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Jeweller Michael Hill International has suffered a collapse in its share price after plunging revenues in the last quarter raised concerns about its shift in strategy away from discount-based pricing.

Group revenue fell by 8.8 per cent to $122.9 million for the three months to September 30 with same store sales declining by 11 per cent in the same period.

Michael Hill shares fell by as much as 27 per cent and were down 24.7 per cent or 23c to 68c at 1.30pm (AEDT). The company’s shares have now lost 43 per cent of their value so far this year and are down nearly 60 per cent over the last two years.

Former deputy Myer chief executive Daniel Bracken will take over the top role at the ASX-listed chain on November 15 after the resignation last month of its current CEO Phil Taylor over health issues.

While reducing its reliance on discounting enabled a modest lift in its gross margin to 64.6 per cent in the three-month period from 63.1 per cent the prior year, the retailer (MHJ) conceded its strategy has encountered teething problems.

Its network of 169 Australian outlets saw same store sales drop 12.8 per cent to $71.6m with a 7.6 per cent fall from its 53-strong New Zealand network to NZ$25.3m ($23.1m). The company’s 84 Canadian stores saw sales drop by 11 per cent to C$24.4 ($26.3m).

The strategy shift “was not adequately supported by sufficient levels of marketing and promotional activities to drive top-line sales”, Mr Taylor said.

Michael Hill remains confident its bid to improve gross margin and reduce the level of discounting is the right strategy and will result in a brand and product “more valued” by its customers.

“While the transition is proving more challenging than expected we remain committed to the strategy and have taken many learnings from the first quarter which we are confident will drive performance in the critical December quarter,” Mr Taylor added.

The jeweller delivered a sharply lower full-year net profit in August, hit by one-off costs in relation to closures in its loss-making Emma & Roe and US businesses, which amounted to $25.5m.

Michael Hill booked an 85.9 per cent fall in net profit after tax to $4.6m, from $32.6m in the previous year. That was 18 per cent above consensus estimates.

Myer boss John King will this week reinstate the department store’s famous “My Store” marketing tagline that was dumped four years ago.

Recently returned from New York and London where he met fashion brand owners to secure new brands, Mr King has unleashed a furious pace of activity.

He has wasted no time since his appointment four months ago in unpicking his predecessors’ legacy, from sacking senior executives to closing clearance floors.

Central to Mr King’s strategy is to drag Myer back to the middle ground in terms of its fashion offer and reposition the company to better cater to the mass market, differentiating it from upmarket chain David Jones while delivering a premium offer to discount department stores such as Kmart, Target and Big W.

Having ended Myer’s 12-year relationship with store ambassador Jennifer Hawkins, Mr King has unveiled his next marketing plan, which will see the return of the My Store campaign, which included the airing of new television commercials last night.

High-profile models and celebrities strutting the catwalk or gliding through Myer stores are gone from TV ads, with everyday women the new stars.

The My Store marketing was replaced by then Myer chief executive Bernie Brookes in 2014 with “Find Wonderful”, which he said better reflected the ­aspirations and desires of Myer customers.

At the time the new slogan was the first shake-up of Myer’s marketing in a decade, but for all the enthusiasm, research and money behind the tagline, it failed to resonate with shoppers.

The retailer said the new campaign acknowledged Myer’s strong history, and the special place it held in the Australian community. “But it also looks to the future with a contemporary look and feel, to show how Myer is evolving and improving its product offering, online store and in-store experiences and service.’’

Mr King said the My Store tagline highlighted the department store’s strong tradition in the Australian retail sector.

“Myer is Australia’s department store,” he said.

“We have been there for generations of Australians, for their everyday life, but also for their most memorable and special occasions, whether that be: ‘My Birthday’, ‘My Christmas’, ‘My Father’s or Mother’s Day’ or ‘My Wedding’.

“The My Store campaign showcases how Myer has been, and will continue to be, a part of the Australian way of life.”

Mr King acknowledged Myer had in instances let down customers.

“We know that in recent times we have not always got it right for our customers. The new campaign will show that we exist for our customers, that we are putting them first, in every action we take and every decision we make — that we are ‘Their Store’ no matter where they shop with us in Australia,” he said.

Mr King, a former CEO of British retailer House of Fraser, has set a strong pace as the new boss of Myer, and while refashioning Myer’s marketing strategy he has cut down the retailer’s bloated executive ranks by making 30 senior executives redundant, including some veterans of the department store.

Upon his arrival in June he toured Myer stores and quickly came to the decision to dump predecessor Richard Umbers’s strategy of rolling out clearance floors across the country, declaring at his first press conference that he “hated” the concept.

Mr King also warned the landlords at Myer’s headquarters in Melbourne’s Docklands that he was prepared to exit the property and take out a smaller office elsewhere, and was looking to reduce the number of floors Myer occupies. He is prepared to move out of the Docklands if a better lease deal can’t be struck.

The Myer boss is, however, a fan of Mr Brookes’s Christmas format known as the “Giftorium” and has pledged to increase its footprint within its flagship stores.

Retail turnover saw a modest uptick over the month of August according to the Australian Bureau of Statistics, which noted a 0.3 per cent increase compared to a flat July.

Online retail sales contributed 5.6 per cent to total turnover, compared to 5.5 per cent in July, and 4.6 per cent the August prior.

The National Retailers Association called this increase the “weakest back-to-back results for 2018”.

“The August ABS retail figures are far from disastrous, but they do show that the sector is continuing to experience a modest sales period,” Acting NRA chief executive Lindsay Carroll said.

“[It] is certainly an improvement on July, with five of the six retail industries recording a rise in turnover, and all state and territories bar the Northern Territory seeing an increase in sales.”

Carroll added that these figures emphasise the need for governments to put retail-friendly measures in place ahead of the looming holiday period, urging for extended trading hours to be considered.

“It’s very important that we don’t get complacent ahead of the most important period of the year, especially with increases to Saturday and evening penalty rates being phased-in for casual employees in retail from 1 November,” Carroll said.

The Australian Retailers Association believe the strong figures enjoyed by the clothing, footwear and personal accessories (0.8 per cent monthly, 4 per cent year-on-year) and cafes, restaurants and takeaway food services (0.7 per cent monthly, 5 per cent year-on-year) are a consequence of the personal tax cuts starting in July.

“This quiet consumer confidence can be seen across various retail categories with consumers rewarding themselves with little luxuries across the market,” ARA executive director Russell Zimmerman said.

“We hope this boost to consumer confidence and discretionary spend flows through to the end of the year where retailers are hoping to see their biggest trade yet.”

When I first lay eyes on Rowena Bird, she’s marched barefoot onto a turf covered stage in dungarees and a blouse with impractical but mesmerising waterfall sleeves that swing hypnotically as she gestures to the auditorium about igniting a cosmetic revolution.

Her hair is as fluorescent as the lighting, reminiscent of LUSH’s glittery product range. As one of the five co-founders of the cruelty-free, largely vegan, eco beauty brand, Bird is also the inventor of its makeup range – injecting colour and playfulness into the everyday.

When I sit down with Bird on day two of LUSH’s annual global showcase, a Willy Wonka style beauty convention held in Manchester in the UK, Bird seems less flighty than her name suggests, admitting she was a bundle of nerves before this morning’s address. But it’s her important message that means she swallows that nauseous feeling to lead the beauty industry beyond the status quo.

“The future is naked. It has to be, because we have to save the planet,” Birds tells whimn.com.au, just moments after unveiling her reusable lipsticks, where customers replace only the product inside, not the whole unit, saving on plastic.

Naked, refers to LUSH’s innovation, inventing products free from traditional packaging of the beauty industry, where a foundation might come in a plastic bottle, housed in a non-recyclable but aspirational box, wrapped in plastic to ensure the freshness. Bird and the LUSH team, dream of a world beyond it.

40 shades in three undertones. Image: Lush Cosmetics

“We lead the way as the most unpackaged company out there and I would like to see others join in and realise you can make things solid and people still buy it,” she says, having released Slap Sticks, a naked foundation, Glow Sticks, naked highlighters and with a naked mascara made from 3D printing and naked Trix Sticks, used to conceal and contour, also less than six months away.

At the showcase Bird also announced an eye palette made entirely out of almond by-product that gets baked, and then the eyeshadow pigment pressed into it. Just. Wow.

“The almond gets mixed with glycerine and cornstarch which seals it and it’s baked like a biscuit and that’s the base. Once you’ve finished with it, you can put it in your compost or your garden and it will completely decompose,” she says with a twinkle in her eye.

It’s the sort of mad wizardry LUSH is leading the way in, and they have been for 23 years. While LUSH was founded in 1995 in Poole, the co-founders had actually worked together before that at The Body Shop and a mail order cosmetic business that actually bankrupted them, so this eco-campaigning isn’t born out response to seem relevant to consciously consuming Millennials, rather its woven into the very businesses’ fabric.

This is what a naked foundation looks like. Image: Lush

“It’s surprising when we opened the first naked shop in Milan, we thought we’d only open it for a couple of months and then change it back. It’s not changing back in Milan. People are loving it and realising ‘actually I can buy it without the plastic packaging’, even though our packaging is recyclable and you can do something with it, they’ll still buy it,” explains Bird.

“When you have a million lipstick tubes going into landfill, we need to reuse the packaging and give it another life and save the planet,” she declares.

Bird isn’t precious about having a monopoly here. In fact, she’s presenting next May at a global industry event in Berlin, after getting pissed off with the agenda.

“All the big beauty brands will be there. I was asked if I’d like to come and give a talk because LUSH is now known in the cosmetic industry now. I said, no, because we don’t have anything in common with these people. Look, I’m looking at your agenda list and you’re saying ‘cosmetic packaging’ and what you should be saying is ‘the end of cosmetic packaging’. She said, you should come and say that. So considering how sick I felt this morning before going on stage, I’m going to go and talk about it,” she laughs.

Rowena Bird is pioneering, package free. Image: LUSH

LUSH is proof businesses can do good things and still make a profit. The brand currently has 931 stores, 35 of which are based in Australia.

“One of the things we do as LUSH is that we are inclusive and all are welcome always and that includes other companies. They’re here [at the Global Showcase] and having a look and it’s well known brands look at us, and you’re welcome, look at our ideas, take them, we’ll tell you how we do them and let’s move forward,” says Bird, believing the industry needs a good shake down, using their palm oil soap story as an example.

“We created soaps and became really aware of palm oil and we became conscious of the orangutans and their habitats being destroyed. It took us two years to come up with a soap base that didn’t use palm oil but we did it. And we worked with them, we didn’t then say, look at what we’ve done, we’re very clever but you can’t use it, we’re the best. We didn’t do that. We said, alright everyone we’ve made a palm free soap base, please this is where you buy it from. It’s an independent company, use it. There’s no one else buying from them. So I want to stand on that stage, and ask why aren’t you buying it, why are you still using palm oil and putting virgin rainforests at risk? We have to go in and buy the rainforest back and replant it, we shouldn’t have to do that, it’s ridiculous.”

She’s proud of what she’s doing with the makeup range on two fronts: it’s sustainable and diverse.

“It’s groundbreaking because of the amount of makeup people buy, because it’s not bought on a needs basis.

“I also want everybody to be able to wear our makeup. The lipsticks and the colours, not everything has shimmer in it, if a guy doesn’t want to wear shimmer. This event, I’m meeting lots of people talking to me who are wearing makeup. It really is for everyone. Things shouldn’t be limited, which is why we don’t do a men’s range. Diversity and inclusion is so important to LUSH. We don’t label things; all our products are for a need.”

The new boss of Coles, supermarket veteran Steven Cain, will make his mark in the nation’s $90 billion grocery sector by driving one of the biggest shake-ups of Coles in more than a decade. It will see him kick out under­performing brands, narrow the range of brands within categories and fill the shelves with more private label goods.

Unveiling his five-year plan to the market yesterday, Mr Cain showed some of the steely determination and ruthlessness that have characterised his decades-long journey through the Australian and British retail sectors, as he confidently declared Coles would maintain its competitive edge by squeezing prices further.

Also under the gun would be brands that either failed to inspire shoppers or were merely mirroring what was already on offer — something Mr Cain said he had witnessed over his many years in the sector.
There is clearly more of an opportunity in the grocery space to differentiate and simplify ... but the way certainly I have seen these thing work in other places is that the big brands tend to get bigger, and brands that are just duplicating ... get smaller,’’ Mr Cain warned.

And Mr Cain showed he was a man in a hurry, as was his hallmark when tried to rescue a then failing Coles food arm back in 2003, before he was ejected from the business.

He has now returned with a much more powerful mandate from parent company Wesfarmers and a newly formed Coles board to drive through his changes at a rapid pace.

“The focus for me is getting on at it and as fast as we possibly can because that is a competitive advantage,’’ Mr Cain said.

“It will be about how fast we can execute it, how well we can execute it.’’

He has pledged that Coles will cut deeper on prices to put more grocery products on everyday low pricing while pulling back on heavily discounted promotions, and he believes private label, or supermarket-owned brands, should increasingly take shelf space.

Mr Cain could be about to start a war on two fronts when Coles emerges as a stand-alone ASX-listed company on November 21.

Stripping out some grocery brands could infuriate suppliers, while lower shelf prices could trigger a new price war with Woolworths.

During his maiden press conference and briefing with analysts Mr Cain fleshed out his five-year plan for Coles, after details of the $20bn demerger from Wesfarmers were released late on Friday.

“Obviously we will maintain our relative competitiveness in the market — that is not something that anyone wants to lose, the good work that has been done,’’ Mr Cain said. “Going forward, as we have said, more everyday low pricing, more own brand and fewer, deeper promotions is, we believe, the way forward.

“We will remain competitive on price and make sure that at Coles you are getting very good value.

“When I look at the five-year plan, that plan is to be better value in five years’ time than we are today.’’

Mr Cain, who has spent the past few weeks in the role touring supermarkets, said shoppers would notice changes to the stores under his watch and the curating of individual stores’ ranges to better serve local, ethnic communities, as well as improving its health food categories.

But the new boss of Australia’s second-biggest supermarket chain seems to have private label and the duplication of products high on his agenda.

“I’ll certainly have a watchful eye on simplification and removing duplication, but equally we know we have to do more on unique own brand products (private label) and we have got to do a better job for matching the stores for the local customer base.’’

Mr Cain wouldn’t nominate a target for private label penetration in Coles stores but said in some grocery categories there would be greater own-brand selection and fewer outside brands.

“In broad terms I would expect to see more small brands, smaller innovative brands in the store.

“I’d expect to see the removal of some duplication in some categories, particularly those in decline, and I’d expect to see more innovation in own-brand products around exclusive lines.’’

Mr Cain wouldn’t say which categories were “in decline’’.

However, there would be new brands, and not just private label, with suppliers able to benefit from this, he argued.

“The key to success will be around innovation and bringing new things to customers. By the way there will also be lots of new brands coming in, not just own brand and around that sort of ethnic and health space.

“The good news for suppliers is that the business is growing.

“I think it has had 43 consecutive quarters of growth. When we are growing it means the supplier base is growing.’’

Details released by Wesfarmers to the market yesterday showed Coles Liquor had sales of $3.3bn in 2018 and pre-tax earnings of $130m, while its convenience stores had sales of $5.8bn and pre-tax earnings of $133m.

But the once-struggling liquor arm of Coles, which includes its Vintage Cellars and Liquorland banners, has begun to turn around.

The Coles demerger scheme booklet shows that its liquor business on a pro-forma basis had pre-tax earnings of $100m in fiscal 2016, rising to $138m in 2017 and slipping to $130m in 2018.

However, Coles convenience stores reporting earnings of $190m in 2016, and the same in 2017, falling to $133m in fiscal 2018.

Coles has also shown to be holding $1bn of freehold property on its books.

ELI GREENBLATSENIOR BUSINESS REPORTER
Eli Greenblat has written for The Age, Sydney Morning Herald and Australian Financial Review covering a range of sectors across the economy and stockmarket. He has covered corporate rounds such as telecommunica... Read more

Shoppers are increasingly embracing mobile devices for purchases, with mobile now accounting for more than half of all transactions in the APAC region (51 per cent) during Q2 2018, according to new research from Criteo.

This number increases to more than 70 per cent for retailers that actively promote and support a native shopping app, with nearly half of purchases made in app (48 per cent).

The research found that customer conversion was six times higher in dedicated shopping apps (20 per cent) when compared to the mobile web (3 per cent), and four times higher than desktop shopping (5 per cent).

“Retailers in ANZ and across APAC are continuing to see shopper preferences shift as they become more reliant on the convenience and personalisation that mobile and in-app commerce experiences can offer,” Criteo head of Australia and New Zealand Pressy Sankaran said.

Sankaran said that it’s not enough to simply offer mobile apps and experiences; a strong omnichannel promotion strategy is required to generate increased sales on mobile. Omnichannel retailers that combine their offline and online customer data can apply over four times as much data to optimise their marketing efforts.

Additionally, while omnichannel customers only represent 7 per cent of a retailer’s potential customer base, they represent 27 per cent of sales compared to online-only shoppers, who represent 44 per cent of shoppers and 24 per cent of total sales.

David Jones is banking on the power of shoes.

The department store opens the first stage of its $200 million Elizabeth Street flagship redevelopment in Sydney’s CBD tonight, the much-anticipated “Shoe Heaven” at the top of the historic building.

“We’re looking to emulate the greatness the store once stood for,” David Jones chief executive David Thomas said.

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“We’re creating something unrivalled in Australian retail.”

Mr Thomas said the main inspiration for the shoe floor came via Paris department store Le Bon Marche, with nods to fellow Parisian Printemps and London’s Selfridges and Harvey Nichols.

Forty staff have been recruited specifically for the shoe floor, many of them with overseas experience, in addition to a continuing staff of more than 20.

Of the new hirings, 85 per cent are multilingual, and a number have been hired internationally.

With service top of mind, the offering also has to be impressive.

“We’ve got close to 100 of the world’s best brands together in one place,” Mr Thomas said.

“Our choice is not what to put in store, but what not to put in store — we’ve edited and curated a range ahead of the world’s best because of the brands that we have gone with.”

New partnerships have been forged with luxury labels Chanel, Louis Vuitton and Gucci, which will all have bespoke concession stores on the floor.

Brands new to the store include Christian Dior, Jacquemus, Malone Souliers, Roger Vivier and Rene Caovilla.

While the retailer won’t ­divulge sales figures on specifics, Mr Thomas said he expected sales to be “significantly more than we used to do — and we have very ambitious targets”.

To celebrate the launch, members of the Sydney Dance Company will perform tonight, and weekly for the immediate future, to bring “entertainment, shopping and theatre together”, Mr Thomas said.

Rafael Bonachela, artistic director of the SDC, is excited about the collaboration, the third with the retailer in his 10-year tenure at the company, which has ­included live performances at catwalk shows and appearing in campaigns.

“The dancers enjoyed it and I enjoyed it, and both organisations left wanting more,” Bonachela said. “Fashion and dance have always been connected in many ways.

“We celebrate the body and individuality and personality. There’s a lot of synergy between both companies.”

Bonachela will create a site-specific work for a group of dancers to accompany smaller vignettes from existing works.

“Every opportunity we get to be closer to the audience and ­people, it’s just about allowing the imagination to flow,” he said.

And, hopefully from the David Jones viewpoint, an opportunity for cash registers to ring.

Michael Kors is going high end.

The handbag maker is acquiring the Gianni Versace fashion house for $2.1 billion, including debt, providing Kors a launching pad into the exclusive European luxury market.

Shares of Michael Kors were down slightly near midday Tuesday, after closing down more than 8 percent Monday when news of the deal leaked. Shares of rival Tapestry, the parent of Coach and Kate Spade, were down fractionally.

After deal closes, Michael Kors will change its name to Capri Holdings, inspired by an "iconic, glamorous and luxury destination" island, the company said. It will retain the Michael Kors brand name.

It plans to grow Versace to $2 billion in revenue globally and increase its retail footprint from roughly 200 to 300 stores. It also expects to expand accessories and footwear from 35 percent to 60 percent of revenue.

The deal marks one of the first times an American company has cracked the code of super high-end luxury fashion, typically controlled by LVMH, the owner of Guerlain and Givenchy, and Kering, the owner of Balenciaga and Yves Saint Laurent. Michael Kors had already dipped into European fashion last year by buying shoe brand Jimmy Choo for $1.2 billion.

As part of the deal, Donatella Versace, who has helped run the company since her brother Gianni was murdered in 1997, will stay on to oversee the label. Donatella, her brother Santo and daughter Allegra will also stay on as shareholders in the company. Versace's management team will continue to be led by its CEO, Jonathan Akeroyd.

That retention will be crucial to Kors as it looks to validate itself to other premium European brands and their visionaries.

Versace is profitable, says Michael Kors CEO Versace is profitable, says Michael Kors CEO
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"We are all very excited to join a group led by [Michael Kors CEO] John Idol, whom I have always admired as a visionary as well as a strong and passionate leader. We believe that being part of this group is essential to Versace's long-term success," Donatella said in a statement Tuesday.

While the number of sizable U.S. brands to acquire has dwindled, the European luxury market has become rife with opportunity. As founders and owners of European luxury brands put an eye toward retirement, a number of businesses, like Prada and Giorgio Armani, have been turning up on wish lists for luxury retailers.

Michael Kors said Tuesday that following the deal, the company hopes to reduce its proportion of business in the Americas from 66 percent to 57 percent, while increasing its European business from 23 percent to 24 percent and Asian business from 11 percent to 19 percent.

The global market for personal luxury goods was estimated to be worth $307 billion in 2017, according to recently filed registration documents for luxury marketplace Farfetch, which went public last week. The luxury market is expected to reach $446 billion by 2025, according to the data.

The push further into luxury serves also as a defense for the next economic downturn, more than a decade after the last one in the U.S. Those who can afford a Versace dress are among the most likely to continue to spend during a recession than those who shop more affordably, industry experts say.

"Where Michael Kors has traditionally sat has been hit harder than true luxury [in recessions], so diversifying across traditional luxury may give them some insulation," said Kathy Gersch, executive vice president of strategy and change at management firm Kotter.

Still, Michael Kors has some challenges with the Italian brand known for its bold prints in the U.S., where Versace has been under-invested, industry bankers tell CNBC.

Michael Kors has been eyeing the luxury space for quite some time. Both it and competitor Tapestry suffered the repercussions of expanding their affordable luxury brands too widely, thereby diluting their stature in the process. Meantime, the malls in which shoppers often pick up their affordable luxury brands have become increasingly desolate as shoppers head online.

Private-equity firm Blackstone, which owns 20 percent of Versace, will cash out as part of its deal.

Of all the bets Michael Kors Holdings could have made on its quest to become an American house of luxury labels, Versace, and its distinct rococo style, stands out as particularly bold.

Kors is nearing an agreement to acquire Gianni Versace in a deal that would value the Italian fashion house at about $US2 billion ($2.8 billion). Investors are skittish about the proposition, sending Michael Kors shares down the most since May.

Chief executive officer John Idol has used the words "heritage," "size" and "scale" to describe the type of luxury brands he's looking to add to the Kors stable. Versace has those three prerequisites covered. It's a 40-year-old Italian house with an international presence and widespread pop-culture relevance. Last year, Versace had revenue of €686 million ($1.1 billion) and returned to profit, according to figures provided by the company. Yet Kors would inherit a business with several issues.

"Despite its profile, Versace has struggled to grow sales," said Neil Saunders, managing director of GlobalData Retail. Michael Kors wouldn't be buying "a perfectly performing brand", but one that "needs work and some repositioning", he said. That work includes "toning down some of the brasher elements of the brand which are now out of step with the more subtle tone preferred by modern consumers".

While Saunders called the deal "additive", he said it may cause disruption in the short term and take several years to reveal the benefits.

Kors shares fell 7.7 per cent on word a deal was close. The stock had been up 15 per cent this year through Friday's close.

Versace, with its Medusa-head logo, is one of the more outlandish major Italian fashion labels. Artistic Director Donatella Versace's flashy designs celebrate extravagance and excess. Her runway show this month integrated the vivacious colour and dazzling patterns the label has become known for - a psychedelic amalgam of soft florals layered on stripes, checks or more florals. The bashful should look elsewhere for their clothes.

Though it's not for everybody, it's certainly for somebody. In recent years, Versace has grown to become a wealth symbol for the nouveau-riche. It's often mentioned in pop music as a label to aspire to - or brag about. Founder Gianni Versace was a fashion icon who dressed rock stars and princesses, and that flashiness remains aspirational today.

So if managed correctly, the payoff could be sizable. Versace would give Michael Kors a foothold in high-fashion. Its namesake label is known for "affordable luxury" and mass appeal, selling leather handbags that cost a few hundred dollars that can be found at Macy's or the discount rack at TJ Maxx. Its purchase of shoemaker Jimmy Choo last year added to its couture credibility, giving it $US600 sandals and $US1000 pumps. Versace's clothing ranges from $US350 T-shirts to $US10,000 skirts worthy of red carpets at the Oscars or Met Gala.

Kors is plotting a different course than that of longtime rival Tapestry, formerly known as Coach. Tapestry, which is also building a stable of brands, has stayed both near its own price point and its New York headquarters. The two labels it has acquired, Kate Spade and Stuart Weitzman, are US brands and play in about the same price range.

Italian newspaper Corriere della Sera reported earlier that Versace could be sold this week for about $US2 billion, with several groups interested including Kors and Tiffany & Co.

Sydney rag trader Michael Gazal could be heading for a $80 million payday after the company he runs confirmed it was in sale talks with the fashion giant behind Tommy Hilfiger and Calvin Klein.

But not everyone in the high-profile Gazal family will be cashing in if the sale of Gazal Corporation goes ahead, after Michael's brother David sold his 24 per cent stake in the company for $35 million late last year.

Fairfax Media reported on Tuesday that Gazal Corporation was in talks with American clothing group PVH Corp to privatise the company.

Most of Gazal's business comes through its 50/50 joint venture with PVH called PVH Brands Australia - which wholesales the Tommy Hilfiger, Calvin Klein, Van Heusen, Pierre Cardin, Trent Nathan and Fred Bracks brands.

Gazal confirmed talks were underway with PVH - which already owns 22 per cent of Gazal's shares - but stressed that they were in "the very earliest stages".

"Gazal is in preliminary discussions with PVH around the potential for a proposal by PVH for a privatisation of Gazal," the company said in a statement released to the ASX.

"The discussions may not continue and, if they do, might not result in a proposal. If a proposal is made, it may not result in a transaction."

PVH was not “about to make a move”, Gazal said.

The prospect of a takeover saw the stock shoot up 13 per cent to close at $4.75.

Gazal confirms sale talks with Tommy Hilfiger, Calvin Klein owner
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Gazal's tightly held shares have been on a run off the back of improved sales and earnings, with the stock more than doubling in value since January when they were worth $1.95.

Executive director Michael Gazal owns almost 40 per cent of the company, PVH owns 22 per cent, Anton Tagliaferro's Investors Mutual owns 10 per cent, while big box retailer Harvey Norman owns 9.3 per cent.

David Gazal, Michael’s brother, was until recently a major owner of shares in what was once the family business.

However he sold his 24 per cent stake in December, at $2.50 a share as part of a deal that saw him buy the company's Bisley Workwear business.

The deal included him selling 9.8 million shares back to the company and 4.2 million to PVH Corporation. That parcel of sold for $35 million would be worth $66.5 million at Tuesday's close price.

Gazal's adjusted net profit grew 23 per cent to $5.7 million for the seven-month period to March 21.

Excluding the write-off of its 7 per cent stake in the collapsed handbag chain Oroton, profit would have jumped 91 per cent to $8.8 million.

The PVH joint-venture brands including Calvin Klein and Tommy Hilfiger were its standout performers, with sales jumping 22 per cent to $144 million.

Youth fashion chain Universal Store is ramping up plans for new stores and online retailing following a $100 million management buyout backed by three of Australia's most successful private equity investors – Brett Blundy's BB Retail Capital, Trent Peterson's Catalyst Direct Capital Management and Adrian MacKenzie's Five V Capital.

BB Retail Capital, Catalyst and Five V reached agreement over the weekend to buy the Brisbane-based business, which has annual sales of more than $100 million and 53 stand-alone stores across Australia, from founders Michael and Greg Josephson.

Universal Store's senior management, led by chief executive Alice Barbery and chief financial officer Stephen Harris, will emerge with a one-third stake alongside BB Retail Capital, which has built successful retail chains including Bras N Things, Adairs and Lovisa, Catalyst, which owns a major stake in Adairs and which floated Just Group (now owned by Solomon Lew's Premier Investments) and Pacific Brands, and Five V, which has investments in RateSetter, Canva and ParcelPoint.

Confidence vote
The deal is a major vote of confidence in Universal Store's management team, which has delivered several consecutive years of double-digit same-store sales growth and maintained EBIT margins above 10 per cent despite massive structural change in the clothing sector, including the shift online and the arrival of global fast-fashion retailers Zara and H&M.

"This is a long way from a turnaround story – it's a very well-run business, so we're very pleased to partner with the team," Catalyst managing director Trent Peterson told The Australian Financial Review on Monday.

Mr Peterson said there would be no major change in strategy following the acquisition, which is expected to be completed at the end of October – "it's one of keep doing what you're doing."

"We believe service is a really important differentiator in the retail environment and this is a business that delivers that in the stores every day," Mr Peterson said.

"A lot of the retailers who are struggling are often retailers who have dialled back service and they're retailers who haven't lent forward to bring what the customer wants as far as the omnichannel retail offer is concerned."

Target market
Universal Store targets fashion-forward 15-to-34-year-olds and differentiates itself from rivals by stocking exclusive products – a combination of private label brands such as Perfect Stranger, Luck & Trouble, Common Need and Token and exclusive ranges sourced from third-party brands such as Herschel, Abrand, Wrangler,Converse and Kiss Chacey.

It emulates fast-fashion chains by delivering stock to stores in four to six weeks and using short-run buying cycles to encourage shoppers to buy quickly or risk missing out. However, customer service is more akin to that in a upmarket boutique.

"Our market is competitive but we focus on our customer so much we've been able to deliver them what they want," said Ms Barbery, who joined Universal Store nine years ago after careers with GAP Inc, Colorado Group and Virgin Blue.

"Retail is not hard, it's just hard work and it's constantly paying attention to every store every day, every decision and every choice and not getting too comfortable."

Universal Store was also fortunate to operate in a part of the market immune from the housing and interest rate cycles.

No stress
"There's no mortgage stress for my customers ... they want flexibility, they want convenience, they want an outfit for the weekend or for that special occasion," she said.

The private equity consortium is expected to stay on board for the usual three to five years before considering exit options, which are likely to include an initial public offering and a trade sale.

Terms of the sale, which was handled by KPMG, were not disclosed but it is understood the deal valued Universal Store at about $100 million, representing about seven times earnings before interest and tax.

The founders of activewear business Lorna Jane are preparing to set up their first physical stores in China to capitalise on rising demand as more than 10 parties, including global private equity and trade buyers, eye a majority stake in the operations.

Asian trade buyers are also among the potential buyers as the Lorna Jane brand, which began in 1989, assesses its options amid a fast-changing sector where fitness and leisure wear is embraced by people in a broader setting and is no longer confined to just sports and fitness activities.

Industry players say Lorna Jane generates annual revenues of more than $200 million. This financial year it will make about 30 per cent of its total sales from online channels including Alibaba's big Tmall e-commerce site in China where the Lorna Jane sports bra is the No.1 selling item in its category, two years after being launched into China.

Founders Lorna and Bill Clarkson own 60 per cent of the company, and private equity firm CHAMP Ventures owns 40 per cent after acquiring that stake in 2010. The founders tested the appetite of buyers in a different sale process in 2014 but the ownership structure stayed intact at that point. Lorna Jane announced on August 20 that KPMG had been hired to undertake a strategic review of the business.

Sports and fitness participation in China is growing at 25 per cent per annum, as people embrace the same health and wellbeing lifestyle as those in Western countries.

"Activewear has now become ready-to-wear. There's now a blurred line between fashion and sports apparel," Lorna Clarkson said. The Lorna Jane brand was seen as highly authentic in China in a market where other Australian wellness brands such as Swisse and Blackmores in the vitamins sector had made large inroads.

Online followers
Chief executive Bill Clarkson, who is Lorna's husband, said the business now had 2.5 million followers on social media. This had helped drive online sales. "One of the things we've done is push hard to build our social and online presence, to the point that around 30 per cent of sales this year will come from online," Mr Clarkson said.

He said the company had a team based in Beijing and Shanghai and a showroom in Beijing. "Our aim is to eventually open stores in China and Hong Kong," he said. That was likely to happen in the next 12 months, but timing would depend on the identity of any strategic partner.

Mr Clarkson said Lorna Jane had 125 bricks and mortar stores in Australia and 32 in the United States. But the company is reducing its physical store footprint to shield the business from stubbornly high Australian rents and better take advantage of online sales that are gathering pace.

KPMG corporate finance partner Luke Lawrentschuk said on Monday there had been robust interest over the past few weeks from both offshore and local players. They included private equity firms and trade buyers.

"The interest has been very strong and has exceeded our expectations," he said.

KPMG declined to comment on the value of the business. "The business is performing extremely well and we'd expect the value to reflect this," he said.

Retail industry analysts said on Monday that businesses like Lorna Jane were generally valued at between 1 to 2 times annual revenues, depending on the growth trajectory.

Pressure on margins
IBISWorld analyst Kim Do said there had been an increasing shift to people wearing activewear as streetwear as fitness clothing made its way out of being specifically worn for sport or fitness activities, and into wider society.

But Ms Do said increasing competition from online-only sportswear retailers and fashionable gymwear brands like Gymshark, along with the arrival of big overseas players such as Decathlon in both the bricks and mortar segment and online in Australia, had put pressure on margins and intensified competitive pressure for all players, although the long-term growth rates of the entire category were solid.

"Over the next five years, health consciousness and fitness will continue to be on the rise. But the rise of new players who've built businesses using social media like Gymshark is adding to the competition," Ms Do said.

British sports fashion retailer JD Sports has also expanded into the Australian market, while online behemoth Amazon has been steadily building its local presence. Rebel Sport, owned by ASX-listed Super Retail Group, has expanded its footprint as stablemate Amart stores were all converted to the Rebel Sport brand.

Lorna Jane's first store was opened in 1990, in what was "the nosebleed section" of an upper floor of Broadway on the Mall, in Brisbane's CBD.

Tommy Hilfiger has launched tommy.com, the online flagship for the brand in Australia and New Zealand.
The site, which launched on September 19, offers the widest assortment of products across all categories, free returns, online package tracking and a dedicated customer service.

This is the latest addition to the growing Tommy Hilfiger eCommerce portfolio worldwide, building on the strategy to drive digitisation across the business.

The mobile-first built website will lead a broader digital strategy for Australia, which includes online and offline activities.

These include influencers, paid social, OOH, media and brand partnerships with Mercedes, After Pay and Pay Pal.

The new tommy.com flagship currently offers the first TommyXLewis collaborative collection, designed in partnership with British racing driver Lewis Hamilton.

The Tommy Icons capsule collection is also available, which is fronted by global brand ambassadors model Hailey Baldwin, model and activist Winnie Harlow, and actress Maggie Jiang.

Additionally, consumers can shop the summer/pre-fall 2018 and fall 2018 collections including menswear, womenswear, denim, swim, underwear, kids and accessories.

The site will exclusively supply Hilfiger Collection across the region, the pinnacle of the brand's product offering.

Followers of the brand have been invited to join the conversation on social media using #TommyHilfiger, #TommyAustralia and @TommyHilfiger.

Michael Hill, the Brisbane-based jeweller with some 300 branches worldwide, has appointed Daniel Bracken as its new chief executive officer after its chief, Phil Taylor, resigned for health reasons.

Bracken, a former deputy CEO at Myer, where he'd been 3 1/2 years, had joined Specialty Fashion Group less than eight months ago, taking over from Gary Perlstein in February. He previously ran The Apparel Group, which owns Australian brands including Sportscraft, Saba, Willow and Jag.

In a statement to the ASX, Michael Hill said Bracken has "more than 25 years of extensive experience in retail and fashion across many iconic brands". He earlier spent 13 years with British luxury retailer Burberry's.

It said that in his stint at Specialty Fashion, he "led the company's restructure and successful divestment of the Millers, Katies, Crossroads, Autograph and Rivers brands, resulting in a significant improvement in shareholder value". Specialty Fashion's shares jumped fivefold over the past eight months, last trading at $1.25.

The company's shares jumped fivefold under Bracken's leadership.
The company's shares jumped fivefold under Bracken's leadership.
Bracken will take up his new job on November 15 and will get an annual base salary of $950,000, plus short-term incentives of up to 70 per cent of that pay if performance targets are met.

Despite posting a $486 million statutory net loss earlier in the week, Myer’s stock price, at 57 cents per share at close of trade on Thursday, reached a six-month high.

This is compared to 42 cents per share at close of trade on Wednesday, after the company unveiled “disappointing” full-year results a month after management shake-ups and calls to refocus on the consumer.

Myer chief executive John King’s level-headed approach to reinvent the Myer brand seems to have gone over well with shareholders.

“It’s been 100 days since I started at Myer, which was just before the end of the financial year,” King said during the company’s investor call on Wednesday.

“I’m as positive about the future of Myer today as I was on my first day, when I spoke to team members in Doncaster.”

King’s whirlwind, ground-floor tour across Myer stores, of which he has 18 left to visit, has left a sizeable impact on the company’s direction moving forward – attuning King to the needs and wants of the Myer shopper.

“The customer’s message is simple: we want great brands, at good prices, with leading service whether that be in store or online,” King said. “We are acting on it.”

Having spent time listening to and speaking with customers, team members, suppliers, brand partners and landlords, Myer’s turnaround plan involves a three-pronged approach to better serving its customers.

Firstly, the department store looks to transform the customer experience across the business. This involves re-positioning Myer within the retail space, refurbishing and in some cases re-sizing stores, and focusing on resetting service standards.

One of the main issues vocalised by Myer customers to King is that there is never enough staff, and it’s hard to find a till that is open.

The group is experimenting with giving certain store more money to invest in staff to see what effect this has on customer satisfaction, and hopes in future to consolidate the stores till system to allow easier access for customers.

Secondly, the department store is going to focus more heavily on its ‘Only at Myer’ branded category.

“We will invest to grow Myer exclusive brands, with broader assortments and extensions to additional categories. We will build destination categories such as accessories, and exit selected categories where Myer is less profitable,” King said.

“We will add new brands that are exclusive to not only Myer, but to Australia where appropriate.”

One of the ‘categories’ Myer looks to exit from during 2019 is it’s clearance zones, which King notes he “hates”.

“I want to be clear: our focus is on profitability and we will not chase unprofitable sales just to hit a top line sales number,” King said, adding that the company didn’t want to sell a $10 note for $5.

Finally, Myer looks to refocus its online presence around a mobile-optimised store, giving customers an easier way to filter and search for Myer products, with King adding that the company is looking to make it the “number-one store” within two years.

“We will be leveraging our Myer One data in a much more efficient way to drive multi-channel customer engagement and growth, and we will enhance our efficiency and fulfilment operations through our DCs to improve profitability,” King said.

The new Myer website will be launched in the coming weeks.

According to King, a department store is only a winning format if it’s relevant to the customer, which is tied intrinsically to a strong online business.

“I think the opportunity for us is to actually grow the top line via online, stabilise the store portfolio, reduce the cost of operating those stores, reduce the space in those stores because we don’t need as much space, and then we’ll improve the profitability of the business, both in-store and online,” King said.

The struggling Australian retail sector is emerging as a private equity hotspot and deal makers expect activity to remain strong, led by firms keen to turn around major brands.

Retail sales in Australia have remained sluggish in the past few months and the most recent figures for March showed zero growth for that month.

Spending on clothing and ac­cessories, household goods and department stores all slowed during the month and economists have warned that a sudden jump in sales is unlikely.

However, private equity funds have poured more than $1.5 billion into the retail sector in just a few months and are expected to remain active buyers.

Figures compiled by The Australian showed that in the past six months at least six major retail deals involved private equity funds buying out companies.

The largest transaction, involving skin and hair care manufacturer BWX, emerged last week when Bain Capital teamed with the company’s management to offer $860 million for the firm. The offer was made at a 50 per cent premium to the company’s last price on the ASX.

The deal came a fortnight after Noni B and its major shareholder Alceon paid $31m for a portfolio of five brands from the embattled Specialty Fashion Group.

The Australian Private Equity and Venture Capital Association (AVCAL) estimates that last year funds invested $720m in consumer good and retail businesses, which accounted for 19 per cent of total spending.

KPMG mergers and acquisition partner Luke Lawrentschuk said the demand from private funds for Australian retail was expected to remain strong, even though the sales forecast in the sector were weak.

He said funds would be keen to buy Australian business that could be easily expanded and in sectors favoured by consumers.

“There’s been a track record in Australia of successful retail deals being carried out. I think the business models of companies or brands which are being bought is very important,” he said.

“They need to be relatable, they need to be easy to understand, the business model should not be complex and they should be able to be scaled up.

“That’s the play book of private equity.”

Mr Lawrentschuk said he believed that most retail-focused private equity investment in the future would be in lifestyle, entertainment, and food and nutritional product firms.

In New Zealand, Comvita, which manufactures manuka honey, last week revealed it had received a takeover offer from a mystery bidder but it had fallen through after the parties could not agree on price.

Mr Lawrentschuk said the number of funds active in Australia was higher now, as the local private investment industry had matured.

“There is a lot of dry powder in Australia in private equity because there is a lot of money that has been raised,” he said.

“The private equity industry has gone through a number of stages. There were a large number of very big funds that had developed five to 10 years ago.

“Now there are a lot of smaller funds which have been set up by people who have left those bigger organisations.”

Allens partner Tom Story said Australian fashion labels were also increasingly likely to be on the radar of private buyers keen to expand the businesses overseas.

In the past two years, Collette, Tigerlily and swimwear designer Zimmermann stakes were sold to private equity buyers.

Mr Story said he thought it unlikely that private equity buyouts of “bricks and mortar” retailers like Myer or David Jones would be on the cards, primarily because of the high property leasing costs involved.

However, he said future investment would be targeted.

“I think a big buyout fund would find it very challenging buying into traditional retail,” he said.

“There’s a range of retailers that have found it very tough but there are aspects of retail that are very attractive to turnaround-type or distressed-asset investors.

“There has been success in buying high-end fashion brands ... the buyers have looked to expand into Asia and the US and that has worked where there’s been a very successful brand.”

While Maison Simons offers customers the latest trends in clothing, accessories, and home décor, it’s another trend that is gaining the brand attention and accolades. Improving its sustainability, the company recently opened the first zero net energy store in Quebec City, Canada.

Using industry-leading technologies to eliminate its carbon footprint, the store is designed to generate as much energy on-site as it annually consumes. The 80,000-square-foot space, which was formerly a Target, is powered by solar energy, and heated and cooled using a geothermal system that regulates temperature by tapping into the energy of the earth, improving its energy efficiency by 60%.

Maison Simons Quebec City | Shopify Retail blogSustainability has been a hot topic in the past few years. And Maison Simons may be setting a high bar, but retailers of all sizes can take steps to become more sustainable by focusing on practices and products.

Why should retailers pay attention to sustainability? Other than the ethical reasons (you know, conserving this great planet we live on), going green offers a wealth of benefits for both retailers and their customers. Customers are paying attention: 93% of global consumers expect more of the brands they use to support social and environmental issues, according to a report by the Retail Industry Leaders Association (RILA).

In addition, the report found that an estimated 68 million adult Americans base purchasing decisions on their values — personal, social, and environmental — and say they will spend up to 20% more on environmentally sound products.

So, many customers are happy to invest in sustainable retailers. But going green is about much than just conserving energy or using longer-lasting light bulbs. Sustainability gives you an opportunity to better connect with your customers, and while having a zero net energy store might not be within grasp just yet, there are smaller steps you can take. Here are five ways to participate in the growing trend of sustainability in the retail industry.

How to Make Your Retail Business More Sustainable
1. Go Paperless
Paperless in retail | Shopify Retail blogYour business might consume a lot of paper, and one of the easiest ways to cut back is by emailing receipts. Not only will you save resources; your customers will likely one less piece of paper to handle, too. According to research, 250 million gallons of oil, 10 million trees, and 1 billion gallons of water are used to create receipts just in the U.S. each year. Eliminating paper receipts not only considerably reduces a business’s carbon footprint, but it ensures that receipts aren’t later discarded as waste.

Going paperless can create efficiencies, help you automate more of your business processes, and offer your customers better security. Transitioning to digital receipts is a great first step toward going paper-free, and they allow you to leverage that valuable real estate on those digital receipts to make more sales. Include links to your website as well as your social media platforms on your receipts, as well as news about upcoming events and promotions.

Rather than using paper calendars, try using a digital calendar tool like Calendly or 10to8 to book appointments with clients and maintain employee schedules. Also, sign up for paper-free statements for your banking and financial needs, and send invoices via email to your customers. You’ll be surprised how little effort it takes to reduce your paper consumption.

2. Cut Waste Out of Your Manufacturing Process
Customers care about how their products are made and they want to know that you care, too.

Manufacturing can produce a lot of waste, and you can make a move toward sustainability by monitoring your supply chain.

If you make any of your own goods, audit your waste and look for ways to substitute recyclable or reusable products into the manufacturing process. If you purchase and resell premade goods, ask for transparency from your vendors in relation to issues such as labor practices, safety conditions, pollution, and waste. Currently, there are no industry standards on disclosure, and it’s up to you to be proactive when obtaining this information.

3. Look for Clean Energy Options
In addition to reducing physical consumption, consider switching to energy methods that consume and emit less waste. This is an area where going green helps you save serious money; energy is the fourth-largest in-store operating cost for retailers after labor, rent, and marketing, according to a report by McKinsey.

Contact your utility suppliers and ask that they conduct energy audits on your store, suggesting ways you can lower usage. A quick update is to switch to LED light bulbs, which use less power. And you can also look into solar options for powering lights and other electronics.

Lowering your thermostat seven to 10 degrees Fahrenheit for eight hours a day reduces consumption by 10%, according to the U.S. Department of Energy.

Turn off your computer, copier and printers when you leave for the day. And be sure to get your employees on board with your energy mission, appointing a “green team” or energy advocate to monitor usage. Simple behavioral changes are no- or low-cost energy savings opportunities, according to RILA.

4. Recycle Old Goods
In addition to selling customers new items, look into ways you can help them recycle old or worn-out goods.

For example, Eileen Fisher stores feature a Green Eileen project which collects, repairs, and resells used company-brand clothing and donates the proceeds to nonprofit organizations that benefit women and children.

Outdoor brand North Face has created a Clothes the Loop program, which collects used clothing and gives customers a $10 off a purchase of $100 or more. Items are repurposed into products like insulation, carpet padding, stuffing for toys, and fibers for new clothing.

And Nike’s Reuse-A-Shoe collects used shoes that are recycled into material used to create running tracks, playgrounds, and courts.

If your business sells items that replace old goods, consider offering to collect unwanted items that can be repurposed or donated to someone who can use them.

5. Be Transparent
Sustainability is of growing importance to consumers, so be sure to share your mission and work with your customers. Transparency and authenticity are key when it comes to putting sustainability at the forefront of your business.

In this case, you’re not just tooting your own horn: you’re giving customers an opportunity to further their own sustainability efforts by supporting a business (that’s you) that cares about the environment, community, and future.

Moving Forward With a More Sustainable Retail Business
A sustainable business not only will bring you respect from customers; it can save you money and resources in the long run.