WEBVTT - Biggest retail stories - 2025 Recap

0:00:00.320 --> 0:00:03.040
<v Speaker 1>Before we start today's podcast, we want to acknowledge the

0:00:03.080 --> 0:00:06.280
<v Speaker 1>horrific terrorist attack that took place in Bondai yesterday. We're

0:00:06.320 --> 0:00:10.320
<v Speaker 1>absolutely devastated to hear the news. Today's recap podcast pales

0:00:10.360 --> 0:00:13.200
<v Speaker 1>in significance to the events that took place yesterday. We're

0:00:13.240 --> 0:00:16.000
<v Speaker 1>sending our thoughts to all the victims, their families, the

0:00:16.040 --> 0:00:19.440
<v Speaker 1>Sydney Jewish community and everybody affected by this senseless attack.

0:00:25.920 --> 0:00:27.280
<v Speaker 2>This is what the flux.

0:00:27.400 --> 0:00:30.000
<v Speaker 1>I'm Brett and I'm Justin and it's Monday, the fifteenth

0:00:30.000 --> 0:00:32.440
<v Speaker 1>of December. We are very excited to be doing our

0:00:32.600 --> 0:00:35.840
<v Speaker 1>very first recap episode for twenty twenty five now be Man.

0:00:35.880 --> 0:00:38.360
<v Speaker 1>As you know, retail is one of the lifebloods of

0:00:38.400 --> 0:00:41.680
<v Speaker 1>the Australian economy, with employees, millions of ossies. It fills

0:00:41.720 --> 0:00:43.960
<v Speaker 1>our shopping centers and it gives us a real time

0:00:44.040 --> 0:00:46.400
<v Speaker 1>read on how confident people are with their money, and

0:00:46.440 --> 0:00:48.960
<v Speaker 1>twenty twenty five gave us a heap to talk about.

0:00:49.040 --> 0:00:51.280
<v Speaker 1>So in this recap episode, we're taking you through the

0:00:51.360 --> 0:00:54.840
<v Speaker 1>three biggest retail stories of twenty twenty five in Australia.

0:00:54.920 --> 0:00:57.560
<v Speaker 1>What happened, why it mattered, and what it tells us

0:00:57.680 --> 0:00:59.800
<v Speaker 1>about where Ossie Retail is heading next.

0:01:00.040 --> 0:01:03.080
<v Speaker 2>Three generous stories today, Juzzy boys, let's do it for

0:01:03.240 --> 0:01:07.200
<v Speaker 2>our first. Chemist Warehouse officially launched on the ASX yesterday

0:01:07.280 --> 0:01:10.360
<v Speaker 2>as its mega merger with Sigma Healthcare went live.

0:01:10.560 --> 0:01:13.080
<v Speaker 1>Now it's time for investing. Why pay more for the

0:01:13.120 --> 0:01:15.119
<v Speaker 1>share price? So tell me what'll be man.

0:01:15.040 --> 0:01:17.120
<v Speaker 2>Well, juzzy boy. We all know Chemists Warehouse as the

0:01:17.120 --> 0:01:20.920
<v Speaker 2>pharmacy with ales tighter than compression socks.

0:01:20.640 --> 0:01:23.280
<v Speaker 1>And the jingle more catchy than hot Potato by the Wiggle.

0:01:23.480 --> 0:01:26.440
<v Speaker 2>But since its first store in two thousand, Chemist Warehouse

0:01:26.440 --> 0:01:27.960
<v Speaker 2>has grown to more than six hundred.

0:01:27.760 --> 0:01:30.440
<v Speaker 1>Stores and be Man or Chemists Warehouse announced its plans

0:01:30.480 --> 0:01:33.240
<v Speaker 1>to merge with Sigma Healthcare back in December twenty twenty three.

0:01:33.319 --> 0:01:35.360
<v Speaker 1>Yesterday was their hard launch.

0:01:35.120 --> 0:01:38.440
<v Speaker 2>And Chemists Warehouse sprinted from a private company to the

0:01:38.560 --> 0:01:40.839
<v Speaker 2>nineteenth largest on the as HOUSE.

0:01:40.880 --> 0:01:44.240
<v Speaker 1>We're talking to company worth around thirty two billion dollars.

0:01:44.319 --> 0:01:47.160
<v Speaker 2>Now, for some perspective here, Chemists Warehouse is valued more

0:01:47.200 --> 0:01:50.480
<v Speaker 2>than Colds and more than double of Quantus and be Man.

0:01:50.560 --> 0:01:53.680
<v Speaker 2>With so few big name companies listing on the ACEX lately,

0:01:53.760 --> 0:01:55.920
<v Speaker 2>there has been a heap of buyers that have been

0:01:56.040 --> 0:01:59.320
<v Speaker 2>sweeping in yep, and naturally a lot of sellers getting out,

0:01:59.400 --> 0:02:03.360
<v Speaker 2>in particular Man Chemist's Warehouse franchisees, who collectively were holding

0:02:03.360 --> 0:02:05.960
<v Speaker 2>more than a third of the company pre IPO. And

0:02:06.160 --> 0:02:11.320
<v Speaker 2>unlike the Chemists ware House founders, these franchisees shares those were.

0:02:11.280 --> 0:02:14.680
<v Speaker 1>Unescrowed, so they're making a rain at buster the nasal spray.

0:02:14.960 --> 0:02:16.400
<v Speaker 2>So what is the key learning here?

0:02:16.440 --> 0:02:19.080
<v Speaker 1>When a company goes public or mergers with another company,

0:02:19.160 --> 0:02:21.880
<v Speaker 1>shareholders are often required to hold onto their shares for

0:02:21.919 --> 0:02:23.080
<v Speaker 1>a set period of time.

0:02:23.200 --> 0:02:26.480
<v Speaker 2>Now. This is called escro and it's designed to prevent

0:02:26.639 --> 0:02:28.680
<v Speaker 2>a flood of shares hitting the market all.

0:02:28.560 --> 0:02:30.480
<v Speaker 1>At once, which could crash the share price.

0:02:30.480 --> 0:02:33.799
<v Speaker 2>For example, Jazzy Boy Chemist Warehouse co founders own forty

0:02:33.840 --> 0:02:36.160
<v Speaker 2>eight point three percent of the merged company.

0:02:35.840 --> 0:02:37.400
<v Speaker 1>So if they were to sell all their shares on

0:02:37.480 --> 0:02:39.639
<v Speaker 1>day one, it would be way more supply of shares

0:02:39.760 --> 0:02:40.880
<v Speaker 1>than demands.

0:02:40.440 --> 0:02:42.680
<v Speaker 2>Causing the share price to decline big time, not to

0:02:42.720 --> 0:02:44.959
<v Speaker 2>mention the fact that new investors would be less likely

0:02:45.000 --> 0:02:46.880
<v Speaker 2>to invest if they knew the founders were out on

0:02:47.000 --> 0:02:47.440
<v Speaker 2>day one.

0:02:47.520 --> 0:02:50.120
<v Speaker 1>On the other hand, THO. B. Man Chemist's Warehouse franchisees,

0:02:50.160 --> 0:02:52.120
<v Speaker 1>who earned about thirty seven and a half percent of

0:02:52.120 --> 0:02:54.320
<v Speaker 1>the company aren't under escrow terms.

0:02:54.160 --> 0:02:56.240
<v Speaker 2>And with so much interest in chemists ware house stock,

0:02:56.440 --> 0:02:59.880
<v Speaker 2>many franchisees have already jumped at the chance to cash in.

0:03:00.040 --> 0:03:02.680
<v Speaker 2>And while the sales of franchise shares has already begun,

0:03:02.840 --> 0:03:05.160
<v Speaker 2>we could see even more selling in the coming week.

0:03:05.240 --> 0:03:08.400
<v Speaker 2>For our second story, the Reject Shop is planning to

0:03:08.520 --> 0:03:12.040
<v Speaker 2>rebrand its stores into Dollarama stores as it pushes towards

0:03:12.040 --> 0:03:14.000
<v Speaker 2>becoming a super low priced retailer.

0:03:14.080 --> 0:03:17.360
<v Speaker 1>Wasn't it already kind of low priced? Hallou can you do?

0:03:17.520 --> 0:03:17.680
<v Speaker 2>Yeah?

0:03:17.760 --> 0:03:18.920
<v Speaker 1>Tell me what's going on here? So?

0:03:18.919 --> 0:03:21.560
<v Speaker 2>The Reject Shop started in Melbourne in nineteen eighty one

0:03:21.639 --> 0:03:24.760
<v Speaker 2>as a retailer that sold discontinued lines of products and

0:03:24.800 --> 0:03:26.600
<v Speaker 2>factory rejects, but over the years.

0:03:26.480 --> 0:03:28.600
<v Speaker 1>It's become a lot more than just rejects.

0:03:28.680 --> 0:03:31.320
<v Speaker 2>It sells everything from snacks to party hats, to health

0:03:31.320 --> 0:03:33.040
<v Speaker 2>foods and cleaning supplies.

0:03:33.040 --> 0:03:35.880
<v Speaker 1>But beman from late twenty thirteen to early twenty twenty five,

0:03:35.920 --> 0:03:38.600
<v Speaker 1>the Reject Shop's share price had plummeted more than eighty

0:03:38.720 --> 0:03:39.280
<v Speaker 1>three percent.

0:03:39.480 --> 0:03:42.240
<v Speaker 2>So in July this year, Dollarama announced his acquisition of

0:03:42.240 --> 0:03:45.160
<v Speaker 2>the Reject Shop for two hundred and fifty nine million dollars.

0:03:44.880 --> 0:03:46.880
<v Speaker 1>And be man, if you're wondering who Dollarama is, that

0:03:47.040 --> 0:03:50.440
<v Speaker 1>is the nearly fifty eight billion dollar Canadian discounting behavior

0:03:50.440 --> 0:03:52.560
<v Speaker 1>which has a nothing of a five dollar promise.

0:03:52.600 --> 0:03:55.480
<v Speaker 2>Yep, it literally has nothing in store over five bucks.

0:03:55.520 --> 0:03:58.440
<v Speaker 1>And now the Reject Shop's new corporate overlord has revealed

0:03:58.440 --> 0:04:01.720
<v Speaker 1>its plans for a full scale transformation of the Region shop.

0:04:01.960 --> 0:04:04.640
<v Speaker 1>The Reject Shop's iconic name will eventually disappear and it

0:04:04.640 --> 0:04:07.440
<v Speaker 1>will be replaced by Dollarama branding and the Dollarma crew

0:04:07.600 --> 0:04:10.280
<v Speaker 1>plant to double the Australian store count to seven hundred

0:04:10.320 --> 0:04:11.480
<v Speaker 1>by twenty thirty four.

0:04:11.560 --> 0:04:14.680
<v Speaker 2>They're also planning to leverage dollar Arma's massive supply chain

0:04:14.720 --> 0:04:17.320
<v Speaker 2>to flight Australian stores with ultra cheap products.

0:04:17.360 --> 0:04:19.599
<v Speaker 1>And they Man, they're certainly trying to disrupt the market

0:04:19.600 --> 0:04:20.919
<v Speaker 1>with some price leadership.

0:04:21.000 --> 0:04:22.479
<v Speaker 2>So what is the key learning here?

0:04:22.560 --> 0:04:25.440
<v Speaker 1>Price leadership is most commonly when a company uses lower

0:04:25.480 --> 0:04:27.440
<v Speaker 1>pricing to reshape an industry.

0:04:27.520 --> 0:04:30.440
<v Speaker 2>It forces competitors to either follow suit or risk losing

0:04:30.480 --> 0:04:31.000
<v Speaker 2>market share.

0:04:31.080 --> 0:04:33.719
<v Speaker 1>In Australia, we've seen Audi pull out the price leadership

0:04:33.720 --> 0:04:36.040
<v Speaker 1>against Coles and Rullies over the past two decades.

0:04:36.040 --> 0:04:38.000
<v Speaker 2>And of course they've seen Kmart do this to Big

0:04:38.160 --> 0:04:40.120
<v Speaker 2>W and ironically the reject shop too.

0:04:40.160 --> 0:04:42.599
<v Speaker 1>But now the region shop with its Dollarama Mite is

0:04:42.600 --> 0:04:44.679
<v Speaker 1>pulling out the unu reverse cards Kmart.

0:04:44.760 --> 0:04:47.400
<v Speaker 2>The danger for incumbents is that they can't always match

0:04:47.440 --> 0:04:49.800
<v Speaker 2>those prices without crushing their own margins. The goal for

0:04:49.880 --> 0:04:52.600
<v Speaker 2>Dollarma would be to push out weaker players from the market.

0:04:52.640 --> 0:04:55.400
<v Speaker 1>We know the Big W is already struggling after it's

0:04:55.400 --> 0:04:58.120
<v Speaker 1>thirty five million dollar loss for the last financial year.

0:04:58.080 --> 0:05:01.440
<v Speaker 2>So this price leadership is about res setting customer expectations

0:05:01.480 --> 0:05:03.240
<v Speaker 2>for what cheap actually looks like.

0:05:03.279 --> 0:05:06.280
<v Speaker 1>The real discount war has only just begun. Your move next,

0:05:06.360 --> 0:05:07.039
<v Speaker 1>km Us.

0:05:07.080 --> 0:05:10.039
<v Speaker 2>For our third and final story, Coles has seen it

0:05:10.120 --> 0:05:12.800
<v Speaker 2>chares jump eight percent after a big push in its

0:05:12.839 --> 0:05:14.000
<v Speaker 2>home brand products.

0:05:14.160 --> 0:05:16.960
<v Speaker 1>The little red quote going hard and performing well, so

0:05:17.080 --> 0:05:17.760
<v Speaker 1>tell me more so.

0:05:17.880 --> 0:05:20.599
<v Speaker 2>Cole's Group is the company that owns major Rossie supermarket

0:05:20.600 --> 0:05:21.640
<v Speaker 2>Giant Coals, as well.

0:05:21.560 --> 0:05:24.240
<v Speaker 1>As one thousand liquor stores across the country under the

0:05:24.279 --> 0:05:25.240
<v Speaker 1>liquor Land brand.

0:05:25.279 --> 0:05:27.479
<v Speaker 2>But joseiboit. We know that over the past twelve months,

0:05:27.480 --> 0:05:30.239
<v Speaker 2>Coals has made a big push to chase market leader

0:05:30.400 --> 0:05:31.240
<v Speaker 2>all leez.

0:05:31.120 --> 0:05:34.400
<v Speaker 1>Yep Coles is double down on its downdown campaigns as

0:05:34.400 --> 0:05:36.719
<v Speaker 1>well as its private label brand, and it was good

0:05:36.720 --> 0:05:37.640
<v Speaker 1>news for the big red.

0:05:37.920 --> 0:05:41.159
<v Speaker 2>Coals Group's sales lifted one point seven percent to forty

0:05:41.160 --> 0:05:43.560
<v Speaker 2>four point five billion, but be man.

0:05:43.400 --> 0:05:45.840
<v Speaker 1>It's group net profit actually dipped by three and a

0:05:45.839 --> 0:05:46.320
<v Speaker 1>half percent.

0:05:46.400 --> 0:05:48.479
<v Speaker 2>Okay, what were the main offenders?

0:05:48.520 --> 0:05:50.560
<v Speaker 1>Well, the earnings from liquorland fell.

0:05:50.480 --> 0:05:52.960
<v Speaker 2>And tobacco sales fell thirty percent because of the black

0:05:53.000 --> 0:05:53.920
<v Speaker 2>market tobacco trade.

0:05:53.960 --> 0:05:55.240
<v Speaker 1>Interesting the sin categories.

0:05:55.240 --> 0:05:57.360
<v Speaker 2>But Josie Boit hold up right there because on a

0:05:57.360 --> 0:06:00.440
<v Speaker 2>normalized basis, Coals Group sales were actually up three point

0:06:00.440 --> 0:06:01.039
<v Speaker 2>six percent and.

0:06:01.040 --> 0:06:02.600
<v Speaker 1>It's profits up two point four percent.

0:06:02.720 --> 0:06:04.039
<v Speaker 2>So what is the key learning here?

0:06:04.120 --> 0:06:08.000
<v Speaker 1>Not all financial years are created equal, especially in supermarkets

0:06:08.080 --> 0:06:10.440
<v Speaker 1>where some years stretch to fifty three weeks.

0:06:10.600 --> 0:06:14.080
<v Speaker 2>Yep. That is why Coles also reported their normalized financial

0:06:14.120 --> 0:06:17.720
<v Speaker 2>results to investors, and normalized results are well. Normalized figures

0:06:17.839 --> 0:06:21.080
<v Speaker 2>strip out unusual factors like an extra trading week to

0:06:21.120 --> 0:06:23.279
<v Speaker 2>give a clear review of a company's performance.

0:06:23.279 --> 0:06:25.440
<v Speaker 1>And this matters for retailers like Coals more than an

0:06:25.520 --> 0:06:27.920
<v Speaker 1>industry like financial services or banking.

0:06:28.000 --> 0:06:28.560
<v Speaker 2>And why is that?

0:06:28.640 --> 0:06:32.359
<v Speaker 1>Because retailers like supermarkets report results in weekly periods, so

0:06:32.480 --> 0:06:35.840
<v Speaker 1>an extra week means an extra seven days of supermarket sales.

0:06:35.920 --> 0:06:38.440
<v Speaker 1>It's basically like coals playing an extra round of footy

0:06:38.440 --> 0:06:39.000
<v Speaker 1>in the season.

0:06:39.120 --> 0:06:41.400
<v Speaker 2>YEP, the last time Coles reported on a fifty three

0:06:41.400 --> 0:06:44.520
<v Speaker 2>week basis was actually FO twenty four, but before.

0:06:44.240 --> 0:06:46.800
<v Speaker 1>That it was f OX nineteen, so it doesn't happen

0:06:46.839 --> 0:06:47.400
<v Speaker 1>too often.

0:06:47.440 --> 0:06:50.800
<v Speaker 2>That is why analysts look at normalized numbers, which strip

0:06:50.839 --> 0:06:53.520
<v Speaker 2>out that extra week to show true performance the coals.

0:06:53.600 --> 0:06:55.960
<v Speaker 1>Those numbers were strong enough to impress it the checkout

0:06:56.040 --> 0:06:56.800
<v Speaker 1>and the stock.

0:06:56.600 --> 0:07:00.159
<v Speaker 2>Market, and clearly it impressed investors enough because coal shares jumped.

0:06:59.839 --> 0:07:02.719
<v Speaker 1>A only all years had fifty three weeks for goals.

0:07:02.839 --> 0:07:05.760
<v Speaker 1>That's it for today. Botsdown our first recap episode on

0:07:05.800 --> 0:07:08.880
<v Speaker 1>the Biggest Australian retail stories of twenty twenty five. Join

0:07:09.000 --> 0:07:11.240
<v Speaker 1>us on Wednesday for a recap on the biggest tech

0:07:11.280 --> 0:07:13.760
<v Speaker 1>stories of twenty twenty five. Thanks for listening and we'll

0:07:13.760 --> 0:07:16.400
<v Speaker 1>see you on Wednesday.