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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.

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.

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.”

Why Storage World Is A Not A Very Smart Business

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COMMENT: What is it about Australia and the lack of service by retailers? In the US and the UK retailers go out of their way to build databases of customers and in some cases they even issue them with barcodes or cards so that regular customers get priority service.

Even corner store dry cleaners in the USA use CRM systems to gather intelligence on their customers. But in Australia the attitude of retailers is totally the opposite.


For example last month I walked in Storage World at Northbridge in NSW where during the past few years my wife and I have spend litterally thousands buying storage gear for temporary accommodation while we built a new house. We also purchased wardrobe rack systems for the new house as well as things like tie and belt racks as well as kitchen and laundry storage gear.

 

 

 

This is not some corner store mum and dad store. This is a chain of stores run nationally across Australia with the Northbridge store being owned by the Company that also franchises the Storage World brand. 


So when I walked in there some four weeks ago to buy some more clothing racks similar to ones that I had already purchased I discovered that they were out of stock and this is when I realised that this was a Company that had a major problem when it came to customer service.


After inquiring as to whether they could order stock in for me I was told “yes” not a problem and after giving the assistant both my name and that of my wife I was told it would only take a couple of days.


Four weeks later and after numerous calls to the shop I still don’t have the goods but I do have a poor customer experience.

 On two occasions I was told it would only be a few days but on my fifth call some three weeks later I actually asked them to repeat the telephone number of either my wife or myself.

 

After an 8 minute wait during which time I ended up talking to two assistants a Storage World employee came back and said “What was your name I don’t seem to have a record of the order”.


Now if this was a Company that took customer service seriously they would by now have both my wife and I on a database.
They should have also offered to phone other stores in their group to see if they had the items in stock.


They should have also, after telling me that it would be in stock within days phoned me after a week to tell me that they were still waiting for the goods to arrive.


But they didn’t because the pimple faced youth on the floor that served me and who just happens to be the critical interface between the customer and the business did not care. He failed to go to a master database and enter any customer details.


All he wanted to do was move onto his next customer finish his shift and get paid. He made no attempt to deliver a good customer service experience and I blame management for this.


Storage World is not alone when it comes to delivering poor customer service in Australia. Harvey Norman and the likes of Dick Smith make no attempt to build extensive CRM databases so that they can offer their regular customers exclusive services and viewings.


Organisations that do understand customer service are the likes of automotive Companies who while taking an order build an extensive database which they later market to in an effort to stay in touch with their most valuable asset a customer who has the ability to spend money.


They send out magazines that constantly remind the customer about the performance of the brand. They invite customers and their friends and partners to cocktail parties and special viewings of new products.

 

I also wonder how many interior or kitchen designers are on the Storage World database, because every day these trades are recommending storage options to customers.


I for one have never received a marketing brochure from Storage World despite going to their store for more than 10 years but guess what I still get a regular brochure from a store in South Coast Plaza in the USA where I have on several occasions purchased goods.


So what is the difference? One understands the value of customer service and the other doesn’t give stuff.

So what is customer service all about? See our recommendations and those of the NSW department of business. 

Shares Rise As Telstra Dealt Back Into Broadband Bid

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Telstra shares rose nearly 5 per cent this morning after the telecom giant was let back into the building of a $43 billion dollar national broadband network by the Federal Government .

Telstra shares rose nearly 5 per cent this morning after the telecom giant was let back into the building of a $43 billion dollar national broadband network by the Federal Government .

Telstra Chairman Donald McGauchie welcomed the Government’s announcement claiming  “We look forward to having constructive discussions with the Government at the earliest opportunity. There is a lot to absorb in the Government’s announcement and we will consider every aspect in detail.
Mr McGauchie said the company would immediately review the Government’s proposal.

“Senator Conroy has said today that the Government does not have a pre-determined view on regulatory matters. Telstra welcomes the opportunity to provide input on the regulatory reform discussion paper.

“Telstra has publicly advanced the need for high-speed broadband for a number of years and shares the Government’s strong desire to make high-speed broadband widely available to all Australians as a key enabler of economic growth and social development.
“Telstra supports the Government’s objectives of investment in world-leading broadband infrastructure, an innovative telecommunications sector and healthy competition that provides real choice for customers.

“We will work with the Government to assist with the implementation of its strategy, but will remain at all times committed to ensuring the best interests of our shareholders, employees and customers.

“The new NBN will have little short- to medium-term financial impact on Telstra’s business as it would take at least eight years before it is completed.

“This announcement does not change our forecasts or our guidance for financial years 2008-2009 or 2009-2010.”

Telstra Gets New Boss

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Telstra has a new marketin boss after Telstra CEO Sol Trujillo today announced that Bill Stewart, the company’s Group Managing Director (GMD), Strategic Marketing will leave the company at the end of the month, to return to his home and family in the United States. He wil be replaced by
Kate McKenzie.


Kate McKenzie, currently GMD, Telstra Wholesale will replace Mr Stewart, effective March 30.  Ms McKenzie’s replacement at Telstra Wholesale will be announced in the coming weeks.


Bill Stewart joined Telstra in 2005 to lead the newly formed Strategic Marketing group, which has responsibility for corporate strategy, mergers and acquisitions, market-based management, pricing, brand management and advertising, and Telstra Asia.


“Under Bill’s leadership, Telstra has delivered increased customer satisfaction across all our business units and services,” Mr Trujillo said. “Bill and his team have helped deliver increases in market share, improved margins, lower churn and high strike rates for sales.


“Bill’s expertise in market-based management has given Telstra an unmatched depth of customer knowledge and has enabled us to provide high-value, competitively differentiated products and services to our customers.
Mr Stewart paid tribute to the accomplishments of the Strategic Marketing group.


“I am immensely proud of the people in Strategic Marketing for delivering this critical element of the transformation,” Mr Stewart said. “All of our achievements have been possible because of the commitment and professionalism of the Telstra team.”


Mr Trujillo said that Telstra was fortunate to have someone of Kate McKenzie’s calibre and experience to take on the role of GMD Strategic Marketing.

 


“Kate is a focussed and clear thinker with a wealth of experience across a range of industries in both the private and the public sector,” Mr Trujillo said. “Kate has done an exceptional job at Telstra Wholesale over the past four years and I am certain she will do an excellent job in her new cross-company role.”


Ms McKenzie will continue to report to the CEO and maintain her position on the CEO Leadership Team.
“I’m very excited to take on such a diverse and challenging role at a time of rapid change for the industry,” Ms McKenzie said.


“Over the past four years, the Strategic Marketing group has been integral to Telstra’s success through its brilliant customer research, management of the company’s brand, a series of timely acquisitions in Asia and the sale of non-core assets. I look forward to building on the terrific work the group has already done.


“I want to thank everyone in Telstra Wholesale who has worked with me since January 2006.   We can be immensely proud of our achievements in taking forward a $2.5 billion business in a challenging environment.  We have brought new products like ADSL2+ and Ethernet into the wholesale market and we consistently provide high quality, value adding products and services to our customers.”

CE & IT Values Are Up But TV Values Are In Decline Say GFK

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As the going gets tough vendors and retailers are looking to the bottom line as opposed to getting a sale for the sake of a sale says David Ackery the General Manager orf Electrical at Harvey Norman and if the latest research from GfK is anythig to go by some vendors are making big returns with the product tracking Company reporting record growth in several key categories.

As the going gets tough vendors and retailers are looking to the bottom line as opposed to getting a sale for the sake of a sale says David Ackery the General Manager orf Electrical at Harvey Norman and if the latest research from GfK is anythig to go by some vendors are making big returns with the product tracking Company reporting record growth in several key categories.
 
GFK have reported  that the overall “value” growth in the consumer electronics market is 3.3 per cent for February 2009 versus the same period last year and YTD growth of 5.9 per cent. In the appliance market maket fans and air conditioning retailers benefitted from the recent bout of hot weather with GFK reporting that the sector had  combined growth of 83 per cent according to GfK Retail and Technology Strategic Planning Manager, Gwenno Hopkin.

GFK have also said that the  the home office segment grew by 14.6 per cent, driven by notebook growth of 26 per cent, storage growth of 31%  and networking growth 53 per cent. IT Peripherals had growth of 22 per cent with Ihe Ink Cartridge category up by 10 per cent.

In the digital still camera market  year on year value growth has been14 per cent however flat panel TV have declined year on year by 4.7% with several vendors claiming that this has been caused by a shortage of display panels. While set-top boxes grew by 21.5 per cent DVD players declined by 10%.

Sony OZ Silent On Further Job And Salary Cuts

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Sony Australia boss Carl Rose could be facing both a salary cut and a 40% bonus freeze as the electronics giant gets set to announce massive losses due to tumbling sales of their Bravia LCD TV’s and PS3 gaming consoles.

Earlier this week Rose backed away from discussing the sacking of 32 staff, despite earlier promises by his PR executives that he would comment on issues raised in a 98 word email that announced the termination of sales and marketing personnel in Australia.


Carl Rose CEO Sony Australia is refusing to discuss sackings and possible salary cuts.

Click to enlarge


His PR minders also refused to elaborate on whether Sony was losing money when it turns to incentives like PS3 and Blu ray giveaways with their Bravia LCD TV’s.


We also wanted to question Rose about the premium pricing Sony is charging for their 200Hz Motion Flow Bravia TV’s which appear to deliver very little in benefits for the bulk of people who watch TV.


Earlier today Sony said it will impose a salary freeze on its full-time workers for one year to cut costs as the electronics giant braces for a massive loss amid a deepening global downturn.


Attempts by ChannelNews and SmartHouse to ascertain whether these cuts will apply in Australia were met by a wall of silence as Sony attempted to spin doctor the sacking of staff in Australia by refusing to return calls.

 

According to several Japanese newspapers and the US Wall Street Journal the salary freeze will be effective from April, and Sony’s managers with non-board posts will be told that they have to take a 35% to 40% cut in their annual bonuses.
“Our business environment is severe. We’ve decided to take such action as we expect to incur a loss” in the current financial year to March, a Sony Japan executive said.


Hit by plummeting sales of their Bravia flat TVs and PlayStation 3 game consoles Sony is expected to announce losses in excess of $3Billion dollars in coming weeks.
Sony Australia has not ruled out further job cuts in Australia.

Australians Are Better Off And Will Spend Say Citigroup

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Australians in particular those with families are better off now than they were before the economic downturn claims Citigroup one of the world’s leading investment banks. Mortgages have fallen by 2% Petrol prices are at an average of $1.04 Vs $1.41 twelve months ago and share market dividend yields have risen substantially. This they say has added $75 to the average weekly income.

They also claim that drawing conclusions about the “average” Australian can be dangerous. Only 35% of Australian households have a mortgage. 29% are renting and 45% of Australian households are families with children, while 20% are retirees.


They say that families with children are better off by $119 a week because they have benefitted from Government handouts. Retirees and renters have a substantially smaller benefit.


Citigroup’s recent report claims that retail sales growth was solid in January with the strongest growth recorded in food retail. Supermarkets, takeaway food outlets plus restaurants and cafes were all stronger. The sharpest slowdown was in appliance retailing and footwear sales.


They say that mortgage debt is concentrated within 35% of Australia’s population however they do predict that Australian households are facing a number of challenges with rising unemployment and falling asset prices.


However, both the RBA and Federal Government are cushioning the average household through interest rate cuts and tax cuts, especially for families.


The say that the recent Federal Government fiscal stimulus for households will boost household income by an average of $2,000 per household because of income tax cuts, tax bonuses and payments for seniors.

 

 

Citigroup say “We estimate the average Australian household’s income will be $75 per week higher in 2009 compared with 2008 (+$3,881 per year). Families with children are even better off, with an increase in income of $119 each week. We arrive at these estimates by rolling forward the expenditure that each demographic group had in FY04, as reported in the ABS Household Expenditure Survey.”.

The net increase in income is highest for families with children (45% of all households) and smallest for those retirees reliant on investment income with fewer benefits from mortgage rate reductions and tax cuts.


Currently unemployment is at 4.8% and is likely to rise to at least 5.4% by the end of 2009. Each 1% rise in the unemployment rate reduces income dramatically for a family, but the overall impact on household income is 1%. The bigger concern with unemployment is weaker consumer sentiment and a fall in the willingness to spend.
While disposable income is rising for households, the high level of debt and uncertainty has resulted in an increase in savings, detracting from retail spending. The household savings rate jumped to 8.5% in the December 2008 quarter compared with virtually no savings in 2007.

They conclude by saying “Consumers have never had it so good. For the past fifteen years, retail prices have not kept pace with overall inflation.” They also conclude that Companies like Harvey Norman and consumer electronics retailers will benefit from Government stimulus programs however appliance sales are expected to remain flat.

Dowload the full report here.

Spending Rises Consumers Confident Say ABS

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Spending in Australia has risen 1% which is twice as much as economists estimated according to the Australian Bureau of Statistics.

A survey by Bloomberg of 20 economists predicted a rise of 0.5%.

Australia was one of the few major economies, to expand in the first quarter following hand outs by the Federal Government. Also helping is the lowest interest rates in 49 years. Retailers like David Jones Ltd. and JB Hi-Fi Ltd, have both raised their profit forecasts in recent weeks.

According to Bloomberg “Interest-rate cuts have worked their magic, together with the stimulus applied by the government,” Craig James, chief equities economist at Commonwealth Bank of Australia in Sydney, said ahead of the report. “The lift in consumer confidence is translating into greater activity at cash registers, and tax cuts will give consumers more reason to visit shopping malls.”

A recent Westpac consumer sentiment report said that consumer confidence jumped by the most in 22 years in June and business sentiment in May had the biggest gain since 2001.

Sales at department stores advanced 5.5 percent from the previous month and spending on clothing gained 2.9 percent, today’s report showed. Sales at restaurants climbed 1.4 percent.