Department store giants Myer and David Jones have both brought forward post-Christmas sales in an effort to draw in customers ahead of a shaky holiday trading season.
The decision comes after Australian Retailers Association chief executive Russel Zimmerman told SmartCompany discounting could place retailers in a precarious position if margins are reduced too low.
Both department stores have taken out full page advertisements offering discounts of up to 30%, with Myer offering 35% off Christmas decorations. Sales have been advertised with household items including sheets, towels, kitchenware and luggage heavily marked down – items usually sold at a discount in January.
The discounting has begun early due to customers being “fickle and frugal”, Myer chief executive Bernie Brookes told the Australian Financial Review.
“The level of discounting is a little bit deeper this year because customer confidence is not as strong as it could be and you’re having to fight for every dollar.”
David Jones chief executive Mark McInnes expressed similar sentiments, saying “three interest rate rises in three months surprised most people”.
Qantas Airways discount carrier Jetstar has released plans to expand domestic capacity, with 700,000 seats and 77 new return flights to be added next year.
“Putting it into perspective, this new capacity we will introduce next year equates to close to half the amount of capacity that we launched across our Australian ports in 2004,” chief executive Bruce Buchanan said in a statement. IT is the airline’s biggest expansion since its launch.
New services will operate between Melbourne and Sydney, with 35 new flights to the Gold Coast, 18 to the Sunshine Coast, 18 to Cairns, 14 to Newcastle and 10 to Tasmania. Four new A320 aircraft will also be added to the company’s fleet.
Shares flat after disappointing Wall Street lead
The Australian sharemarket has opened flat today after weak leads from Wall Street, where investors grew anxious regarding new worries about the national debt.
The benchmark S&P/ASX200 index was up 12 points or 0.28% to 4650.9 at 12.20 AEST, while the Australian dollar also fell to US90c.
NAB shares gained 1% to $28.25, while ANZ also gained 1.1% to $21.74. Westpac shares rose 1.1% to $23.86, AMP fell 0.5% to $6.22.
Food and dairy manufacturer Goodman Fielder has now agreed to sell off its edible fats and oils operation to global food group Cargill for $240 million.
”As a consequence of our strategic decision earlier this year to focus on our consumer brand portfolio, we decided that, as a commercial industrial business, it did not fit comfortably with our major strategic focus, and that therefore the funds employed in this business would be better utilised elsewhere,” managing director Peter Margin.
”The sale of these assets will allow the company to focus on our core business which is the manufacturing and marketing of everyday branded consumer foods. We will now concentrate on enhancing the strength of our outstanding portfolio of retail consumer brands.”
Australian iron ore exports has risen 10% to 98 million tonnes in the September quarter, compared to the previous year, with markets in Asia now beginning to recover.
However, the Australian Bureau of Agricultural and Resource Economics has said export earnings are still 26% down due to declines in contract prices.
Network Ten believes it is at the beginning of an upturn in the advertising market with good performances to be seen in 2010. Chairman Nick Falloon said at the company’s annual general meeting that ratings in 2009 had strengthened the network’s position with advertisers.
“Network Ten has substantially completed its negotiations for 2010 with the major buying groups,” Falloon said. “These negotiations, coupled with our strong ratings performance in 2009, support our ongoing goal of achieving a 30% share of revenue.”
As reported in The Age, the nation’s big four banks will see $1.2 billion in debt owed to them by collapsed childcare centre operator ABC Learning disappear.
Westpac has reportedly said it has made provisions against these losses for a $200 million loan, while ANZ has said it has also made provisions for its $182 million in loans.
Federal Investment Review Board increases to four members
The Federal Investment Review Board has now expanded to four members, and will attempt to improve its communication about investment policies.
Federal Treasurer Wayne Swan has said former Lazard Australia managing director Brian Wilson and Takeovers Panel member Hamish Douglass will join the board in 2010, replacing Chris Miles. Swan also said limiting foreign investment will reduce business investment by a quarter, impacting job creation.
“There would also be very substantial costs to Australia’s productive capacity, given the role of foreign direct investment in building our capital stock,” Swan said in a speech. “For the first time in our history, our location will be a competitive advantage for our nation, where in the past it has been a disadvantage.
Overseas, anxiety on Wall Street grew about mounting national debt issues despite new figures which revealed wholesale inventories rose for the first time in October for over one year. The Commerce Department announced inventories rose by 0.3%, after a 13-month trend of declines.
However, the Dow Jones Industrial Average grew just 50.08 points or 0.5% to 10,377.05.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
