Speaker 1: This is what the Flux. I'm Brett and I'm just
Speaker 1: it and it's Friday, the twenty eighth February, Fluxpam.
Speaker 2: If you're still gorging on John Snow's antics in the
Speaker 2: Game of Thrones, or you're thriving on the Last of Us,
Speaker 2: well you better binge quickly. That's because Warner Brothers Discovery
Speaker 2: is taking these shows off Foxtell's library and rolling it
Speaker 2: into their very own Max streaming service in March. And
Speaker 2: this means Max will join the likes of Netflix, Disney Plus,
Speaker 2: Amazon Prime and Stan all competing for your precious little
Speaker 2: eyeballs every night.
Speaker 1: And they man with so many services. It means so
Speaker 1: many of the Flux family are paying for multiple streaming
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Speaker 1: Subscription Tracker helps you with. Yes, you connect your accounts
Speaker 1: in this than thirty seconds, and we identify all of
Speaker 1: your subscription services all in one pricky place. Help show
Speaker 1: you how much you've spent in the past and how
Speaker 1: much is forecasted over the next month and year. If
Speaker 1: you don't want to say, but desperately need to know
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Speaker 2: Three cost conscious stories today, Jazzi boy, let's do it
Speaker 2: for our first.
Speaker 3: Woolworths has suffered a twenty percent decline in its first.
Speaker 2: Half a net profit after it struggled with strikes and
Speaker 2: empty shelves late last year.
Speaker 1: Well well, well, looks like Coles might be popping the
Speaker 1: champagne this week, b man, So tell me what's going on.
Speaker 3: Jazy boy.
Speaker 2: You might know Woolworth's as the largest supermarket across Australia with.
Speaker 1: More than thirty seven percent of total supermarket market share,
Speaker 1: but it's also the owner of Big w pet Stock,
Speaker 1: My deal man, Woolworth's a supermarket is usually the golden
Speaker 1: goose laying the golden eggs, which have not been on
Speaker 1: the shelves lately.
Speaker 3: But it wasn't the case in the last half YEA.
Speaker 1: In late November, Woolies is warehouse workers went on a
Speaker 1: three week strike over its pay and conditions.
Speaker 2: Do you remember no toilet paper on shelves, no pasta,
Speaker 2: limited fruit and veg.
Speaker 1: It was feeling like COVID all over again. I know.
Speaker 2: Now Woolies has worn that its first half net profit
Speaker 2: dropped more than twenty percent.
Speaker 1: Now Man, A large part of that profit drop is
Speaker 1: because of the worker strike, where it's struggled to get
Speaker 1: products on sites else.
Speaker 3: But Jazzy Boy.
Speaker 2: Even without the strike, Woolies earnings would have declined five percent.
Speaker 2: So now Woolworth's will begin a cost cutting program across
Speaker 2: the business where it plans to cut four hundred million
Speaker 2: dollars in expenses.
Speaker 3: All the equivalent of eight hundred thousand Magi two minute noodles.
Speaker 1: And apart from the strike, the main reason for the
Speaker 1: loss was a shift in consumer behavior. So long, farewell
Speaker 1: consumer inertia.
Speaker 3: So what is the key learning here?
Speaker 1: Consumer inertia is when shoppers stick to the same soupmarket
Speaker 1: out of habit, or convenience or loyalty.
Speaker 3: Even if better deals are available elsewhere.
Speaker 1: Yeah, in Australia this has helped Coals and Will dominate
Speaker 1: for so long, and it's given them the power to
Speaker 1: keep prices high without much competition. In fact, be Man
Speaker 1: research from last year shows that eighty one percent of
Speaker 1: Aussie shoppers spend most of their grocery budget at just
Speaker 1: one supermarket according to E sixty one.
Speaker 3: And over two thirds are staying loyal to Coals or
Speaker 3: Woolies every month.
Speaker 1: But be Man Woolworth's latest results show that maybe this
Speaker 1: is starting to change.
Speaker 2: Willy CEO mentioned that more customers are cross shopping to
Speaker 2: find the best deal, mainly due to cost of living stresses,
Speaker 2: and this shift may mean shoppers are breaking their usual
Speaker 2: habits and exploring other retailers.
Speaker 1: For our second story, points Bet, one of the largest
Speaker 1: bookmakers in Australia, has agreed to sell out to aid
Speaker 1: to a japan based rival for three hundred and sixty
Speaker 1: million bacarinis. But it is not without its controversy.
Speaker 2: Is anything not controversial in the betting industry. Juzzy Boy
Speaker 2: go on here.
Speaker 1: Okay so points Bett is an Australian online book makeup
Speaker 1: that launched in Melbourne back in twenty seventeen.
Speaker 2: It made a name for itself as it raised nearly
Speaker 2: five hundred million bucks to dominate betting overseas.
Speaker 1: Yeah, it became one of the first bookmakers to enter
Speaker 1: the US market when betting was just becoming legalized across
Speaker 1: different states.
Speaker 2: But in twenty twenty three, Juzzy Boy Points Bett sold
Speaker 2: its US division to the merch giant Fanatics for two
Speaker 2: hundred and twenty five million bucks. It was losing between
Speaker 2: fifteen and thirty million dollars per quarter before selling the
Speaker 2: US business, but it promised plans to double down on
Speaker 2: the Ossie and Canadian markets.
Speaker 1: Next minute, point Betts announced plans to sell the Australian
Speaker 1: and Canadian businesses for three hundred and fifty million bucks.
Speaker 3: Brotto, who are they selling to?
Speaker 1: It's a Japanese based book maker called it a mixie
Speaker 1: who's planning to expand into Australia.
Speaker 2: But not so fast, does it, boy, Because before you
Speaker 2: think this is all hunky dorrie. Another gaming operator called
Speaker 2: the Blue Bet also made an offer.
Speaker 1: And it claims points Bet refused to even engage in
Speaker 1: its offer that was valued at more than three hundred
Speaker 1: and sixty million dollars, So a little.
Speaker 3: Bit more very interesting. So what is the key learning here?
Speaker 1: In merger and acquisitions? Shareholder value is king.
Speaker 3: And Jazzy Boy.
Speaker 2: Board directors always need to act in the best interests
Speaker 2: of their shareholders.
Speaker 1: But Ben Man, it's not always about who throws the
Speaker 1: biggest pile of cash on the table. Sometimes other strategic
Speaker 1: factors come into play.
Speaker 3: In this case, Mixey offered points Bets board and shareholders
Speaker 3: three hundred and fifty mil in cash money today.
Speaker 1: That's cold, hard cash in the bank, which reduces risk
Speaker 1: and provides immediate cash for shareholders.
Speaker 2: On the other hand, blue Bet offered points bet a
Speaker 2: mix of two sixty million cash and up to a
Speaker 2: one twenty mil in blue Bet shares and the man.
Speaker 1: This type of deal is known as a cash and
Speaker 1: script offer. Shareholders receive a combination of cash and shares
Speaker 1: in the acquiring company.
Speaker 2: But here is the kicker. The value of those blue
Speaker 2: Bet shares is not guaranteed.
Speaker 1: It all depends on how Blue Beet performs in the future.
Speaker 2: And this is a good example of how M and
Speaker 2: A decisions aren't only about the headline number. For our
Speaker 2: third and final story, EY Australia has announced it will
Speaker 2: be cutting one hundred jobs from its advisory division after.
Speaker 3: A pullback in client spending.
Speaker 1: Ewa's advisory division facing a little profit and loss of
Speaker 1: its own b man Sotel me more well.
Speaker 2: EY, which used to be known as Ernst and Young,
Speaker 2: is one of the global Big four professional service giants.
Speaker 1: It does everything from accounting to tax, to consulting and
Speaker 1: even dabbles in a little bit of Law.
Speaker 2: And techka the Swiss Army Knife of the corporate world.
Speaker 1: It's the third largest globally based on revenue, and the
Speaker 1: second largest professional services firm in Australia thanks to Peter
Speaker 1: we Sez Big four Oh.
Speaker 3: But Juzzi Boy. Even the mighty and powerful professional services
Speaker 3: firms are feeling the pain now.
Speaker 1: Ey's announced it will cut one hundred staff from its
Speaker 1: consulting art because of a slowdown in the advisory market.
Speaker 2: And while these one hundred jobs are about one percent
Speaker 2: of its Australian shop, it also cut five hundred jobs
Speaker 2: last year as well.
Speaker 1: One of the biggest challenges for Ey and co oh
Speaker 1: is the pullback of government spending on consulting services.
Speaker 3: So what is the key learning right here?
Speaker 1: When governments bring work in house, consultants fill the pay
Speaker 1: in professional services.
Speaker 3: Government contracts are often a bit of a cash.
Speaker 1: Cow there, lucrative, they're often long term and they've been
Speaker 1: pretty reliable in the past.
Speaker 3: But when the tide turns, it can devastate the industry.
Speaker 1: And that's exactly what's happened over the past few years.
Speaker 2: Get this one, government spending on consulting services dropped by
Speaker 2: six hundred and twenty four million bucks in FY twenty
Speaker 2: four alone.
Speaker 1: Or eighty four million dollars less each month compared to
Speaker 1: two years ago.
Speaker 2: And Jazi boy, it's a nice little reminder that a
Speaker 2: heavy reliance on government contracts can be a double edged sort.
Speaker 1: Great in boom times, but brutal when the policy change it. Yet,
Speaker 1: I was spending over fifty bucks on different streaming services
Speaker 1: in the last month. I use a Flux Subscription track
Speaker 1: app to see what I was spending on and bang,
Speaker 1: I cut Apple TV. That for us, We've got it
Speaker 1: all covered in the Flux Subscription track up they shut it,
Speaker 1: download the app and check it out.
Speaker 3: Thanks for listening, and we'll see you on Monday.