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Biggest retail stories - 2025 Recap · What the Flux

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  Speaker 1: Before we start today's podcast, we want to acknowledge the
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  Speaker 1: horrific terrorist attack that took place in Bondai yesterday. We're
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  Speaker 1: absolutely devastated to hear the news. Today's recap podcast pales
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  Speaker 1: in significance to the events that took place yesterday. We're
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  Speaker 1: sending our thoughts to all the victims, their families, the
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  Speaker 1: Sydney Jewish community and everybody affected by this senseless attack.
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  Speaker 2: This is what the flux.
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  Speaker 1: I'm Brett and I'm Justin and it's Monday, the fifteenth
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  Speaker 1: of December. We are very excited to be doing our
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  Speaker 1: very first recap episode for twenty twenty five now be Man.
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  Speaker 1: As you know, retail is one of the lifebloods of
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  Speaker 1: the Australian economy, with employees, millions of ossies. It fills
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  Speaker 1: our shopping centers and it gives us a real time
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  Speaker 1: read on how confident people are with their money, and
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  Speaker 1: twenty twenty five gave us a heap to talk about.
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  Speaker 1: So in this recap episode, we're taking you through the
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  Speaker 1: three biggest retail stories of twenty twenty five in Australia.
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  Speaker 1: What happened, why it mattered, and what it tells us
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  Speaker 1: about where Ossie Retail is heading next.
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  Speaker 2: Three generous stories today, Juzzy boys, let's do it for
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  Speaker 2: our first. Chemist Warehouse officially launched on the ASX yesterday
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  Speaker 2: as its mega merger with Sigma Healthcare went live.
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  Speaker 1: Now it's time for investing. Why pay more for the
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  Speaker 1: share price? So tell me what'll be man.
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  Speaker 2: Well, juzzy boy. We all know Chemists Warehouse as the
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  Speaker 2: pharmacy with ales tighter than compression socks.
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  Speaker 1: And the jingle more catchy than hot Potato by the Wiggle.
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  Speaker 2: But since its first store in two thousand, Chemist Warehouse
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  Speaker 2: has grown to more than six hundred.
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  Speaker 1: Stores and be Man or Chemists Warehouse announced its plans
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  Speaker 1: to merge with Sigma Healthcare back in December twenty twenty three.
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  Speaker 1: Yesterday was their hard launch.
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  Speaker 2: And Chemists Warehouse sprinted from a private company to the
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  Speaker 2: nineteenth largest on the as HOUSE.
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  Speaker 1: We're talking to company worth around thirty two billion dollars.
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  Speaker 2: Now, for some perspective here, Chemists Warehouse is valued more
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  Speaker 2: than Colds and more than double of Quantus and be Man.
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  Speaker 2: With so few big name companies listing on the ACEX lately,
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  Speaker 2: there has been a heap of buyers that have been
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  Speaker 2: sweeping in yep, and naturally a lot of sellers getting out,
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  Speaker 2: in particular Man Chemist's Warehouse franchisees, who collectively were holding
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  Speaker 2: more than a third of the company pre IPO. And
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  Speaker 2: unlike the Chemists ware House founders, these franchisees shares those were.
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  Speaker 1: Unescrowed, so they're making a rain at buster the nasal spray.
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  Speaker 2: So what is the key learning here?
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  Speaker 1: When a company goes public or mergers with another company,
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  Speaker 1: shareholders are often required to hold onto their shares for
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  Speaker 1: a set period of time.
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  Speaker 2: Now. This is called escro and it's designed to prevent
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  Speaker 2: a flood of shares hitting the market all.
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  Speaker 1: At once, which could crash the share price.
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  Speaker 2: For example, Jazzy Boy Chemist Warehouse co founders own forty
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  Speaker 2: eight point three percent of the merged company.
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  Speaker 1: So if they were to sell all their shares on
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  Speaker 1: day one, it would be way more supply of shares
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  Speaker 1: than demands.
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  Speaker 2: Causing the share price to decline big time, not to
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  Speaker 2: mention the fact that new investors would be less likely
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  Speaker 2: to invest if they knew the founders were out on
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  Speaker 2: day one.
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  Speaker 1: On the other hand, THO. B. Man Chemist's Warehouse franchisees,
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  Speaker 1: who earned about thirty seven and a half percent of
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  Speaker 1: the company aren't under escrow terms.
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  Speaker 2: And with so much interest in chemists ware house stock,
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  Speaker 2: many franchisees have already jumped at the chance to cash in.
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  Speaker 2: And while the sales of franchise shares has already begun,
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  Speaker 2: we could see even more selling in the coming week.
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  Speaker 2: For our second story, the Reject Shop is planning to
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  Speaker 2: rebrand its stores into Dollarama stores as it pushes towards
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  Speaker 2: becoming a super low priced retailer.
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  Speaker 1: Wasn't it already kind of low priced? Hallou can you do?
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  Speaker 2: Yeah?
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  Speaker 1: Tell me what's going on here? So?
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  Speaker 2: The Reject Shop started in Melbourne in nineteen eighty one
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  Speaker 2: as a retailer that sold discontinued lines of products and
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  Speaker 2: factory rejects, but over the years.
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  Speaker 1: It's become a lot more than just rejects.
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  Speaker 2: It sells everything from snacks to party hats, to health
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  Speaker 2: foods and cleaning supplies.
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  Speaker 1: But beman from late twenty thirteen to early twenty twenty five,
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  Speaker 1: the Reject Shop's share price had plummeted more than eighty
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  Speaker 1: three percent.
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  Speaker 2: So in July this year, Dollarama announced his acquisition of
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  Speaker 2: the Reject Shop for two hundred and fifty nine million dollars.
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  Speaker 1: And be man, if you're wondering who Dollarama is, that
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  Speaker 1: is the nearly fifty eight billion dollar Canadian discounting behavior
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  Speaker 1: which has a nothing of a five dollar promise.
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  Speaker 2: Yep, it literally has nothing in store over five bucks.
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  Speaker 1: And now the Reject Shop's new corporate overlord has revealed
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  Speaker 1: its plans for a full scale transformation of the Region shop.
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  Speaker 1: The Reject Shop's iconic name will eventually disappear and it
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  Speaker 1: will be replaced by Dollarama branding and the Dollarma crew
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  Speaker 1: plant to double the Australian store count to seven hundred
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  Speaker 1: by twenty thirty four.
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  Speaker 2: They're also planning to leverage dollar Arma's massive supply chain
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  Speaker 2: to flight Australian stores with ultra cheap products.
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  Speaker 1: And they Man, they're certainly trying to disrupt the market
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  Speaker 1: with some price leadership.
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  Speaker 2: So what is the key learning here?
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  Speaker 1: Price leadership is most commonly when a company uses lower
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  Speaker 1: pricing to reshape an industry.
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  Speaker 2: It forces competitors to either follow suit or risk losing
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  Speaker 2: market share.
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  Speaker 1: In Australia, we've seen Audi pull out the price leadership
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  Speaker 1: against Coles and Rullies over the past two decades.
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  Speaker 2: And of course they've seen Kmart do this to Big
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  Speaker 2: W and ironically the reject shop too.
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  Speaker 1: But now the region shop with its Dollarama Mite is
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  Speaker 1: pulling out the unu reverse cards Kmart.
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  Speaker 2: The danger for incumbents is that they can't always match
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  Speaker 2: those prices without crushing their own margins. The goal for
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  Speaker 2: Dollarma would be to push out weaker players from the market.
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  Speaker 1: We know the Big W is already struggling after it's
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  Speaker 1: thirty five million dollar loss for the last financial year.
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  Speaker 2: So this price leadership is about res setting customer expectations
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  Speaker 2: for what cheap actually looks like.
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  Speaker 1: The real discount war has only just begun. Your move next,
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  Speaker 1: km Us.
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  Speaker 2: For our third and final story, Coles has seen it
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  Speaker 2: chares jump eight percent after a big push in its
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  Speaker 2: home brand products.
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  Speaker 1: The little red quote going hard and performing well, so
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  Speaker 1: tell me more so.
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  Speaker 2: Cole's Group is the company that owns major Rossie supermarket
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  Speaker 2: Giant Coals, as well.
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  Speaker 1: As one thousand liquor stores across the country under the
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  Speaker 1: liquor Land brand.
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  Speaker 2: But joseiboit. We know that over the past twelve months,
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  Speaker 2: Coals has made a big push to chase market leader
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  Speaker 2: all leez.
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  Speaker 1: Yep Coles is double down on its downdown campaigns as
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  Speaker 1: well as its private label brand, and it was good
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  Speaker 1: news for the big red.
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  Speaker 2: Coals Group's sales lifted one point seven percent to forty
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  Speaker 2: four point five billion, but be man.
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  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?
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  Speaker 1: Well, the earnings from liquorland fell.
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  Speaker 2: And tobacco sales fell thirty percent because of the black
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  Speaker 2: market tobacco trade.
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  Speaker 1: Interesting the sin categories.
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  Speaker 2: But Josie Boit hold up right there because on a
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  Speaker 2: normalized basis, Coals Group sales were actually up three point
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  Speaker 2: six percent and.
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  Speaker 1: It's profits up two point four percent.
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  Speaker 2: So what is the key learning here?
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  Speaker 1: Not all financial years are created equal, especially in supermarkets
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  Speaker 1: where some years stretch to fifty three weeks.
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  Speaker 2: Yep. That is why Coles also reported their normalized financial
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  Speaker 2: results to investors, and normalized results are well. Normalized figures
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  Speaker 2: strip out unusual factors like an extra trading week to
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  Speaker 2: give a clear review of a company's performance.
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  Speaker 1: And this matters for retailers like Coals more than an
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  Speaker 1: industry like financial services or banking.
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  Speaker 2: And why is that?
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  Speaker 1: Because retailers like supermarkets report results in weekly periods, so
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  Speaker 1: an extra week means an extra seven days of supermarket sales.
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  Speaker 1: It's basically like coals playing an extra round of footy
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  Speaker 1: in the season.
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  Speaker 2: YEP, the last time Coles reported on a fifty three
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  Speaker 2: week basis was actually FO twenty four, but before.
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  Speaker 1: That it was f OX 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
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  Speaker 2: out that extra week to show true performance the coals.
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  Speaker 1: Those numbers were strong enough to impress it the checkout
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  Speaker 1: and the stock.
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  Speaker 2: Market, and clearly it impressed investors enough because coal shares jumped.
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  Speaker 1: A only all years had fifty three weeks for goals.
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  Speaker 1: That's it for today. Botsdown our first recap episode on
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  Speaker 1: the Biggest Australian retail stories of twenty twenty five. Join
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  Speaker 1: us on Wednesday for a recap on the biggest tech
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  Speaker 1: stories of twenty twenty five. Thanks for listening and we'll
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  Speaker 1: see you on Wednesday.