Retail sector is said to be sensitive to the economic booms and busts due to its very nature of consumer-focused offerings and services. It is also one of the most dynamic and constantly evolving sectors, credited to the fast-changing consumer preferences and behaviour.
This very nature of the sector forces the industry players to constantly evolve with the pace of consumer and disruptive technologies as well as consistently embrace the emerging trends in the industry.
Such disruptions in the retail industry often result in business model innovations, new strategies, new services and better solutions to maintain pace with the ever-changing industry.
Let’s discuss some retail-focused companies listed on ASX.
Woolworths Group Limited (ASX: WOW)
After the demerger of Coles Group Limited (ASX: COL) from Wesfarmers Limited (ASX: WES), the markets might be ready to embrace the upcoming event of another restructuring from an Australian blue-chip company – Woolworths Group.
In the past three years, the supermarket giant has restructured its business drastically with the sale or exit of the businesses which included EziBuy, Masters and Woolworths Petrol and securing strategic partnerships with EuroGarages, Caltex and Qantas.
And, the next one is approaching, this time, the group is seeking to create new entity – Endeavour Group. The new entity is reported to be combination of Woolworths Drinks Business and ALH Group.
WOW is seeking a restructure scheme vote at the Extraordinary General Meeting on 16 December 2019, which would form the base for the demerger. Following the completion of restructuring, the group would apply to combine the retail drinks business with ALH Group to form Endeavour Group.
After internal restructuring and the planned merger, the group would move to create new entity by the way of demerger.
On 20 November 2019 (AEST 01:06 PM), WOW was trading at $38.710, down 1.676% from the last close.
Myer Holdings Limited (ASX: MYR)
Myer operates sixty-one department stores in Australia, according to the latest annual report (FY2019). Some of the offerings of MYR are menswear, womenswear, electrical goods, toys, beauty products and general merchandise.
Recently, in its AGM, Chairman of the company – Mr Garry Hounsell, highlighted the pathway on which the retailer is moving. It was reported that the changes are visible on the stores with better service and exclusive brands at a great price.
The company also revamped its Board in the past three years, with five of the eight Board members joining the Board. Lyndsey Cattermole AM and Jacquie Naylor are among the latest appointments to the Board with deep and proven expertise in IT and retail, respectively.
The company also added new human capital to key customer facing functions and supply chain, enhancing its marketing, advertising, and supply chain capabilities. The company is progressing on reducing excess space, enhancing merchandise range and service, and executing efficiencies to deliver cost savings.
Its Customer First Plan is making good progress, which primarily emphasises on;
- Transforming customer experience in store,
- Exclusive brands and categories,
- Value addition to online website,
- Simplified business processes,
- Efficient from factory to customer,
- Accelerated cost reduction.
On 20 November 2019 (AEST 01:20 PM), MYR was trading at $0.537, down by 0.556% relative to the previous close.
Kogan.com Ltd (ASX: KGN)
‘A customer obsessed eCommerce company’ – Mr Ruslan Kogan, CEO & Founder
Kogan.com is aggressively diversifying its revenue streams, placing its footprints to areas that might be considered unconventional for an online retailer. However, the implementation and value addition to customers would continue to hold the keys.
The online retailer has made its way to travel, mobile, insurance, marketplace, energy, pet insurance, money, health, internet, cars, life insurance and credit cards. What’s intriguing about this aggressive expansion is the partnership models with leading businesses adopted by Kogan to launch new verticals.
Exclusive Brand Strategy
Kogan launched mobile and internet service in partnership with Vodafone, while credit cards were launched with Citi, and likewise, it has a partner for each of the new vertical launched. On the conventional side, its exclusive brand strategy is working out favourably, helping its retail business to propel growth as well.
In its 2019 Annual General Meeting, the online retailer also provided trading update for the October month. According to unaudited management accounts, in October 2019, gross sales increased by over 18% and gross profit grew by over 22%, while operating costs were lower, all compared to October last year.
Four months into the financial year have depicted signs of strong growth, and the most important period of trading months of the year have started – the Christmas period of November and December.
On 20 November 2019 (AEST 01:28 PM), KGN was trading at $7.090, with no change relative to the previous close.
Super Retail Group Limited (ASX: SUL)
Super Retail Group has four major brands in its portfolio, which includes Supercheap Auto, Rebel, BCF, and Macpac. Super Retail Group is a small-cap company with a market capitalisation just above $2 billion mark as of 20 November 2019.
In its Investor Day presentation, the retailer highlighted some strategic drivers that are being emphasised.
Grow the core four brands
In the past three-year period to 2019, sales of the group delivered a compound annual growth rate of 3.8%, with 71.2% growth in online and 1.7% growth in offline. The sale of the core four brands of the group generated a compound annual growth rate of 4.9% in the similar period.
It is said the current structure is a complex multi-brand divisional structure, posing risk of under-investment in core brands with a focus on private label penetration. SUL intends to have a focused investment in Supercheap Auto, Rebel, BCF and Macpac while executing organic growth opportunities.
Leverage closeness to our customer
The group intends to drive visits and transaction value growth through structured loyalty program. It was said analytical insight is driving improvement in marketing, merchandise, logistics, and store performance.
SUL would align marketing, merchandising and pricing strategies to customer, while gleaning deep understanding of the customer through more sophisticated analytics and insights.
On 20 November 2019 (AEST 01:38 PM), SUL was trading at $10.130, down by 0.491% relative to the previous close.
Kathmandu Holdings Limited (ASX: KMD)
Kathmandu Holdings has been designing outdoor gear for adventurous people for thirty-years. As of 20 November 2019, KMD has a market capitalisation of ~$819.26 million at approx. 294.7 million shares outstanding.
Recently, the company completed the acquisition of Rip Curl Group Pty Limited. In October, the company had announced to have entered into a binding agreement to acquire whole of the Rip Curl for $350 million. The consideration price valued the acquisition at 7.3x EV/FY2019 pro forma normalised EBITDA.
The target is a global surf brand and action sports company, which designs and manufactures, along with wholesale and retail capabilities. The brand had come into existence in the year 1969 and has a rich history synonymous with surfing. It also serves as the sponsor to some of the world class athletes and premium global competitions.
For KMD, the combination of Kathmandu, Rip Curl and Oboz, which was acquired in April 2018, could possibly mean revenues of over NZD 1 billion, having a combined footprint of 341 owned retail stores, 254 licensed stores and more than 7,300 wholesale doorways, globally.
On 20 November 2019 (AEST 01:42 PM), KMD was trading at $2.740, down by 1.439% relative to the previous close.
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.