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Clive Peeters Share Rocket 11% As Market Slides 4.7%

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Shares in Clive Peeters have bucked a 4.7% downturn in the ASX by rising 11.1% in late afternoon trading. However by the close they had lost all their gains to close at $0.90.

Late yesterday the Company finally admitted that they were calling in KPMG Corporate Finance in an effort to solve their problems which has resulted in their shares nose diving 94% this year.

Shares in Clive Peeters have bucked a 4.7% downturn in the ASX by rising 11.1% in late afternoon trading. Late yesterday the Company finally admitted that they were calling in KPMG Corporate Finance in an effort to solve their problems which has resulted in their shares nose diving 94% this year. 
First tipped by the Financial Review last Tuesday the Company has finally confirmed that they have called in KPMG to conduct a “strategic review” of their operation. Insiders have also said that the Company is cutting stock levels in an effort to preserve cashflow. 
In recent weeks GIO who have the lion’s share of the consumer technology credit risk market have admitted that they are keeping a close watch on the Company’s performance.
In a statement to the ASX the Company said that they are set to consider both corporate and operational strategies with a view to maximising value for all shareholders”.
Clive Peeters said it has retained KPMG Corporate Finance to advise the process and it does not intend to disclose any details of the review until it’s completed.

Short Throw Projectors Taking The Place Of The Flip Chart

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Projector sales are starting to take off again according to GFK with a core market being the office and the purchase of short throw projectors. Sean Fellows, Account Manager at GfK Retail and Technology said “Projectors are now likely to become the flipchart of the digital age consequently demand is likely to continue to rise in the future.”

Projector sales are starting to take off again according to GFK with a core market being the office and the purchase of short throw projectors. Sean Fellows, Account Manager at GfK Retail and Technology said “Projectors are now likely to become the flipchart of the digital age consequently demand is likely to continue to rise in the future.”

He also said that changing working practices and budgets are resulting in a need for greater flexibility within the office. As a lot of work is done digitally, when coming to share this information the need for Projectors and other Audio Visual Equipment has increased.

While GFK Australia does not track office or SMB sales other than via mass market retailers research from IDC and Gartner does show that the SMB and large enterprise market are buying a new generation of projectors.

In the UK projectors have witnessed growth of 38% against the same period last year.Despite the impressive sales of Projectors in 2008, there has however been a noticeable slowdown in unit sales over the past couple month as business cut capital budgets.

Whilst businesses may aspire to equip all their meeting rooms with fully fledged AV suites, within the current trying economic climate this may be no more than a pipe dream. Many meeting rooms are simply too small to deploy a traditional projector with any real success and with a workforce becoming more mobile with the adoption of increasing numbers of Laptops, Netbooks and Smartphones, business technology is becoming more flexible and data projectors are certainly not slacking.

The value of a Portable Data Projector in the mobile workplace is incredibly advantageous, even more so for the new generation of Short Throw Projectors coming onto the market. A Short Throw Projector is defined by GfK as being able to produce an image larger than 1.5M from a distance of less than 100cm. With the benefit of portability and the added bonus of being less reliant on having boardroom sized meeting rooms in which to present, the flexibility of Short Throw Projectors makes them desirable to 21st Century business. This also has benefits within the home as living rooms are getting more compact and space is limited for large screen Televisions.

The latest GfK figures for the UK show that the volumes sold of Short Throw projectors are indeed on the rise, growth increasing on a month by month basis. In September 2008, 2.3% of all projectors sold within the UK were Short Throw models. Interestingly this growth is fuelled by new LCD Projectors, with 5.6% of all LCD Projectors sold in September being Short Throw models, compared to DLP models which contributed to only 0.2% share in the same period. This goes completely against the trend when one looks at the prevalent technologies in the total Projector market. DLP Projectors, which have the greatest volume share standing at 61% in September 2008, have grown massively from the position 12 months ago where they accounted for only 43% of volume sales and LCD Projectors dominated the market.

Sean Fellows said  “The adoption of Short Throw Projectors within the consumer channels are yet to be felt – probably due to the high average selling price. The price elasticity of demand is less elastic within a business than in the consumer market. Consequently the average consumer is unlikely to see the intrinsic benefits when they are able to purchase a large screen Television at a lower price. Nevertheless as the technology becomes increasingly price competitive, a fall in price by a couple of hundred pounds could see the adoption rate rise within the consumer channels”.

Dont Blow It GFK Warns CE Retailers

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The penetration of flat panel TVs in Australian households is increasing at a rapid rate claims GFK, with analysts claiming that the industry could get a big boost running into Xmas from the release of billions of dollars in funding by the Federal Government.


Several retailers including Clive Peeters, Harvey Norman and JB Hi Fi claim that they also expecting big sales between Boxing Day and the New Year. However retailers have been warned to not “Overdo the offers or incentives”.
GFK data shows that 1-in-7 Australians now own an LCD TV, with 1-in-13 owning a Plasma TV. They are also investing in home theatre systems and other attach devices claims the research Company.


 Evidence of this they claim is 1 in 5 now owns a DVD player. 1 in 9 a DVD recorder and 1 in 3 a games console.
 GFK claim that DVD players have the largest penetration of Australian households despite DVD recorders being the newer technology. However Games Consoles are, by far, the fastest growing of these three major component categories.
In the first six months of 2008, Games Consoles recorded sales of a$224 million, an increase of 45% on the first half of the previous year. In contrast, DVD players and DVD recorders registered decreases of 16% and 8% respectively for the same period.


In response to the demand for TV components, some retailers and manufacturers have been giving them away for free as part of the sale of a TV, in an attempt to attract flat panel consumers and this has proved very popular they claim.
However, when it comes to these offers influencing the actual decisions made by flat panel buyers, the effect is far from predictable.


Recent data from GFK’s Australia ConsumerScope study shows, that although many people are influenced by giveaway promotions, around 40% would have made the same purchase decision without the incentive. This does not suggest that such promotions are failing, but it is clear that they are not all equally as persuasive says the researcher.

 

They say that the consumer response to giveaways is category-sensitive and also depends on the free product. Some giveaways tend to steer a consumer towards alternative models within a selected brand’s range, whereas others are powerful enough to instigate a brand switch.

 
At least one trend, however, appears to be consistent across product categories: as the price of the “paid for” item increases, giveaway promotions become more effective at switching consumers to a different model within a preferred brand’s range, and less effective at switching consumers to a completely different brand. Although a select few giveaway promotions are able to contradict this trend, the overall implication is, that compared with lower-end consumers, big spending consumers are less likely to switch brands because of a giveaway.


These high spending consumers are more inclined to respond to giveaway promotions by being up-sold to another model within their favourite brand’s range. Retailers and manufacturers have already begun unveiling their latest promotions designed to encourage cautious consumers to celebrate Christmas as usual and, in an uncertain economic environment, it will be more critical than ever to select and target such promotions accurately.

Retail Up 2% And That’s Official

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Retail sales over the Xmas New Year period were 2% higher than last year, claims the Retail Traders Association proving that the Federal Government handouts did makes their way into the economy they say.

Retail sales over the Xmas New Year period were 2% higher than last year claims the Retail Traders Association proving that the Federal Government handouts did makes it’s way into the economy they say. 

The Association’s executive director, Richard Evans, says the Federal Government’s cash handouts, and the falls in petrol prices and interest rates have helped buoy the retail market.

And he says he is expecting the handouts to continue to flow through to cash registers.

“It’s too much to expect that people went out immediately and spent it, they may have used it on their credit cards or to reduce debt, but they’ll soon realise that they’re cashed up and they’ll start re-entering the market place,” he said.

Mr Evans also says retailers have been slashing prices to get rid of stock but he says prices are unlikely to remain low with the slump in the Australian dollar.

“Expect less range on the shelves over the winter months and probably a little bit more extra in price,” he said.

“What we have to understand though, this is a normal cycle… a bit more severe than normal though of course, but we’re expecting growth to come back into the retail market in April-May this year and with strong growth in the September quarter.”

Clive Peeters Bleeds In NSW

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Clive Peeters is set to report their half year results on the 27th February 2009 however analysts are tipping a net loss of $0.4M which represents a decline of 104%. Sales are believed to be down 16.3%.

Contributing to the losses is a major downturn in NSW with analysts tipping losses in this State to be between $1M and $3M.

One analyst writes in a briefing to vendors “We expect performance from NSW to be disappointing, with the tough trading environment, the large upfront marketing costs and the lack of brand traction to be the main contributor of the A$1.7m EBIT loss. We have assumed no interim dividend”.

They added “Losses in NSW – We expect losses in FY09 and FY10 of A$3m and A$1m, respectively. An update on conversion rates and a discussion of potential changes to store locations (closure of some poorly located stores, opening better located stores) is expected. A weak trading environment and store openings may put further constraints on cash flow.

Several vendors that ChannelNews has spoken to claim that they are waiting for the KPMG report into the operations of Clive Peeters.

WiMax On Hold As Media ISP Struggles For Cash

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Wireless broadband provider Unwired is struggling to find the money for its planned national metropolitan WiMax network, according to Australian IT.

Wireless broadband provider Unwired is struggling to find the money for its planned national metropolitan WiMax network, according to Australian IT.

The network was expected to be rolled out in capital cities at a cost about $200 million, the Oz says. But Unwired chief executive David Spence said increases in financing costs caused by the global financial crisis have increased the price tag by 10-15 percent.

The company now needs to tweak the funding package so the network can be built at “a much lower cost”, he said.

Spence said the WiMax project is not facing cancellation by Unwired’s owner, Kerry Stokes’s Seven Group. He reckons the company could start building “in the next few months” but conceded that Seven was keeping a close eye on the budget.

Some observers believe WiMax may have missed its big opportunity, with 3G HSPA networks – led in Australia by Telstra’s 3G – already servicing up to 98 percent of the population.

 

Feds Do Nothing As Banks Hurt Small Business

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COMMENT: One has to seriously question whether the current Federal Government actually understands small medium business and that right now thousands of SMB organisations are starved of cash because of high interest rates and a refusal by banks to loan money to SMB organisations.

During the past week I have spoken to several small medium business owners who are terrified that they are set to lose their business because banks are still charging up to 9% interest on overdrafts to small medium businesses while also refusing to loan them additional money that will help them manage the economic downturn.

One has to seriously question whether the current Federal Government actually understands small medium business and that right now thousands of SMB organisations are starved of cash because of high interest rates and a refusal by banks to loan money to SMB organisations.


Do they actually realise that the mainstream Banks in Australia are still charging up to 8 or 9% interest on business overdrafts  to SMB organisations of which there are more than 2 million small businesses in Australia employing approximately 4.5 million people.


And if those businesses start falling over it will create a much bigger problem than whatever the decline in the automotive or construction industries will have on the economy.


Small business in Australia has a total capitalised worth of $4.3 trillion 4 times that of the Australian stock exchange. Small business is a very important sector of the Australian economy.

 

 

In the consumer electronics and IT industry the biggest suppliers are small medium businesses that distribute technology products into retailers who are responsible for 11% of all employment in Australia.


The reserve bank has set the prime interest rate at 3.5% so in essence banks are pocketing between 4.5% and 5.5% on the money they lend to SMB organisations.


They are also raking in billions from the 12 to 18% interest rate they charge on credit cards.


But what is the Federal Government and Prime Minister Kevin Rudd and Tresurer Wayne Swann doing for SMB organisations. We know that they are concerned about the automotive industry which is primarily made up of foreign Companies who take their money out of Australia and we know that he is concerned about the mining industry who also exports their profits.


But what about SMB organisations that keep the bulk of their profits in Australia and are the engine room for the economy.
Surely there are grounds to hold an inquiry into the high cost of money for the SMB industry and surely the industry is worth supporting not by pouring in money to prop up organisations but by creating a fair and level playing field.

 

Why should the Government pour money into construction and automotive companies like James Hardie and Brookfield Multiplex, who are going to take their profits out of Australia after being propped up by Kevin Rudd?


And what’s to stop the Australian Government tipping $10B into a fund strictly for SMB borrowing where the interest rate is 1.5% above prime. The answer is nothing.

Late last week the governor of the Reserve Bank, Glenn Stevens, said at a Senate hearing that bank chiefs should not let overzealous loan officers choke credit to small businesses and increase the risk of recession.

Mr Stevens told the Senate hearing that he Reserve was ready to lower interest rates further if it was needed however there is every chance that SMB organisations will not see lower interest rates due to banks interest gouging. So while home loan mortgage rates fall to 5.2% and lower the chances are that SMB organisations will over coming months start laying employees off and then there will be a bigger issue as to where the money is going to come from to pay the low mortgage payments.

Regional Australia & WA To Boom Claim Citi Group

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NSW is a retail basket case when it comes to retail spending according to Cit Group Analysts however Victoria is even worse. According to a new report. Victoria was the slowest state at 5.6% growth, NSW recorded growth of 6.4%, while Queensland was the fastest growing state at 9.2%.

Overall Australian retail spending grew 6.9% however the reduction in commodity prices is likely to lead to a slowdown in interstate migration and income growth for Queensland and Western Australia in 2009 say Citi Group.

The retail report claims that many retailers have expanded their presence in the resource rich state of WA. However, only a handful of retailers have a large exposure to faster growing regional areas and a small exposure to the weakest state – NSW.

Retailers with the best geographic exposure are Metcash, Harvey Norman and Woolworths.

They claim that Australia is a two-speed economy, whether it be those regions exposed to the resources boom and those that are not, the metropolitan versus regional divide or higher-end households spending significantly more than middle and low ncome households.

While retail spending was strong in 2007, not all parts of Australia enjoyed the good growth they say. NSW and Victoria have lagged the other states. In addition, rural and regional areas have suffered despite demographic trends favouring population growth in those areas.

Major Retailers want to be in Western Australia due to the fact that WA delivered 9.9% growth in calendar 2006 and a further 10.5% increase in 2007. What is hurting several retailer including the likes of Harvey Norman is their exposure to NSW.

CitGroup say that retailers with an over-exposure to NSW have suffered during the past few years. In 2006, growth was 4.4% and 6.4% in 2007, both below the national average however premium retailers still performed strongly in NSWbecause the State has more wealth andhigher income growth.

In 2009 CitiGroup expect retail spending growth to accelerate in regional Australia. Its exposure to both the mining and agricultural industries will lead to stronger income and population growth than for major metropolitan areas. They note that over the past three months, significant rain has fallen over many agricultural areas in the east coast of Australia. Additionally, agricultural commodity prices have soared – wheat prices are up 91% in the past year (in Australian dollars). Therefore, farmrelated income is expected to rise significantly in 2008 and 2009.

Fairfax Profits Tank 23%

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Australian media group Fairfax Media Ltd has reported a first half loss of $365 million, a 23% decline on the same period last year.

The company has also wriiten down the value of publications like the Australian Financial Review, The Sydney Morning Herald and the Age as consumers desert the publications for niche websites and online news sources.  

Chief Executive Officer Brian McCarthy,has said that advertising revenue from newspapers has declined significantly as both vendors and consumers move away from reading Fairfax media properties.

Fairfax has taken a $447.5 million loss on the value of its newspaper mastheads and licenses.

Sales at the publisher of the Sydney Morning Herald, the Australian Financial Review and Melbourne’s the Age newspaper rose 0.5 percent to A$1.44 billion with online growing by up to 12%.

Bloomberg reports “Cost containment and further cost-cutting initiatives will be key to the result,” Finola Burke and Belinda Tilbrook, analysts at Credit Suisse AG, wrote in a report dated Feb. 20. Sales “will come under pressure from a deteriorating advertising market,” they wrote.

Classified advertising is expected to remain weak for the rest of the fiscal year, Fairfax said today.

“We are focused on continuous operational improvement,” McCarthy said in the statement. “For now, we have battened down the hatches and we will ride this storm out.”

Clive Peeters Open To Take Over Offers

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Clive Peeters CEO Greg Smith who today reported a 90% decline in profits has said that he is open to takeover offers or a major new investor. He has also said that the board is currently considering several incomplete proposals from competitors to buy out the Victorian based consumer electronics Company.

Clive Peeters CEO Greg Smith who today reported a 90% decline in profits has said that he is open to takeover offers or a major new investor. He has also said that the board is currently considering several incomplete proposals from competitors to buy out the Victorian based consumer electronics Company.

Speaking to ChannelNews today Smith said that he believed that many Companies will between now and July 1 when new dismissal laws come into effect in Australia lay off thousands of workers and that appliance and consumer electronic sales will not pick up till the September October period.

He said “60% of our business is appliances and this side of our business is down over 12% while our consumer electronics business is up over 5%”.

On the question of New South Wales he said that the Clive Peeters group was suffering because of a lack of stores and that the Company has plans for 12 new stores in that State.

He said “We are pleased that there is continued improvement coming through in NSW despite the very depressed conditions in that State”.

Sales in H1 in NSW 2009 fell 7.6% on the corresponding period of the previous year, the best performance of our eastern states operations.  Our operating costs in Sydney were managed very carefully over the period and the final result was $1.6 million net operating loss after tax for H1 2009.  This compared to the H2 2008 Sydney loss of $1.8 million after tax, and to the H1 2008 Sydney loss of $2.6m after tax, so we are encouraged by this trend.

“To grow we have to invest in NSW and this is a top priority for the board going forward”. Said Smith.

On the issue of Dick Smith Vs JB Hi Fi he said “I agree with the sentiment that Harvey Norman could get hurt if there is increased competition between the Woolworths owned Dick Smith group who do have money and JB Hi Fi. I also agree with the sentiment that Dick Smith stores are traditionally small and they do not have the same brand recognition as JB Hi Fi. For example JB Hi Fi shift a lot of small cheap stock similar to Dick Smith for example our average sale is $800 vs $80 for JB Hi Fi”. 

Greg Smith added “with sales under significant pressure this caused increased competition and a sharp fall in gross margins over H1 2009 – the Company’s first margin decline in over 15 years, which says a lot about how challenging this retail environment is.

Greg Smith stated “these times demand strict management of inventories and cash flows, and we are doing well in these two areas.  Capital expenditure is under a tight hold, and no new stores are committed to or planned for calendar year 2009.

However on a positive note our pilots for kitchen and bathroom renovations (Moorabbin and Thomastown) and for a range of new technology, software and gaming product (Moorabbin) have both been launched in recent months and are showing promising early results.  We expect these product and services innovations to represent a platform for like stores sales growth as we roll them out to other stores when the retail cycle improves.