Latest / What the Flux / Coles boosted by its private label | Reece's share price down the drain | Labor launches 5% home deposit scheme

Transcript

Coles boosted by its private label | Reece's share price down the drain | Labor launches 5% home deposit scheme · What the Flux

• 0:05
  Speaker 1: This is what the Flux I'm brand, I'm justin and
• 0:07
  Speaker 1: it's Wednesday, the twenty seventh of August.
• 0:09
  Speaker 2: Juzzy Boy Australia Post has suspended its postal delivery service
• 0:13
  Speaker 2: to the US. They say it was forced to take
• 0:16
  Speaker 2: the action because of significant changes made by the US
• 0:18
  Speaker 2: government to import tariff rules seeing and there ain't no
• 0:21
  Speaker 2: timeline on when the suspension will be lifted.
• 0:23
  Speaker 1: Could have heard a lot of small businesses in Australia
• 0:25
  Speaker 1: be man Indeed, fox out. The average salary in Australia
• 0:28
  Speaker 1: is over two thousand dollars per week. Now that's according
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  Speaker 1: to the ABS. Today in the Flux app, we break
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  Speaker 1: it down by state, including which state is averaging the
• 0:36
  Speaker 1: biggest salary, as well as which industry. So if you
• 0:38
  Speaker 1: want to learn all about it who's taking home the bag?
• 0:41
  Speaker 1: Make sure downt leave the Flux app and check it out.
• 0:43
  Speaker 2: Three surprising stories today Juzzy Boy, Let's do it for
• 0:46
  Speaker 2: our first. Coles has seen it shares jump eight percent
• 0:49
  Speaker 2: after a big push in its home brand products.
• 0:52
  Speaker 1: The little red quote going hard and performing well, So
• 0:55
  Speaker 1: tell me more so.
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  Speaker 2: Cole's Group is the company that owns a major Rossie
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  Speaker 2: supermarket giant Cole as well as at.
• 1:00
  Speaker 1: Thousand liquor stores across the country under the liquor Land
• 1:03
  Speaker 1: brand the Joseiboit.
• 1:04
  Speaker 2: We know that over the past twelve months, Coles has
• 1:06
  Speaker 2: made a big push to chase market leader all lease.
• 1:09
  Speaker 1: Yep, Coles is double down on its downdown campaigns as
• 1:12
  Speaker 1: well as its private label brand.
• 1:14
  Speaker 2: And it was good news for the big red. Coles
• 1:16
  Speaker 2: group's sales lifted one point seven percent to forty four
• 1:19
  Speaker 2: point five a billion, but be man.
• 1:21
  Speaker 1: It's group net profit actually dipped by three and a
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  Speaker 1: half percent.
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  Speaker 2: Okay, what were the main offenders?
• 1:26
  Speaker 1: Well, the earnings from liquor Land fell.
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  Speaker 2: And tobacco sales fell thirty percent because of the black
• 1:31
  Speaker 2: market tobacco trade.
• 1:32
  Speaker 1: Interesting the sin categories.
• 1:33
  Speaker 2: But Josie Boit hold up right there because on a
• 1:35
  Speaker 2: normalized basis, Coals group sales were actually up three point
• 1:38
  Speaker 2: six percent and.
• 1:39
  Speaker 1: It's profits up two point four percent.
• 1:40
  Speaker 2: So what is the key learning here?
• 1:42
  Speaker 1: Not all financial years are created equal, especially in supermarkets
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  Speaker 1: where some years stretched to fifty three weeks. Yep.
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  Speaker 2: That is why Coles also reported their normalized financial results
• 1:52
  Speaker 2: to investors, and normalized results are well normalized figures strip
• 1:56
  Speaker 2: out unusual factors like an extra trading week, to give
• 1:59
  Speaker 2: a clear view of a company's performance. And this matters
• 2:01
  Speaker 2: for retailers like coals more than an industry like financial
• 2:04
  Speaker 2: services or banking. And why is that Because retailers like
• 2:07
  Speaker 2: supermarkets report results in weekly periods, so an extra week
• 2:11
  Speaker 2: means an extra seven days of supermarket sales. It's basically
• 2:14
  Speaker 2: like Coles playing an extra round of footy in the season. Yep,
• 2:17
  Speaker 2: the last time Coles reported on a fifty three week
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  Speaker 2: basis was actually Fox twenty four, but before.
• 2:22
  Speaker 1: That it was f y nineteen, so it doesn't happen
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  Speaker 1: too often.
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  Speaker 2: That is why analysts look at normalized numbers, which strip
• 2:29
  Speaker 2: out that extra week to show true performance.
• 2:31
  Speaker 1: The coals, those numbers were strong enough to impress the
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  Speaker 1: checkout and the stock.
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  Speaker 2: Market, and clearly it impressed investors enough because coal shares
• 2:37
  Speaker 2: jumped eight percent.
• 2:38
  Speaker 1: For only all years had fifty three weeks.
• 2:40
  Speaker 2: For our second story, the country's largest supplier of plumbing
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  Speaker 2: and bathroom supplies, Reese, has seen shares flushed twenty one
• 2:48
  Speaker 2: percent after its profits plunged.
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  Speaker 1: Talk about a leaky share price, Beman, and tell me.
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  Speaker 2: More well, Reese was founded in nineteen nineteen by none
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  Speaker 2: other than Harold Joseph Reese, and it's.
• 2:58
  Speaker 1: Grown to become Australia's largest of plumbing and bathroom supplies.
• 3:02
  Speaker 2: Do you want a bath ree You want a hot
• 3:04
  Speaker 2: water system? That'd be Reese and non return isolating valve
• 3:07
  Speaker 2: you didn't know existed until your plumber charged you four
• 3:09
  Speaker 2: hundred dollars for it.
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  Speaker 1: That is Reese, Yep and the Man. While Reese listed
• 3:13
  Speaker 1: on the ASEX in twenty fourteen, the controlling family, the Wilsons,
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  Speaker 1: still owns sixty seven percent of the business.
• 3:19
  Speaker 2: And now Reese CEO Peter Wilson has warned that Reese's
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  Speaker 2: earnings before interest in tax NEBIT fell twenty percent in
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  Speaker 2: the last financial year to five hundred and twenty eight mil.
• 3:27
  Speaker 1: And the Man. That is way below the five hundred
• 3:30
  Speaker 1: and eighty mil that analysts were expecting.
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  Speaker 2: And while overall sales did slide one percent to just
• 3:35
  Speaker 2: under nine billion dollars, it's US business copped the biggest hit.
• 3:38
  Speaker 1: In the US, which makes up more than half the business,
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  Speaker 1: its sales actually dropped five percent.
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  Speaker 2: And Reese also warned that the US housing market is
• 3:45
  Speaker 2: expected to stay turbulent for the financial year.
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  Speaker 1: Next minute, Reese's share price tumbled up to twenty one
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  Speaker 1: percent and Judsey Boy, it's quite interesting to see a
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  Speaker 1: CEO so downbeat on an investor call, but also acknowledging
• 3:57
  Speaker 1: the reality so true. So what is the key learning here?
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  Speaker 2: All CEOs deliver bad news the same way.
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  Speaker 1: You see, be Man. The controlling family still own a
• 4:04
  Speaker 1: significant majority of the publicly listed company.
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  Speaker 2: So the CEO Peter Wilson can afford to speak with more.
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  Speaker 1: Honesty, unlike a professional CEO in a listed company, who
• 4:12
  Speaker 1: usually takes a different approach.
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  Speaker 2: When things aren't going well. They might emphasize the resilience
• 4:17
  Speaker 2: of the company.
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  Speaker 1: They'll highlight the green shoots.
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  Speaker 2: They'll keep an optimistic view to protect market confidence in
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  Speaker 2: their own position.
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  Speaker 1: But be Man, this optimistic spin isn't always for the
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  Speaker 1: better of the company in the long term.
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  Speaker 2: In fact, a study by Credit Swiss found that founders
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  Speaker 2: and founding families that retain twenty percent or more of
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  Speaker 2: a company's capital see superior performance to non family owned companies.
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  Speaker 1: Yep, these family owned public companies outperformed non family owned
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  Speaker 1: companies an annual average rate of three point one percent.
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  Speaker 2: So While a family run business might sound gloomier in
• 4:46
  Speaker 2: the short term, it could actually be part of its
• 4:48
  Speaker 2: commitment to long term growth.
• 4:49
  Speaker 1: Yeah. For our third and final story, the Labor government
• 4:52
  Speaker 1: has brought forward an expansion of its five percent home
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  Speaker 1: deposit scheme by three months.
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  Speaker 2: Get ready to see some moven and or shaken the
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  Speaker 2: property market. What is going on here?
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  Speaker 1: It's the background, b man. The first home buyer guarantee
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  Speaker 1: was first announced in the twenty twenty two budget, which
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  Speaker 1: allowed first home buyers to purchase a home with as
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  Speaker 1: little as five percent deposit.
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  Speaker 2: Back then, with fifty thousand places offered for each financial year.
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  Speaker 1: But you may remember, as part of the election in May,
• 5:14
  Speaker 1: the Labor government went hard on a new expanded offer
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  Speaker 1: for first home buyers.
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  Speaker 2: Yea, It promised it by twenty twenty six it would
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  Speaker 2: offer a new first home buyer guarantee.
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  Speaker 1: It would let first home buyers get into a property
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  Speaker 1: with a five percent deposit and the government would act
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  Speaker 1: as a guarante or for the other fifteen percent.
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  Speaker 2: Of course, Jesse boy, there are some restrictions, but the
• 5:31
  Speaker 2: income limits for this scheme have been broaden and the
• 5:33
  Speaker 2: property price caps have been raised too. And while This
• 5:36
  Speaker 2: was meant to be launched in twenty twenty six. The
• 5:38
  Speaker 2: government has now brought this forward to October this year.
• 5:40
  Speaker 2: In fact, be Man around seventy thousand first home buyers
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  Speaker 2: are expected to use the scheme in the first year alone,
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  Speaker 2: and while this may help more ossies get into the market,
• 5:49
  Speaker 2: economists worn it could push up property prices even further
• 5:52
  Speaker 2: for houses within the property cap.
• 5:54
  Speaker 1: So what is the key learning here?
• 5:56
  Speaker 2: Housing affordability debates often come back to a key tension
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  Speaker 2: demands side policies first supply side policies.
• 6:02
  Speaker 1: In the short term, these demand side policies, like the
• 6:05
  Speaker 1: first home buyer guarantee, feels like relief for buy it.
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  Speaker 2: But it also increases competition in the market, which can
• 6:10
  Speaker 2: push prices higher. The government have plans around the supply
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  Speaker 2: side too. Surely they do have.
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  Speaker 1: Plans to build one hundred thousand new houses, but it
• 6:16
  Speaker 1: doesn't happen overnight.
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  Speaker 2: In fact, they reckon it will take eight years to
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  Speaker 2: get to this number.
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  Speaker 1: You've got to rezone, you've got to get counsel approvals,
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  Speaker 1: and then you've actually got to build.
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  Speaker 2: In fact, SQM Research believes this policy could lead to
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  Speaker 2: a more than fifteen percent increase in prices over a
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  Speaker 2: six year period.
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  Speaker 1: On top of the annual growth of the property mask.
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  Speaker 2: So while the first home buyer guarantee gets people into
• 6:36
  Speaker 2: the market fast, that it may contribute to the affordability
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  Speaker 2: pressures that it is trying to fix.
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  Speaker 1: Interesting man, here's a little bit of a sneak peek
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  Speaker 1: into the average salary breakdown by state. Did you know
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  Speaker 1: that Tasmania, on average, there's the least FLUXAM. If you
• 6:49
  Speaker 1: want to learn more about which state is earning the
• 6:51
  Speaker 1: most money, make sure to download the Flux app and
• 6:53
  Speaker 1: check it out.
• 6:53
  Speaker 2: Thanks for listening and we'll see you on Friday.