer substantially, with a far greater range and experience bringing over 107 million customers to the website last year. 

“The final bit is building our capabilities. We want David Jones to be a service-led business, and to make sure that we’ve got the right people, talent and capability in the business [moving forward],” Fyfe said. 

Flower power

On Thursday, the business launched its 2022 Flower Show — an underwater themed experience at its Elizabeth Street store which continues David Jones’ push into experiential retail. 

Following the launch of the business’ Spring/Summer collection, which brought together 400 customers at a set of fashion shows designed to introduce the season’s clothing and which is now touring stores around the country, David Jones is inviting its customers to come and unwind at its nine-storey flagship surrounded by a number of new blooms.

“Customers, more than ever, are craving human interaction,” said David Jones’ director of omnichannel Kate Bergin told Inside Retail. 

“The immersive and experiential side of retail is our point of difference, and we’re able to offer that because of the size of our stores. We’re focused on experiential retail and the services we can provide.”

According to Bergin, David Jones tends to see foot traffic spike by around 30 per cent during its intermittent events, providing a raft of new customers. In anticipation of this, the business will have attendants across its flagship that will be focusing on directing customers to where they want to go in an effort to maximise the sales opportunity. 

And, for the first time in several years, the Flower Show will be extended to the business’ Bourke Street store in October.

“It’ll be great to be able to offer the event across our two flagships,” said Bergin. 

Looking forward

However, with David Jones tending to cater to weather consumers, having positioned itself in the luxury and premium end of the department store space, Fyfe said he is well aware that customers will be facing financial headwinds in the months to come. 

“We’re really clear about there being headwinds, there have been for the last few years, but we’re overcoming some of these,” Fyfe said. 

“We’re really confident about what lies ahead for David Jones, particularly as we turn to Christmas – this year will give us the best run-in we’ve had to Christmas in the last three years.

“We’ve got a consistent plan about how we will celebrate these events with our customers. We’ve got lots in flight.”

In fashion, newness is everything. New products, new stores, new designers, new brand ambassadors: if you don’t have something groundbreaking to promote, then you have nothing to talk about.

But fashion brands also require a deep understanding of their customers’ needs, a handle on the changing nature of retail, a knack for predicting trends and finding their unique selling point, as well as more general skills such as managing staff, optimising output and balancing creativity and profitability.

Three Australian businesses celebrating anniversaries this year – A-Esque, a luxury handbag manufacturer founded by former Mimco owner Amanda Briskin-Rettig; jewellers Sarah & Sebastian; and Grace, an upscale Melbourne boutique that prides itself on introducing local audiences to the best of international fashion – have shown their mettle in not merely staying the course but thriving despite changing headwinds of fashion trends, a shift to online retail and, of course, COVID-19.

While their firms might be small, the founders have four key lessons for business.

1. Only communicate when you have something to say

For Briskin-Rettig, talking to customers is key. But the trick is to have the right kind of communication, at the right time. “Communicate when you have something to say,” she says. “Otherwise, let your product talk. We talk to customers, but we don’t shout at them.”

Although Briskin-Rettig has a dedicated social media team, she says it is not constantly posting. Rather, it tends to be reactive.

“Actually, my son can’t believe how little we post. We communicate more behind the scenes.”

Briskin-Rettig has a dedicated social media team that responds to client direct messages “all day, every day”.

“People want to hear from you on their terms. We answer questions quickly, we provide solutions. But we know our customers don’t need to hear from us every second of the day.”

2. Sell your customers the right product

Ilana Moses knows better than most the importance of creating a bond between customer and brand.

At Grace, her independent boutique in Melbourne, it is Moses’ job to ensure each client leaves the store happy – and stylish. Sometimes that means losing a sale, but long term it works in the boutique’s favour.

“We would never push a sale that didn’t make sense,” she says.

“People come back when they are happy. Our business card is our clients. We want people to leave the boutique looking amazing. We don’t let people buy things that don’t fit properly or don’t suit them. We want people coming back, and that is down to an honest and genuine rapport.”

3. Don’t pit staff against each other

Moses knows that the heart of any retail business is its staff. The former intellectual property lawyer offers staff bonuses based on the commission of the entire team, rather than individual effort, which she says can breed resentment.

“Be good to people. Customer service is everything to us, and that starts with treating our staff well,” she says. “We never pit staff against each other with individual bonuses. All bonuses are based on team effort.”

Moses also says that including team members in decision-making has been instrumental to the success of the business.

“It’s important to take your staff on the journey with you. Whether it’s new brands I’m considering or the buy for each season or the design of our new website, there is always room for their voices, and I value their opinions and ideas.”

By far the biggest investment Moses has made is in staff training. When clients are spending thousands on luxury items, they need to feel as if they’ve made a sound decision. Sales associates are critical here.

“We have 45 brands in store. Our staff need to know who they are, how they fit into the market, who the customer is. Sometimes it comes down to granular things, too. When a customer comes in and asks, ‘Where is the leather on this bag from’, I think customers deserve a proper answer. Consumers are switched on, they appreciate knowledge, they are conscious of what they are spending on.”

4. Offer something unique

Each business will have its own unique selling point. For Moses and Grace, it is introducing local customers to new and different international brands.

“Retail is so competitive,” she says. “Our USP (unique selling proposition) is being first to market with a number of brands in Australia. We were the first to stock [cult denim label] Rag & Bone, [New York designer] Jonathan Simkhai, [tailoring specialist] Petar Petrov,” says Moses, who found the brands through extensive travel and research. “When a customer trusts you, they trust you to introduce them to newness. And for the customer, they know it’s not going to be everywhere. It’s special.”

At Sarah & Sebastian, co-founder Sarah Munro trusted her gut.

“I was making the jewellery that I wanted to wear, and it was very different to the trends of the day,” she says. “It was fine, delicate, small. But we didn’t bow to trends because we found an audience with that style. People responded, and now we have more than 600 SKUs (stock keeping units). We’ll never change our aesthetic based on external pressure.”

In addition, Sarah & Sebastian has a soldering service, where a bracelet is soldered onto a customer’s wrist without a clasp (meaning it is worn long-term and not removed).

“It’s not a new thing,” Munro says, “but in Australia, it is our thing. It’s something our customers associate with us.”

At A-Esque, Briskin-Rettig allows clients to visit the atelier where her bags are made. It deepens trust and gives clients a unique experience, making them feel special.

“People aren’t necessarily watching a bag being made. It’s more about [thinking], ‘OK, that piece I am buying, it was made right here. I care about where things come from, it’s nice to buy things from good places.’ ”

Bunnings boss Mike Schneider says there is plenty of growth left in Australia and New Zealand for the big box retailer, focusing on the commercial business, including the national roll-out of Tool Kit Depot aimed at the professional power tool users.

The hardware giant is aiming for network expansion in its core warehouse brand as well as TKD and recently acquired tile retailer Beaumont Tiles to help drive sales as the DIY market tempers after a two-year COVID-19 induced boom.

Mr Schneider told The Australian Financial Review there are no plans to have another crack overseas (owner Wesfarmers abandoned the UK in 2018), and said there is room locally for TKD despite it being a fraction of the store network compared with rivals Sydney Tools and Metcash’s Total Tools.

From the 11 sites it currently has, TKD is aiming to expand over the next five years to 75-100 stores across Australia and New Zealand, ranging in size from 1000 to 2000 square metres.

It is poised to open two “dark stores” on the east coast in coming weeks to service TKD online orders, with the first stand-alone retail store to open before the end of the year in Queensland. WA has six stores which are honing in on areas such as the landscape garden market.

“The Tool Kit Depot business is helping us cater to more of the specialist trade customers. We’re able to deliver even more choice including an expansive power garden range used for landscaping, as well as an onsite service and repair offer,” he said.

Wesfarmers-owned Bunnings acquired Adelaide Tools in 2019 to deepen its relationships with trade customers, and has since renamed it TDK.

Mr Schneider is aiming to also double its frame and truss offering under its commercial arm from three sites now to six over the next year. The commercial side of the business constitutes about 40 per cent of sales currently, but the goal is to make it as even a contributor with the DIY side.

The head of the hardware chain hopes that staff absenteeism will continue to fall. It has halved after peaking at 11 per cent in January when omicron hit.

Over the past decade, Bunnings has evolved from a warehouse model offering around 34,000 hardware and home improvement products to an omnichannel business with over 110,000 home, commercial and lifestyle products across its instore, online and marketplace offers.

Bunnings has grown its addressable market from $39 billion in 2007 to $100 billion in 2022.

The business has invested heavily in online and digital, and is looking to make a push into more personalised digital communications to shoppers and expand Bunnings’ marketplace offering.

However, only $145 million, or about 1.7 per cent of group sales, were generated online in the second half of fiscal 2022. US giant Home Depot has double-digit online penetration.

Mr Schneider said online will grow over time as Bunnings adds more ranges. It also aims to get more than 100,000 items on its marketplace platform, where third-parties sell a range of goods from small kitchen appliances to pet care, and to ship directly to consumers.

Bunnings will join the newly revamped membership program OnePass around November. Its stablemates Kmart, Target and marketplace Catch are already under this subscription umbrella.

Mr Schneider said there has been “good traction” with FlyBuys which allows the retailer to use data and target shoppers with localised content.

At the recent full year results the retailer noted deeper digital engagement was contributing to sales growth online, instore and through the PowerPass app. Revenue grew 5.2 per cent to $17.8 billion in the past fiscal year, while earnings gained 3.7 per cent to $945 million following extraordinary growth through the prior two years.

Mr Schneider said there were around 650,000 hours of YouTube videos consumed over fiscal 2022 by DIYers with “How to Build a Deck” the most popular as people stayed at home and fixed up their abodes.

Coco Republic is to launch two flagship stores in California ahead of a progressive rollout in selected US markets and other global locations, the company has announced. 

The plan coincides with the appointment of two key executives in the US: Eric Bauer as global CEO and Skye Westcott as president of North America who will lead what Coco Republic, the Australian-founded furniture and homewares chain, describes as an “accelerated global expansion, initially focused on the California market”. 

“Coco Republic is an exciting opportunity to introduce the leading Australian furniture and lifestyle brand to a global consumer,” said Bauer. “We believe that our product design ethos and Australian essence will resonate globally enabling us to build a global community, be an influential design-lead authority and act as a guide to those who seek a well-designed life.”

The US expansion will commence with a flagship store in San Francisco’s Union Square in October and another at Culver City in greater Los Angeles late this year. It follows the success of a partnership with Restoration Hardware and the launch of an outdoor collection at an HD Buttercup store in Los Angeles in 2019.

Underpinning the strategy is Coco Republic’s acquisition of the assets and intellectual property of California home furniture retailer HD Buttercup in October last year. Evan Cole, who founded HD Buttercup, has joined Coco Republic’s board and the Culver City store will open in a converted HD Buttercup site.  

The new appointees have extensive experience in brands and consumer-fronting businesses. Bauer has more than 30 years of leadership experience with brands including Gap, International Vitamin Corporation, and PepsiCo. Westcott has nearly 40 years of omnichannel leadership experience in merchandising, marketing, product design and global sourcing, including with HD Buttercup.

Coco Republic, now majority-owned by Story3 Capital Partners, was founded in 1979 and has 15 showrooms in Australia and New Zealand, along with e-commerce stores in both markets.  

“We are incredibly excited to introduce our brand to the California market and inspire a new world of consumers to design beautiful interiors,” said Anthony Spon-Smith, vice chairman and creative director of Coco Republic.

“Our partnership with Story3 has been a tremendous catalyst in executing our strategy and the new growth capital investment is a testament to the strength of our brand and the potential we see ahead.” 

The leadership additions of Bauer and Westcott will play a significant role in cementing the brand globally as a leading design-led Australian luxury furniture and lifestyle brand and leading the next phase of the company’s growth and success,” Spon-Smith concluded.

Ongoing Covid-related issues, government-mandated store closures in the first half and freight delays have eaten into the profit of bedding and homewares retailer Adairs.

The company, which owns and operates Adairs, Focus on Furniture and Mocka brands, says group sales rose 12.9 per cent to $564.5 million in the year to June 26, while tax-paid profit fell 29.6 per cent to $44.9 million.

Online sales registered $195.4 million and contributed 35 per cent of all sales. Like-for-like sales, excluding its Focus brand, fell by 2 per cent.

Adairs’ cost of doing business was higher than the previous year at 8.3 per cent, largely due to one-off Covid-related warehousing inefficiencies, rent rebates, and higher salary and wages to team members, despite store closures.

The brand upsized 11 Adairs stores and opened four new stores during the year. Its National Distribution Centre (NDC) in Melbourne was completed during the first half of the year.

Mocka’s sales were up 6.5 per cent to $64.1 million although higher import freight costs and increased domestic delivery charges resulted in a decline in its gross profit margin.

In its seven months under Adairs’ ownership, Focus on Furniture contributed $81.7 million to sales. Adairs says the brand’s acquisition has a “complementary” customer and product overlap with its existing businesses.

Mark Ronan, CEO and MD of Adairs said: “Significant operational disruptions related to Covid, particularly within our supply chain, impacted the group’s cost base and meant that this growth did not translate into an increase in profits.”

He added that a majority of these costs are not expected to carry into the future years despite recent macroeconomic headwinds.

Retail sales continued to strengthen in July with trade increasing 17.9% compared to the same month last year, according to Mastercard SpendingPulse.

Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment.

According to its data analytics, most retail categories recorded substantial year-on-year sales growth, led by lodging (up 63.3%), jewellery (up 47.6%) and apparel (up 31.3%).

Overall, retail sales across the board continued to strengthen in July with trade increasing 17.9% compared to the same month last year.

Australian Retailers Association (ARA) CEO Paul Zahra cautioned that sales in discretionary retail categories are elevated in comparison to a year ago, when businesses in NSW and Victoria were severely restricted.

“In July last year, our two largest states were in lockdown and spending dried up as many non-essential retailers were forced to close their doors,” Zahra said.

“It wasn’t until October that businesses in NSW and Victoria finally reopened, and consumers were able to shop in-stores once again."

With Australia strictly locked down travel in 2021, Zahra said it’s no surprise that lodging is “leading the way” with sales up 63.3% as people gear back into local and international travel.

“The current retail trade environment is very different to a year ago and businesses are dealing with a whole new set of challenges due to inflation and rising costs associated with fuel, energy, supply chains and rents,” Zahra continued.

“What’s pleasing is that sales are currently holding up well despite the rising cost of living and interest rates, although it appears as though we haven’t seen the full impact of this hit consumers.

“The ARAs forecasts with Roy Morgan on Father’s Day gift spending are down 7.7% compared to last year, with 42% of consumers saying the current cost of living challenges will impact how much they’ll spend.

“The concern is with inflation yet to peak, consumers will start to be squeezed when it comes to their discretionary purchases.”

Other areas that saw increases in year-on-year sales included fuel and convenience (up 26%), electronics (up 22.6%), home furnishings (up 18.7%), and groceries (up just 4.5%).

The findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check.

The Australian Retailers Association (ARA) is a national retail body, representing a $400 billion sector that employs 1.3 million Australians. It is the largest private sector employer in the country.

Endeavour Group has marked its first year as a standalone business with a minor increase in profit on static sales, results released today show. 

The former Woolworths Group subsidiary, which owns Dan Murphy’s and 344 hotels and clubs, achieved sales of $11.6 billion and a profit of $495 million, up 2.8 per cent. The result was significant given the disruption to hotel trading due to Covid movement restrictions during the first half, offset in part by increased online sales of liquor to house-bound consumers. It also shows how the group overcame widespread disruption on the eastern seaboard from flooding which saw some of its stores and hotels closed for weeks due to damage. 

On the retail side, Endeavour Group opened a net gain of 32 stores during the year while on the hotel side it completed 40 renewals and acquired five new properties. 

“The investment in our digital connections with customers has been accelerated in recent years given Covid-19 restrictions and we emerged from FY22 with both record sales and record numbers of customer connections,” said Endeavour Group MD and CEO, Steve Donohue. 

He said the company’s fortunes continued to improve during the first seven weeks of the new trading year, as the hotel division recovered further and retail trends “are consistent with a return to normal patterns of trade”. 

Compared to the same period in FY20 – prior to the advent of Covid-19 – retail sales were up 12.7 per cent and hotels by 13.4 per cent. The company warned that sales comparisons to last year are not meaningful given the impact of Covid restrictions in place at the time.

Australia’s largest retail landlord is adding basketball courts, community centres, libraries and swim schools to its tenant mix as it dives deeper into an experience-based shopping trend that drove $12 billion in half-year sales across its malls.

Scentre Group, which owns and manages dozens of Westfield branded shopping centres, has upgraded its full-year guidance per security to 19 cents after experiencing a strong rebound in revenue, occupancy and rent collection.

Scentre’s incoming chief executive, Elliott Rusanow, estimates the group’s malls, like those in Sydney’s Chatswood and Melbourne’s Doncaster, are in proximity to 20 million people in Australia and New Zealand, about 10 million of whom visit once a week.

“We’ve grown customer visitation, portfolio occupancy, rental income and cash collection resulting in strong profit growth for the half,” said chief executive Peter Allen, who will step down from running the group in October.

Operating profit for the six months to June was up 17.5 per cent to $540.5 million, compared with the previous corresponding half-year, and about $12 billion in sales flowed through retailers at its 42 Westfield malls, half a billion more than it reported for the same period in 2019 before the pandemic.

Jarden analyst Lou Pirenc labelled the landlord’s first half result as “well ahead of expectations”, noting that the group is still trading at a 25 per cent discount.

“I don’t think it’s revenge spending because, if it was, it would have been all out there and then slowed down.”

Scentre’s outgoing chief executive Peter Allen

“We believe more evidence of a recovery in rents and superior funds from operations growth to most REITs, should drive a re-rating,” Pirenc said.

Occupancy was up to 98.8 per cent, average rents increased by $5 per square metre, gross rent collection was $1.25 billion, and 585 new merchants were signed up across its centres, with 108 of those new to the portfolio, during the half year.Allen said the uplift in sales across most categories was not a consumer-driven “revenge spending” spree following the end of lockdowns and successive waves of virus variants, but rather a sustained shift in spending despite the threat of inflation and interest rate rises.

“I don’t think it’s revenge spending because, if it was, it would have been all out there and then slowed down. We haven’t seen that. We’re seeing it grow. Our three months sales growth is stronger than our six months sales growth,” he said.

When Scentre Group was first spun out of billionaire Frank Lowy’s Westfield empire eight years ago leaving it all the Australian assets, roughly 10 per cent of stores in its centres were experience-based, focused mainly around restaurants and casual dining.

“Today, 43 per cent of our 12,000 stores are experience-based,” Allen said. Now they extend beyond food to categories such as wellness, health, beauty and sports.

In a bid to consolidate Westfield’s standing as “town centres” and prime locations to visit - where customers are entertained, socialise and shop - the landlord is adding attractions such as basketball courts on the roof of its Chatswood centre, and swim schools at Westfield Warringah and its revamped Knox mall, which is also gaining basketball courts, a community centre and public library.

“Those types of interactions are really creating the destination,” Allen said.

Scentre recently opened a $55 million rooftop entertainment, leisure and dining precinct at its Westfield Mt Druitt mall, which it said increased customer visitations and dwell time.

Scentre shares were up 2.52 per cent in early afternoon trade to $2.85.

The Swiss group will sell an additional 3.2 percent to Symphony Global, leaving YNAP without a controlling shareholder. The deal paves the way for Farfetch to potentially take control of the loss-making e-tailer, the companies said.

E-commerce operator Farfetch and Symphony Global, the investment vehicle of Emirati real estate mogul Mohamed Alabbar, will acquire a 47.5 and 3.2 percent percent stake in Yoox Net-a-Porter (YNAP) respectively, from Cartier-owner Richemont, the companies said in a statement.

The deal leaves Yoox-Net a-Porter without a controlling shareholder, and paves the way for Farfetch to potentially acquire the remaining YNAP shares. As part of the agreement, Richemont’s brands will also adopt Farfetch’s technology to power their digital activities, according to the statement.

“This investment and work we will do with Farfetch Platform Solutions for YNAP will pave the way to a potential acquisition by Farfetch, which would create a complementary portfolio of iconic luxury destinations, appealing to different demographics, price points and regions,” Farfetch CEO Jose Neves said.

The deal provides a long-awaited, albeit painful exit for Richemont from a costly foray into multi-brand e-commerce. The Swiss group, which acquired full control of YNAP at a €5 billion valuation in 2018, will receive shares in Farfetch valued at just $440 million, which it has agreed to hold as an investment, as well as receiving another $250 million in Farfetch shares in 5 years.

The transaction values YNAP at around €1 billion, materially lower than Richemont’s investment, as well as below recent estimates of the unit’s value. As a result, Richemont said it would claim a €2.7 billion writedown on the asset.

Still, investors and analysts welcomed the news. Bringing its stake in YNAP below 50 percent will allow Richemont to deconsolidate the e-tailer in its reporting, where the unit’s steep losses have dragged down the company’s valuation for years. Richemont shares were up more than 3 percent in early trading on Wednesday.

Richemont, which is controlled by South African billionaire Johann Rupert, has faced mounting pressure to report progress on selling or turning around YNAP, which fell behind rivals during the pandemic even as online shopping surged.

Sales and profits in the group’s jewellery houses including Cartier and Van Cleef & Arpels have boomed in recent years, but the company trades at a discount due to the drag on profits from YNAP, a governance structure that deflates the voting power of minority shareholders, and a pattern of idiosyncratic fashion investments. Activist shareholder Bluebell recently proposed a shakeup to Richemont’s governance, including an expanded board and bringing on a former Bulgari CEO, Francesco Trapani, to represent minority shareholders’ interests.

The Farfetch deal will boost Richemont’s operating profit margin by around 4.5 percent, RBC analyst Piral Dadhania said in a note to clients.

Farfetch, which reports its first-half earnings Thursday, will gain exposure to a broader base of customers by investing in its biggest rival. It’s also opened the door to acquiring major clients for its business-to-business services: providing white-label solutions for Richemont’s brands will be a boon for Farfetch’s Platform Solutions unit, which is seen as an increasingly important growth engine for the group as some key luxury brands like Gucci reduce their exposure to third-party sellers.

“This seems very good news for both companies. Richemont will finally remove YNAP from its perimeter … Farfetch secures the number two in multi-brand digital distribution,” Bernstein analyst Luca Solca wrote in a research note.

The addition of Richemont’s brand portfolio to the Farfetch platform is likely to give the e-tailer a much-needed traffic boost, Solca added. “Prima facie, this seems an excellent deal for Farfetch,” he said.

From humble beginnings as a car parts by mail order business to a retail conglomerate selling everything from basketballs to puffer jackets, the business behind popular automotive retailer Supercheap Auto has lived up to its slogan of being everything auto – and much, much more.

With nearly 700 stores across the country and a stable of well-known retail brands, it’s little wonder Super Retail Group has been a popular stock for investors, who have driven up its share price more than 400 per cent since it first listed on the Australian Securities Exchange.

Today, the business has capitalised on a strong COVID-fuelled sales boost and built its online offering, while also reversing the fortunes of its struggling outdoors retailer Macpac.

However, with consumer confidence waning and the cost of living increasing, there are some concerns the business may not be able to maintain its strong sales growth.

How it started: The business began in Brisbane in 1972 as a mail-order service for car parts started by husband-and-wife duo Reg and Hazel Rowe, which soon grew into having bricks-and-mortar stores. In 1981, the Rowes changed the company name to Super Cheap Auto.

By 1991, Super Cheap had eight retail stores across Queensland with nearly $20 million in annual sales. By 2002, it had 100 stores, and in 2004 the business listed on the ASX at $1.97 a share, netting an $81 million windfall for the founders.

A year later, the business acquired CampMart’s four camping and outdoor leisure stores, which would become the foundation for BCF. In 2010, it acquired Rays Outdoors and renamed the broader business to Super Retail Group. Rebel Sport joined the stable a year after, and Macpac was purchased in 2018.

How it’s going: Today, the company’s four brands – Supercheap Auto, Rebel, BCF and Macpac – have about 700 locations across Australia and New Zealand, with a collective annual revenue of $3.5 billion. It is one of the larger retailers on the ASX, with a market capitalisation of $2.3 billion. Its shares are changing hands for about $10.30.

Like many businesses, the company has grown swiftly through COVID thanks to an online shopping boom, aided by a $200 million capital raise early in the pandemic to help bolster its online and omnichannel offering.

Industry: Automotive, sports and outdoors retailing.

Main products: Car parts, sporting goods, camping equipment, puffer jackets.

Key figures: Chief executive Anthony Heraghty, chair Sally Pitkin, non-executive director and co-founder Reg Rowe.

The bull case: At the company’s full-year results last week, Super Retail revealed a 2.8 per cent increase in annual sales but a 20 per cent drop in net profit and a fall in margins. While these seem like significant falls, they are compared to record highs of COVID-fuelled 2021, with analysts saying the business is still in good shape.

MST Marquee senior analyst Craig Woolford told clients in a research note Super Retail reported a “strong result with good momentum”, highlighting the company’s preliminary trading figures for the start of the new financial year, which showed 17 per cent sales growth across the group, led by outdoors brand Macpac, which reported 42 per cent growth through July.

Macpac’s performance has been of particular focus for investors, as the business has spent many years in the doldrums. Its sales over fiscal 2022 grew 15 per cent, aided by a strong bout of cold and wet weather.

Online trade continues to be a standout, thanks to its investment throughout the pandemic. Over the past 12 months, the company reported a 44 per cent uptick in online sales to $601 million, comprising nearly 20 per cent of overall sales.

The bear case: While analysts were praising the company’s sales growth, simultaneously they were wringing their hands over a potential issue which has hurt many of Super Retail’s peers: too much stock.

The business has about $800 million in stock, up 15 per cent on last year. Some analysts flagged a risk that a slowdown in consumer spending could see the company with excess inventory it is unable to move, leading to heavy discounts and weaker profit margins.

Heraghty defended the choice, saying it is “safety stock” to hedge against any further delays in shipping, and Citi analyst Adrian Lemme said a $100 million decline in inventory, compared to the first half of the financial year, “takes away at least part of the bear case downside”.However, Super Retail could still be exposed to a deterioration in consumer spending, as businesses such as Macpac, Rebel and BCF are largely discretionary and could be cut out as household budgets tighten.

Furniture retailer Nick Scali credits its Plush acquisition for driving sales growth – however it says widespread supply chain disruptions muted profits.

For the year to June 30, the business reported sales increased by 18.2 per cent to $441 million however its tax-paid profit fell 11.1 per cent to $74.9 million. 

In November last year, the group acquired Plush from Greenlit Brands Household Goods for $102.5 million. Subsequent to the acquisition, the brand contributed $88.8 million to group revenue while also contributing to an “elevated” order bank at the end of the period.

E-commerce written sales orders contributed $37.6 million of sales – double the volume of the previous year. That helped the company overcome the closure of 55 per cent of its stores during the first three months of the financial year.  

Anthony Scali, MD of Nick Scali, described the year as a “challenging period” for the business as lockdowns in sourcing countries and store closures at home impacted the business.

“Despite these challenges, the group was still able to deliver a strong result and end the year with a significant order bank which will translate to revenue in the next financial year.” 

The business does not plan to provide any additional guidance for the next financial year due to ongoing economic uncertainty and inflationary pressures in the market. 

Global plus size fashion retailer City Chic says it has accelerated growth across all regions, and reached an “exceptionally strong position” in the US market.

For the 53 weeks to July 3, group sales rose 39 per cent to $369.2 million while tax-paid profit increased 4.7 per cent to $22.3 million. Comp sales rose 25.5 per cent.

Organic growth in all channels drove US sales up 53.9 per cent to $162.4 million while Australian sales reached $161.8 million, up 11 per cent notwithstanding Covid-related store closures. 

The business lost 13.4 per cent of its trading days in Australia however online sales continued to surge – up 27.5 per cent following the introduction of the “conservative” product range.

The company’s global customer base grew 30 per cent to 1.4 million active customers while its website registered 78.6 million visits – a 35 per cent increase year on year.

Phil Ryan, CEO and MD of City Chic, said the business adapted to overcome challenges presented by the pandemic and still pursue its growth plans.

“To ensure sustained growth into the future, we established a sophisticated global distribution network through our own websites and a global partner network. This included diversifying our global supply chain into new sourcing regions and investing in inventory ahead of the curve.”

The business expects to increase retail prices where necessary, to protect margins and will boost inventory by 52 per cent to protect itself from potential shortages rising from supply-chain interruptions during the next financial year.