Pre-Christmas retail sales exceed forecast to hit $52.89 billion; L Brands business splits - Victoria's Secret heads private and Bath & Body Works becomes a standalone; travel retail: Lotte to debut Sydney store and Heinemann retains key airport duty-free concession; and L'Oréal see uplift in online sales in China for February.
Pre-Christmas retail sales exceed forecast to hit $52.89 billion
In spite of some retailers feeling the heat, sales revenues for the six-week period prior to Christmas reached $52.898 billion. A result that exceeded the annual Roy Morgan/Australian Retailers Association(ARA) prediction of $52.878 billion. According to Michelle Levine, CEO, Roy Morgan: "It's important to understand that the pre-Christmas retail sales growth of 2.9 per cent last year was higher than for the same period in 2018 and even higher than for the same period in 2017".
The researcher's predictions that Tasmania, Queensland and Victoria would enjoy the highest growth were also on the money. NSW topped the list in spending - $16.692 billion - but was the only state whose results were below the rate of inflation at 1.5 per cent.
Clothing, footwear and accessories logged the fastest growth in revenues - up 4.4 per cent to $4.23 billion. Food accounts for 40 per cent of total pre-Christmas sales and revenues grew 3.3 per cent in 2019 to $21.85 billion. A hefty 17 per cent of dollars outlaid were spent on household goods - up 1.7 per cent to $8.895 billion. Hospitality posted an uptick of 2.8 per cent to $7.485 billion. While department store sales spiked 2.9 per cent to $3.47 billion.
The pre-Christmas retail landscape was beset with stories of consumers closing their wallets and not spending like they used to, adds Levine. "However, the real story should be about the enduring resilience of the Australian consumer".
L Brands business splits - Victoria's Secret heads private and Bath & Body Works becomes a standalone
Victoria's Secret, the flagship of US-based L Brands, has been under pressure for some time for clinging to an outdated view of femininity in the #MeToo era. The other major part of the business, Bath & Body Works, has been a quiet achiever, sustaining regular double-digit growth. Rumours of an L Brands sell-off have been swirling for some months, but a part solution has emerged as the way forward.
Sycamore Partners, the US private equity firm with investments in fashion brands such as Stuart Weitzman and Nine West, has agreed to purchase a 55 per cent majority stake in Victoria's Secret for US$525 million. L Brands will retain a 45 per cent holding and the company will become privately-held. Founding CEO, Leslie Wexner, will stand down from the position and the current COO of Bath & Body Works, Andrew Meslow, will assume the role on completion of the deal. Victoria's Secret division comprises the Victoria's Secret Lingerie and Beauty and Pink brands and has a capital enterprise value of US$1.1 billion.
Bath & Body Works will operate as a standalone business and is viewed as a continuing profit generator. But Victoria's Secret is the top earner of L Brands. The company reported net sales of US$3.9 billion for Q4 2019, taking revenues for the 2019 fiscal year to US$12.11 billion - a 2 per cent decline from 2018.
Travel retail: Lotte to debut Sydney store and Heinemann retains key airport duty-free concession
Lotte, the Korean travel retail giant, is the world's largest duty-free operator. Following its acquisition of JR Duty Free in 2018, the multinational is determined to stamp its mark on the Australian travel retail landscape. On track to posting revenues of $280 million in its first year of operation in the local market, Lotte is planning to become the leader in the category by 2023.
Lotte Duty Free has signed an agreement with Mirvac Retail to open a flagship store in Sydney's CBD early next year. Located on the corner of Pitt and Market Streets in the heart of the city's luxury retail precinct, the three level, 3000 square metre store will be given a ritzy fit-out by Bates Smart, the storied architectural firm responsible for some of Australia's most iconic landmarks, including Federation Square and the Crown Casino & Entertainment Complex.
Lotte's largest investment-to-date in Australia, the store will showcase prestige and luxury beauty, skincare and fragrance brands, an upmarket watch boutique and a fine wine and liqueurs zone. There will be a concierge service and customers will be offered limo transfers from Sydney's leading 5 star hotels.
Sydney Airport has renewed its duty-free concession with Germany-based Gebr. Heinemann for a further 8 years. The new contract will run from 2022 to 2029 and there will be a stronger focus on luxury. Highlights to look forward to include more beauty and fashion brands and pre-departure pampering services for men and women. A new promotional precinct will shine the spotlight on champagne, caviar, cognac and other premium indulgences.
L'Oréal see uplift in online sales in China for February
It's impossible to click on to a news site anywhere in the world that isn't filled with headlines centering on the coronavirus outbreak. Businesses across many industries have been flagging the likelihood of profit downturns as Chinese consumers grapple with travel bans, store lockdowns and more.
China is the largest single market for the Maybelline New York and Lancôme brands, so few beauty players have more to lose than L'Oréal. But the multinational has revealed that online sales of makeup and skincare across its leading brands have been stronger in the first three weeks of February than they were last year.
According to Chairman and CEO, Jean-Paul Agon, e-commerce sales have partially offset losses in retail and duty-free stores. The top two online giants, Alibaba and JD.com, have found solutions to overcome problems in areas of China most affected by the coronavirus epidemic, he noted.
Snippets from the Wires
- Online sales in Australia increased to $17 billion last year - up from $15.9 billion in 2018. According to a report from CouriersPlease, 43 per cent of those surveyed indicated they would make more online purchases this year. Drilling down to the demographics of the would-be purchasers - 55 per cent were aged 30 and under, 46 per cent were 40 to 59 and 25 per cent were over-60.
- US-based International Flavors and Fragrances (IFF) is one of the titans of the global fragrance and flavourings industry. With offices and manufacturing facilities in 35 countries, IFF posted a 5 per cent jump in sales in Q4 2019 to US$1.2 billion. Full year sales for 2019 surged 29 per cent to US$5.1 billion - up from US$4 billion in 2018.
- AmorePacific, one of the two leading players in the Korean cosmetics industry, has been focusing on boosting international sales over the past few years. Europe is proving a hard nut to crack, but North American sales rose 38 per cent in FY2019. Total overseas sales for the multinational exceeded two trillion Korean won (US$1.69 billion) for the first time, fuelling a total revenue lift of 6 per cent for the fiscal year to US$4.72 billion.
- Bricks-and-mortar represents over 93 per cent of retail sales in Australia. A lucrative target for local and overseas investors, who bought $6.84 billion worth of retail property assets nationwide last year, reports Colliers International, the global commercial real estate services organisation.
