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Retail Update

by Rebecca Overall

retail

TOPSHOP franchisee owed at least $35 million

  • Minutes of the first creditors meeting showed that the TOPSHOP franchisee Austradia Pty Ltd owed at least $35 million to creditors when it went into voluntary administration last month.
  • The biggest creditor is not Arcadia Group, which claims it is owed $8.8 million or £5.02 million, but the Commonwealth Bank of Australia, which is owed $12.1 million.
  • TOPSHOP, one of the first of the global chains to arrive, has annual sales of about $90 million, while Zara, H&M and Uniqlo combined have sales of more than $680 million, based on recent accounts.

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Officeworks ramps up Amazon defences

  • Officeworks is expanding courier operations and bundling up business services as part of a strategy to differentiate itself from Amazon and find new avenues for growth.
  • In the next few months the office products category killer will launch a new range of business services such as accounting, bookkeeping, payroll, communications and web design aimed at small, micro and medium-sized businesses.
  • Long-serving managing director Mark Ward is aiming to maintain Officeworks' record of sales and earnings growth by expanding into new categories after identifying markets worth another $35 billion, taking the addressable market from $20 billion to $55 billion.

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Wesfarmers to trim Target Portfolio

  • Wesfarmers will reduce the size of Target’s store portfolio in an effort to improve productivity as it looks to refocus the struggling business towards a growth phase by FY21.
  • Speaking to analysts and investors at Wesfarmers’ annual strategy day on Wednesday, department stores CFO Marina Joanou said that leadership has taken “decisive action” to cut costs at Target and reset the business, concluding a store network review across the division.
  • A 20 per cent improvement in store space productivity across the department store division is being targeted in what Joanou called a “long term game” that will include closures, store re-badges and new stores where appropriate.

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Kmart slashes prices and looks abroad

  • Kmart CEO Ian Bailey is expecting increasingly cash-strapped consumers to show out in force for his latest round of price cuts, as the DDS chain looks to a customer-first strategy that widens its price differential with competitors.
  • The discount department chain will slash prices by as much as 20 per cent on selected items across its entire range, with 320 products set to be reduced later this week.
  • Bailey, who sees the target as an aspiration, said last week that the $80 billion market Kmart plays in is relatively static and that achieving Kmart’s goals would require taking market share from competitors.

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SumoSalad puts two companies into voluntary administration

  • Health food chain, SumoSalad, has put two of its companies into administration in order to protect the financial interests of some of its franchisees and force its retail landlord to negotiate over lease payments.
  • Luke Baylis, chief executive and co-founder of SumoSalad, said putting two of its companies Sumo Westfield Leasing Pty Ltd and Sumo Leasing Pty Ltd would not have an impact on the rest of the Sumo group, with the company’s network of 104 stores still continuing with business as usual.
  • Baylis said the decision was in line with SumoSalad’s strategic plans to have stores out of shopping centre food courts and into more profitable sites like hospitals, airports, service stations and universities where, he said, the company already has a strong and growing presence.

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If you would like more retail insights, get in touch with industry specialist, Rebecca Overall, on 03 8613 3527.