WOW Closes Stores Nationally

AUSTRALIA: Queensland based electronics retailer WOW Sight & Sound was placed into receivership late last month with debts of more than $25 million. Receiver Ferrier Hodgson has since been unable to find a buyer and the company will now hold a closing-down sale to offload its stock, beginning Thursday.

Ferrier Hodgson partner Stewart McCallum said that the closures would result in approximately 580 job losses, Mr McCallum said redundant staff would be paid their salaries in the normal course of business, but employees could wait three months to receive their entitlements. In a statement, Mr McCallum said that employee entitlements which are protected under the Australian Federal Government’s General Employee Entitlements and Redundancy Scheme – GEERS – won’t be paid until the realisation of all the group’s business assets is concluded and the ownership claims over stock by suppliers have been resolved. This process is expected to take at least three months. Read the full article »»»»

Retail Woes Slash Woolworths Profit

Australian grocery chain Woolworths has announced a 17 per cent slide in profit for the first half of the financial year despite solid growth across most of the business. Net profit for the six months to December came in at $967 million, but this was in line with expectations. Chief executive Grant O’Brien said the result was mainly due to the divestment of its Dick Smith electronics chain.

“We’ve taken a once-off charge for the consolidation and divestment of the Dick Smith business but our trading businesses have actually been profitable – and I think pleasingly profitable – this year,” Mr O’Brien said.

Price cuts at supermarkets as part of its discount war with rival Coles also dampened profits. ”Deflation, whilst challenging for a retailer, is great news for consumers, and I think that’s how it should be looked at,” Mr O’Brien said.

A fall in earnings at Big W also weighed on the result, while food, liquor and petrol businesses saw growth of around 6 per cent. ”There’s still more work to be done,” Mr O’Brien said. “We’re enhancing our position as Australia’s fresh food people and the home of national brands. At the same time we’re improving costs and the customer experience in our stores.”

JB Hi-Fi Profits Crumble Under Sales Fatigue

Discount electronics retailer JB Hi-Fi has recorded a larger than expected fall in half yearly profit due to what it called challenging conditions in the retail sector. JB Hi-Fi  reported net profit of $79.6 million in the six months to the end of December last year, down 9 per cent on its previous first-half result. The company says the three-week post-Christmas trading period was particularly soft, and the weakness was driven by poor TV sales. In December, said it expected a 5 per cent fall in earnings.

In a statement, chief executive Terry Smart said it had been a tough start to the year. ”Consumers were suffering from ‘promotional fatigue’ and therefore have not reacted as well to our post-Christmas promotional offers as in previous years,” Mr Smart said. ”While the market will remain challenging, we will continue to focus on delivering customers a unique and engaging shopping experience both in-store and online.” The company says it expects its full-year sales to rise 5 per cent to around $3.1 billion for the year.

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Australian Retailers Say Lay-bys Are Back In Style

The Australian Retailers’ Association – ARA – says lay-bys are back in style, as consumers become more careful with their money and savings rates soar. The association’s executive director, Russell Zimmerman, says the old-fashioned way of paying off a product before picking it up has had a resurgence. Zimmerman says many retailers, both “bricks-and mortar” and online, are again offering lay-bys for credit-wary consumers amid ongoing economic uncertainty.

“I think people have got much higher utility bills, they’re trying to save more money – we’re at a 24-year record high for savings,” Zimmerman said. “It’s just people feeling that they’ve got to tighten their belt a little bit.”

RELATED: The leading retail body is calling on the federal and state governments to consider the impacts of new taxes on consumers and businesses, as many begin 2012 budget discussions. Read the full article »»»»

A Very Gerry Christmas

In the US the debate is whether the country can support one or zero highly profitable big box chains. Best Buy – the bears argue – is the showroom for Amazon. In Australia we still have two chains –  Harvey Norman and JB HiFi –  Currently Harvey Norman is losing to JB HiFi and ultimately both will lose share to the internet. Forbes recently pointed out a couple of interesting facts on the US retailing behemoth: “Best Buy is headed for the exits. I can’t say when exactly, but my guess is that it’s only a matter of time, maybe a few more years.” said Larry Downes in Forbes on January 2, 2012. Consider a few key metrics: Despite the disappearance of competitors including Circuit City, the company is losing market share. Its last earnings announcement disappointed investors. In 2011, the company’s stock has lost 40% of its value. Forward P/E is a mere 6.23 (industry average is 10.20). Its market cap down to less than $9 billion.  Read the full article »»»»

Myer Chairman ‘Howard McDonald’ Predicts 2012 Profits Will Top $146 Million

Australia: At the Myer annual general meeting today Myer Holdings Ltd chairman Howard McDonald said this year had seen the toughest trading climate in his 35-year career in retail. The once great retail behemoth, Myer reported a 3.5 per cent dip in first-quarter sales earlier this month, Mr McDonald confirmed expectations of flat sales for the current financial year. Mr McDonald also confirmed full-year net profit after tax expectations around 10 per cent below last year’s profit of $162.7 million. In what almost seemed like optimism,  Mr McDonald said the Reserve Bank’s decision to ease the official interest rate earlier this month could help boost sales in the coming weeks. Consumer confidence in 2012 has been negatively affected by increasing pressures from the cost of living, including huge rises -up to 40 percent in some states – in utility charges, education, health care and new taxes. Add into this, the growth of online retail and the outlook being flat is a positive, as reflected in Howard McDonald’s statements. Read the full article »»»»