Latest / What the Flux / Temple & Webster’s sofa upgrade | Seven West Media’s worst year yet | Treasury Wine no longer selling wines

Transcript

Temple & Webster’s sofa upgrade | Seven West Media’s worst year yet | Treasury Wine no longer selling wines · What the Flux

• 0:00
  Speaker 1: This is what the Flux.
• 0:01
  Speaker 2: I'm Brett and I'm Justin and Monday, this seventeenth February,
• 0:04
  Speaker 2: FLUXPAM Tomorrow is the big day.
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  Speaker 1: The RBA will be making its big announcement on the
• 0:09
  Speaker 1: cash rate. Get this one. Seventy three percent of experts
• 0:12
  Speaker 1: surveyed by Finder are predicting a cash rate cut, including
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  Speaker 1: all four of the big four banks. If you don't mind,
• 0:19
  Speaker 1: could save us one hundreds, possibly even thousands fee man.
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  Speaker 2: And speaking of which, we are very excited. We have
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  Speaker 2: a big feature in the Flex app tomorrow doing a
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  Speaker 2: big deep dive on the RBA's decision. If it goes down,
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  Speaker 2: we'll explore why. If it stayed the same, we'll also
• 0:32
  Speaker 2: do a deep dive on that. To make sure to
• 0:34
  Speaker 2: check out the Flux app for all your insights on
• 0:36
  Speaker 2: the big cash rate decision.
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  Speaker 1: Three insightful stories today Jasi Boy, Let's do it for
• 0:41
  Speaker 1: our first temple and Webster has seen it share price
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  Speaker 1: fly to an all time high after its revenue jump
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  Speaker 1: twenty four percent off the back of bathroom fixtures and couches.
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  Speaker 2: Making the people wear couches online without sitting on them.
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  Speaker 2: Absolutely not for me. So what is going on here.
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  Speaker 1: Well, Jessie Boy. Temple and Webster was founded in twenty
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  Speaker 1: eleven and listed on the ASX in twenty fifteen.
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  Speaker 2: And it was a pretty chopy few years for them.
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  Speaker 2: Their share price dropped nearly seventy five percent in their
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  Speaker 2: first three months of listing.
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  Speaker 1: But Temple and Webster has weathered the storm since then
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  Speaker 1: and grown to become the largest online furniture retailer in Australia.
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  Speaker 2: In fact, they made it sells more than two hundred
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  Speaker 2: thousand products.
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  Speaker 1: Now, Temple and Webster have announced that their sales have
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  Speaker 1: risen by twenty four percent for the past six.
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  Speaker 2: Months, largely thanks to a big increase in purchases of
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  Speaker 2: couches and of course those bathroom fixtures you always talk about.
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  Speaker 1: Yep, that's me. And as a result, Temple and Webster's
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  Speaker 1: share price has jumped more than fifty percent for the
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  Speaker 1: last twelve months.
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  Speaker 2: And the man, of course, that's thanks to the increasing sales,
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  Speaker 2: but more importantly it's thanks to their increase in profit margin.
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  Speaker 1: Oh you went there, juzzy voice. I'm wondering what is
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  Speaker 1: the key learning?
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  Speaker 2: A profit margin is how much profit a company keeps
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  Speaker 2: after covering all its costs.
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  Speaker 1: And in the retail industry, profit margins are notoriously tight.
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  Speaker 2: Like supermarkets that often just make a few cents on
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  Speaker 2: every dollar.
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  Speaker 1: And Temple and Webster pulled off a profit mark or
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  Speaker 1: four point two percent in the last six month.
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  Speaker 2: Which is way above their expected margin of one to
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  Speaker 2: three percent.
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  Speaker 1: And growing margin means they're not just selling more stuff,
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  Speaker 1: they're making more money from what they sell.
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  Speaker 2: That might be cutting costs out of their goods.
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  Speaker 1: It might be getting more efficient with something like AI
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  Speaker 1: for their customer service as they claim to be doing.
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  Speaker 2: Or charging higher prices without losing customers.
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  Speaker 1: And in a sector where margins are often raiser thin,
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  Speaker 1: even small improvements can become significant gains.
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  Speaker 2: Yeap. For our second story, seven West Media has seen
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  Speaker 2: its worst ever half year results as it tries to
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  Speaker 2: transition away from its free to air TV and newspapers
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  Speaker 2: traditional media companies in a world of hurt right now,
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  Speaker 2: tell me more? Okay? So seven West Media is the
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  Speaker 2: company behind the seven network as well as the West
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  Speaker 2: Australian newspaper group.
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  Speaker 1: Yep, we're talking home and away my kitchen rules can't
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  Speaker 1: forget better homes and gardens.
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  Speaker 2: But then, despite these banger shows. Seven West Media has
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  Speaker 2: struggled over the past twelve months.
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  Speaker 1: That's because of a major softening of the TV advertising
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  Speaker 1: market this year.
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  Speaker 2: Yeah. As a result, seven West Media saw their net
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  Speaker 2: profit drop sixty eight percent to just under eighteen million
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  Speaker 2: dollars for the six months to December thirty one.
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  Speaker 1: Don't forget the revenue fell by more than six percent.
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  Speaker 2: But the man, there was a little peep, a little
• 3:13
  Speaker 2: squizz of good news.
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  Speaker 1: Oh what little nugget do you have for me? Does you? Boy?
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  Speaker 2: Well? Seven increased its AD share to nearly forty four
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  Speaker 2: percent of the whole TV ad market.
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  Speaker 1: The problem is that this is a growing share of
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  Speaker 1: a declining market.
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  Speaker 2: But despite all of this, seven West media share price
• 3:28
  Speaker 2: actually jumped because it's focus on competing in the BVOD space.
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  Speaker 1: Interesting, So what is the key learning here?
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  Speaker 2: Broadcaster Video on Demand or b VOD is the name
• 3:37
  Speaker 2: of the service that allows viewers to access TV content
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  Speaker 2: from traditional broadcasters online.
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  Speaker 1: We'd be talking seven plus nine now ten play sps
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  Speaker 1: on demand, ABC iView are.
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  Speaker 2: You rilling them all off? B Man Expert and BVOD
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  Speaker 2: is fast becoming some of the hottest property in the
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  Speaker 2: AUSSI ADS market.
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  Speaker 1: Firstly, viewers love it because it's free, unlike streaming service rivals.
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  Speaker 2: Secondly, it means you don't need to be in front
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  Speaker 2: of your TV at seven pm sharp to catch Irene
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  Speaker 2: on Home and.
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  Speaker 1: Away Jazi Boys Irene still going around, I believe so.
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  Speaker 1: And Thirdly, advertisers love it because it's a cheaper way
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  Speaker 1: to target your audience with much better analytics and be man.
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  Speaker 2: It's fair to say that seven West Media and its
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  Speaker 2: competitors are investing heavily in BVOD for the future for
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  Speaker 2: good reason.
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  Speaker 1: In twenty twenty four, TV revenue was down nine and
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  Speaker 1: a half percent year on.
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  Speaker 2: Year, whereas in the first half of twenty twenty four
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  Speaker 2: BVOD revenue jump nearly fourteen.
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  Speaker 1: Percent and with nearly fourteen million b VOD viewers on
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  Speaker 1: seven plus, this is becoming a key part of seven
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  Speaker 1: West story. For our third and final story, Treasury Wine Estates,
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  Speaker 1: the wine giant has taken its lower priced wine brands
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  Speaker 1: off the sale slash divestment market after failing to find
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  Speaker 1: a buyer.
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  Speaker 2: Talk about a little one eighty year b man. So
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  Speaker 2: what is going on?
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  Speaker 1: Treasury Wine Estates is the ASX listed wine maker behind
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  Speaker 1: some big brands that are sold around the world.
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  Speaker 2: We'd be talking Squealing Pig, Nineteen Crimes, pepper Jack, but
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  Speaker 2: jazz Boy.
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  Speaker 1: You cannot leave out Treasury's Golden Goose. It's cash cow,
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  Speaker 1: it's gravy train, and it's the biggest money spinner. I'm
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  Speaker 1: talking penfolds.
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  Speaker 2: Very true. But be man, let me tell you one thing.
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  Speaker 2: They also own a heap of cheaper brands like Wolf Blast, Linderman's,
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  Speaker 2: Yellow Glen, and Blossom Hill, as well.
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  Speaker 1: Cheap Alert and Juzzy Boy. In August last year, Treasury
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  Speaker 1: announced plans to sell the lower priced brand portfolio.
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  Speaker 2: That's because interest in cheap wine has been declining and
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  Speaker 2: the margins are pretty thin.
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  Speaker 1: But now Treasury has announced it won't be selling the
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  Speaker 1: cheap brands anymore.
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  Speaker 2: And that's because it couldn't find a buyer at the
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  Speaker 2: price they wanted.
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  Speaker 1: Apparently they only received low ball offers.
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  Speaker 2: So now they're only up to it and accepting that
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  Speaker 2: it's their own responsibility to maintain these brands.
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  Speaker 1: But given these brands aren't part of the broader growth story,
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  Speaker 1: you've got to imagine these brands will just continue to
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  Speaker 1: decline further and further and further.
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  Speaker 2: So true, So what is the key learning here?
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  Speaker 1: A failed sale can be worse than no sale at all.
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  Speaker 2: Yeah, announcing that a brand or a business is up
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  Speaker 2: for sale only to get zero decent offers can be
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  Speaker 2: a pretty bad look.
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  Speaker 1: Makes people wonder what's wrong with that asset. It can
• 6:01
  Speaker 1: spook investers as well, and just boy, it can even
• 6:04
  Speaker 1: leave employees and customers feeling a little uneasy about the
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  Speaker 1: future of the company or those brands.
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  Speaker 2: In fact, be Man Treasuries already written down the value
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  Speaker 2: of these brands on their books by three hundred and
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  Speaker 2: fifty four.
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  Speaker 1: Million dollars and still could not find a buyer and
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  Speaker 1: be Man.
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  Speaker 2: Because of these potentially negative impacts, companies often prefer to
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  Speaker 2: negotiate sales confidentially and.
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  Speaker 1: Only make public announcements once a deal is done.
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  Speaker 2: But now Treasury Win needs to get back to work
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  Speaker 2: with these underperforming brands and hope they can sell a
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  Speaker 2: lot of Blossom Hill.
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  Speaker 1: See.
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• 6:36
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• 6:48
  Speaker 1: Thanks for listening and we'll see you on Wednesday.