Pull for the shore, boys!
Fraserlive
I wish I could draw. I'd put John Fletcher and Rick Allert in a leaky rowing boat named Coles, both of them pulling on the oars as hard as they can - having decided to make for the shore rather than fix the leaks. The shore would have a sign sticking out of the sand saying 'Wesfarmers'.
Of course, some of the planks of the boat are sound, according to Coles' full year results. Officeworks and Target are the star performers, Coles Express has been okay, with food and liquor suffering a big ouch, but still relatively profitable.
Although Kmart has been praised for a move in a positive direction, it is still the ugly sister. A 27 per cent improvement in earnings before interest and tax (EBIT) looks encouraging until you realise it has produced a lousy return on investment of 18.3 per cent (by far the lowest in the group) and a trading profit margin of 2.49 per cent. That can be translated as a reliance on settlement discounts and supplier contributions to stay out of the red stuff. Wesfarmers must be wondering whether 180 Kmart stores throughout Australia is a good idea. For no fee I'll advise the board that no, it isn't. One hundred and eighty stores turning over about $4 billion resulting in a profit of $97 million does not compute.
Homage to wholesalers
Even though I once went mahulla with my father as we tried gormlessly to succeed as a textile wholesaler in Melbourne, I still retain a certain love for this easy way to lose money. It kind of gets into your blood, but I couldn't see anybody new wanting to take on textile wholesaling in Australia. Those left in the trade are now largely run by the families of the founders who will admit they could invest the money more wisely but wouldn't have half as much fun.
The Parsons, Elsegoods, Collins, Wenzels, Smouhas and Tinworths come quickly to mind. I now regard them as national schumtta treasures, offering a unique service to Australia's designers and wannabe designers for whom they research trends, chase down mills to make fabric, stock it and then offer varying degrees of credit.
David Tinworth, whose forebears established Martin & Savage 80 years ago, has seen the swing to offshore garment production shrink his company to less than half its peak number of employees.
But the trendline has flattened, he believes, brought about partly by the demise of competitors (I don't think he was thinking about my company which sank shortly after setting sail) but more because the offshore mist has cleared to define what garments should be manufactured and where. There is a new crop of small clothing companies that need the services of wholesalers, especially those who go overseas to check trends and colours and then evolve their own interpretations.
That used to happen 20 years ago, David tells me. Then there was a period of off-the-shelf textiles that didn't require much participation from wholesalers. But now textiles have gone creative again or, as young Tinnie says, "made with love".
Wholesalers must accept that they can no longer expect the huge order, and must find mills that are willing to supply short runs. But within those parameters they are safe to offer their goods. There is a much greater emphasis now on relationship building between wholesaler and manufacturer, and between wholesaler and mill. Remarkably, honour is creeping back into the business.
Martin & Savage has had a long association with Bruck, Australia's only surviving, volume weaver. Bruck still makes a number of M&S plain fabrics, keeping alive a tiny part of what was once a grand display of national verticality in which Australia began with fibres and finished with garments without importing any of the intervening stages.
I asked David Tinworth how business was right now. "I don't stop to count the fish because they might stop biting," he said. Which I take to mean that M&S is busy.
Myerfire
The conflagration that destroyed the Myer store in Hobart recently was significant from several viewpoints. On the positive side is the opportunity for all suppliers to refill the shelves, because virtually nothing remained after the fire. No doubt they will be called upon to assist restocking the temporary site with discounted merchandise. Another positive is that the store will have cleaned out the hard core unsaleable stuff and get some money for it from the insurance company.
The negative that came across in all the news coverage was the trepidation of Myer competitors in the main street. I would have expected them to rejoice in having a much bigger share of Christmas 2007 business with Myer out of the way. But no. They see Myer as a drawcard rather than a competitor.
By Fraser McEwing