This is what the Flux. I'm Brett and I'm justin. As Monday, the tenth of March.
Doesy Boy. With Cyclone Alfred hitting Queensland and northern New South Wales over the last few days, insurers are bracing for thousands of claims. In fact, the cost of cyclone Alfred is expected to top two billion dollars. We are sending all of our thoughts to the Flux family who have been affected by the cyclone flexam.
Do you know only one in four Australians with super no their exact superannuation balance and regularly monitor it. Pretty crazy because it can be the biggest investment you've ever made in your life. That's why in the Fox Academy this month, we cover everything that you need to know about super, from how to choose a super fun, all the voluntary and non voluntary contributions you can make, and all the ways to maximize your super. So make sure to check out the Fox Academy this month.
Three compounding stories Today Dozzy Boy, very good, Let's do it for our first Country Road Group has seen its earnings fall by more than seventy percent in the second half of twenty twenty five after too many promotions and discount not even Black.
Friday and Precrisist sales or enough for Country Road here be man. So what's going on?
Well, Josey Boy Country Road Group is the company that owns Australian retailers like you guessed it, Country Road.
But also Witchery, Mimco, Trenery and Politics with an X.
And this whole squad is owned by Woolworth's Holdings.
No, no, no, not the supermacher giant, but it's South African namesake.
And this Woolworth Holdings Group is the same group that purchased David Jones for two point one billion dollars once upon a time.
And sold it for under one hundred million dollars.
But now Jusy Boy Country Road Group has seen its earnings for the last half fall from fifty point two million dollars to just fourteen point two million dollars.
Or more than seventy percent drop in its earnings.
The reason you ask, well, they ran promotions to get stock out of their warehouses as.
Well as the impact of a weaker Australian dollar.
But the worst part they don't reckon times of getting any better and as a result, Country Road Group will reassess the carrying value of its Australian retailers.
And this could result in some very costly impairments.
So what's the key learning here?
The carrying value of an asset is essentially what the company thinks the asset is worth on its books.
But when conditions change, companies may have to write down this value to reflect.
Reality that could be a result of slower sales or shrinking profit margins, like the case for Country Road Group stores.
And we know that shoppers have been tightening their wallets and discounts have been eating into company profits.
So now Country Road Group needs to ask itself is Witchery or Mimco still worth what it's listed on our balance sheet?
If they do choose to write down the value of these assets, it will be a hefty expense that will impact their future earnings and.
Will also impact their total assets.
And Jessie Boye we saw this with Star Entertainment Group who wrote down the value of their casinos by one point four billion dollars last year.
And then man. While the write down isn't ideal for Country Road Group, it is a necessary reality check.
For our second story, Parata Group. It just strutted past its competitors with four year revenue jump of seventeen percent, and now it's taking a look their juicy acquisition target.
Prata really waltzing down the financial runway, b Man, So tell me more. Well.
Prata Group was founded in nineteen thirteen as a leather goods shop in Milan.
And since then it's grown into one of the world's most iconic luxury fashion houses.
We'd be talking brands like Prata, Mumu Churches, Marchesi eighteen twenty four, which is a pastry shop, and Luna Rossa and be Manned.
Despite a softer luxury market, Prita Group's net revenue grew seventeen percent in twenty twenty four to five point four billion euros.
All right, and who were the winners for the Prata crew, Well.
It was quite Prata who saw its revenue jump four percent.
Surely it wasn't Luna Rossa, who I've absolutely never heard of.
Nope, it was Mumu. It's revenue skyrocket by ninety three percent and across the one billion euro sales milestone for the very first time.
In fact, Mumu now makes up twenty five percent of Prata group's business up from fifteen percent just one year ago. So, given Prata is one of the few thriving luxury houses, it seems to be in pole position to swoop on Versace, which is up for sale. So what is the key lee in fashion and business? If you want to stay iconic, you just have to expand.
But here's the thing, be Man, luxury houses really create new brands from scratch.
Even ELVIMH, with its seventy five brand empire like Louis Vuitton, diorg Ivanci, Tiffany and Co. Has only done it once since nineteen eighty seven, and that was when it launched fenty with Rihanna in twenty nineteen. Now carrying on the other hand, Julie Boy has bolted on Gucci, Balenciaga and Saint Laurent, amongst others, and so b Man.
It's all about the strategic acquisitions and.
In the battle to acquire Vasace, timing is everything.
LVMH and Caring are struggling due to the luxury slowdown, and that means they need to get their own fashion houses in order for looking external. Prata, on the other hand, they're thriving.
And that puts it in a perfect position to make an aggressive move here for our third and final story, Gap, the retailer has seen its share price pop more than seventeen percent after it beat profit estimates, but tariffs are still a big concern.
Gap really pulling off the fashion equivalent of a glow ut b Man. So what's going on here?
Well, Gap, also known as the Gap, is the global clothing and accessories retailer.
It was found to back in nineteen sixty nine in San Francisco and it's going to over three thousand stores globally.
Now Darzi Woite. Gap is also the owner of Old Navy, Banana, Republic and Athleta.
And be Man. Despite the fact that Gap closed all its stores in Australia in twenty eighteen, it has the third most stores in the.
World, behind none other than H and M and Zara. Where is uniclothe and b Man.
Many of GAP's competitors, like Abercrombie and Fitch they ever warned of poor retail sales over the past week.
But not Gap. They've bucked the trend.
Yeah. Their revenue for the fourth quarter at was four point one billion US dollars, which.
Was slightly better than investor expectation.
But b Man, it was really they're better than expected earnings that got investors very excited.
And neck minute their share price jump by seventeen percentile.
But only see b Man because before you get too excited, GAP may be facing a bit of a supply chain headache.
Yep, they produced some of their products in China, in Mexico, in Canada.
Aka Trump's tariff.
Towns exactly, So what is the key learning here?
When tariffs go up, so do prices, and consumers are the ones often left holding the bag.
Now, JARSI wait, we know that tariffs are essentially taxes on important goods, and.
When governments impose them on countries, companies have two choices.
He's option one absorb that extra cost.
Option two pass it on to consumers.
And many retailers are panicking now because Trump has still promised to implement twenty five percent tariffs on Canada and Mexico, and.
He's pushed up the tariff on China to twenty percent as well.
GAP is one of the lucky ones. It claims that less than ten percent of their products are sourced from China and.
Less than one percent of their product comes from Canada and Mexico. Combine.
But others, especially those deeply tied to Chinese manufacturing, are not so lucky.
Fox dam If you are one of the three four Australians that don't know you seepreinuation balance and don't monitor it regularly, we have the perfect horse for you in the Flux Academy this month. Make sure to download the Flux app if you want to win some prizes as well.
Thanks for listening and we'll see you on Wednesday.