RetailBiz Round Up for Wednesday 12 February 2014 – with Patrick Avenell
Today's ASX results are here
Garment retailer Noni B has announced an after-tax profit of $1.9 million for the six months to 31 December 2013, a decline of 2.8 per cent on the previous corresponding period.
The company, which operates 219 stores nationally, recorded $62.4 million in total revenue, down 3 per cent, while like-for-like sales were down slightly more: 3.9 per cent.
David Kindl, joint managing director, said difficult trading conditions throughout the period contributed to this downturn, though he did say that trading improved slightly in the lead-up to Christmas. Furthermore, Noni B’s online sales, which Kindl calls its ‘webshop’, continued to improve.
“Demand was weak in all states and territories, especially Victoria, South Australia and Tasmania, but there were signs of improving sentiment in New South Wales,” he said. “Webshop sales continued to grow and we introduced an international currency converter at the end of 2013.
“Despite this challenging environment, we achieved two of the key operational objectives listed in our 2013 annual report by increasing margins and controlling costs, and we are targeting further improvements.”
Noni B’s gross margin for the half-year was 61.4 per cent, up from 60.8 per cent from the year prior. The company has announced it will close seven underperforming stores over the coming half-year.
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ALDI is closing the gap between itself and the supermarket heavyweights, according to Roy Morgan’s Supermarket Currency report.
Over a 4-week period, Roy Morgan discovered that Woolworths is the most popular supermarket, with 9.5 million customers, following closely by Coles with 8.8 million and then ALDI in third with 4.2 million shoppers.
While the gap between second and third is still cavernous, it is shrinking as ALDI eats into these behemoths, leaving IGA behind in the process.
“Despite the long-standing dominance of Coles and Woolworths, ALDI have shown that it’s not a two-horse race,” said Warren Reid, group account manager for consumer products at Roy Morgan research.
“More importantly, ALDI’s popularity also suggests that there are opportunities for other international supermarket giants to successfully enter the Australian grocery market.
“While ALDI’s increase in market share over the last eight years may seem like a slow burn, they’ve actually secured a sizeable chunk of the $82 billion grocery market. It’s not that Metcash/IGA are any less important to consider, but they haven’t made the same kind of gains over the last few years.
“Despite Woolworths posting above-average sales in their latest quarter, this hasn’t had any noticeable impact on their market share, as Coles continues to close the gap, and ALDI continues to grow.”
Consumer sentiment is down again, according to the Westpac Institute. While there was much publicity about the certainty that would be provided by an election and a majority government, that has not eventuated, leading to another dip in Westpac’s index, which is now at its lowest level since July 2013.
"Today's figures are quite patchy and this indicates that people might just be taking a breather to reassess their goals for the year ahead,” said Margie Osmond from the Australian National Retailers Association.
"While the numbers suggest retail consumption might be flat for the next few months and retailers would prefer to see the sentiment number sitting well above the 100 mark (it is sitting at 100.2), today's sentiment reading won't have retailers hitting the panic button just yet.”
Joining consumer sentiment in a slump is consumer satisfaction. Zendesk Benchmark today reported a 2 per cent drop in average customer satisfaction, to 80 per cent, with the retail industry (down 6 per cent) and travel (down 7 per cent) the worst offenders.
Sam Boonin, research lead for Zendesk Benchmark, said it the extra pressure on retail staff during the Christmas season was responsible for this decline.
“If you thought customer service was worse this holiday season, you weren’t alone,” he said. “Customer satisfaction took a hit across the board, and retailers felt more pain than usual. The holiday service woes serve as a wake-up call for companies to better anticipate and prepare for seasonal demands.”
Boonin said the most satisfied customers are in Winter Olympic champs Norway (91 per cent), while the least satisfied are in Cricket World Cup champs India (55 per cent).
Several innovations in delivery options led to The Iconic servicing 1 million customer orders during December 2013.
“It is clear to us that customers have realised the huge benefits of online shopping over traditional shopping,” said MD Adam Jacobs. “Our guaranteed free 3-hour same day delivery during this period, combined with our ParcelPoint click and collect network and 100-day free returns, has really given The Iconic an advantage over other retailers.”
Quote of the Day
“Adele Ferguson's statement that 'ASIC concluded there was no wrongdoing' is incorrect. ASIC has stated publicly that the no further action letter issued to David Jones is just that. It is not exoneration. It is not a clean bill of health and it is not ASIC's tick of approval.”
– ASIC commissioner John Price is not having much luck setting the record straight on the decision not to continue investigating interesting share trades in and around Myer’s secret merger bid for DJs.
Image of the Day
Entertainment and retail precinct Melbourne Central will become a lively CBD hub for Melbournians attending the White Night Festival on Saturday 23 February 2014 from 7pm. There will be a lightshow and activities throughout the evening, finishing at 7am.
Video of the Day
Sit back and enjoy a simpler time for beleaguered retailer Myer with this spot from 1987…