🦘 Godfreys Bites The Dust

G’day everyone!

Here’s what we’ve got in store for you today:

• An Iconic Aussie Vacuum Brand Goes Into Voluntary Administration

• December 2023 Retail Sales Came In Lower Than Expected

• Qantas Poaches Optus’ Head of Corporate Affairs

Let’s have a look at the market snapshot before jumping into the news:

Godfreys Bites the Dust: 93 Years in, Vacuum Giant Faces Closure

After an impressive 93-year run, Godfreys, the renowned vacuum cleaner retailer, is facing a tough reality.

The company has entered voluntary administration, signaling a possible end to an era in the Australian market.

Administrators from PwC are now at the helm, tasked with finding a buyer to breathe new life into this long-standing brand.

The situation looks grim.

PwC plans to shut down 54 stores in Australia and New Zealand within the next two weeks, a move that will unfortunately result in 193 job losses.

The future of Godfreys, which includes over 141 stores and more than 600 employees, now hinges on the success of the sale and the vision of a potential new owner.

Jane Allen, daughter of Godfreys co-founder John Johnston, expressed her sadness over the development but emphasized the necessity of this decision for the company's survival.

Godfreys' struggles can be traced back to a shift in consumer behavior and a decline in discretionary spending, which have severely impacted sales.

Founded in 1931, Godfreys had grown into one of the largest specialist vacuum retailers globally.

However, its journey has been turbulent, marked by ownership changes and financial struggles.

The company's founder, Johnston, reacquired it in 2018, only to pass away a few months later.

As PwC undertakes the restructuring and sale process, they cite challenges like lower customer demand, rising operational costs, and fierce competition as key factors in Godfreys' financial woes.

Retail experts point to a failure to innovate and adapt to changing shopping habits as contributing factors to the company's decline.

Black Friday Bargains Beat December Sales in Australia

Australian retail took a surprising turn in December 2023, with sales dipping 2.7% to $35.2 billion, influenced by the double whammy of Black Friday deals and rising living costs.

The Australian Bureau of Statistics (ABS) notes this decline follows a 1.6% rise in November, a trend driven by shoppers snagging Black Friday discounts, altering the traditional December shopping spike.

Ben Dorber from ABS points out the shift in spending from December to November, emphasizing the allure of Black Friday sales amid increasing cost-of-living pressures.

Despite December's seasonally adjusted drop, a marginal 0.1% trend increase indicates a subdued but steady retail scene.

The Australian Retailers Association (ARA) prefers to spotlight a modest 0.8% year-on-year rise in December 2022.

Notably, department stores enjoyed a 3.7% boost, with other retail sectors like cafes and food retailers also recording growth. However, household goods faced a downturn, dropping 3.2%.

Region-wise, Western Australia and Tasmania led with increases of 2.4% and 3.1%, respectively, though New South Wales saw a 0.6% decline.

ARA CEO Paul Zahra comments on the bargain-driven nature of shoppers during the 2023 festive season, attributing it to tighter budgets and cost-of-living challenges.

Zahra observes that department stores capitalized on Boxing Day sales, despite the general softening in discretionary spending due to high interest rates and escalating family costs.

Looking ahead, ANZ Research economists Madeline Dunk and Adelaide Timbrell predict weak growth into the first half of 2024, with potential improvement later in the year as inflation eases, and fiscal support, tax cuts, and a rate cut in November boost household incomes and spending.

Corporate Affairs Shuffle: Qantas Scores Optus' Head Of Corporate Affairs

It’s been a rough few months for Optus!

In a significant corporate shift, Qantas has successfully poached Danielle Keighery from Optus, two weeks before her slated start as the telecom giant's corporate affairs chief.

Keighery, known for her tenure at Crown Resorts and a 17-year stint at Virgin, is set to join Qantas as the new chief corporate affairs and communications officer.

Keighery's move comes amid a challenging period for Qantas, which has faced controversies and a tarnished brand image.

Issues such as allegations of selling fares for non-existent services and obstructing competition have put the airline in the spotlight.

Her appointment is part of a broader leadership overhaul at Qantas, following several high-profile resignations and new appointments, including Vanessa Hudson stepping in as chief executive.

Hudson praised Keighery's extensive experience in corporate affairs and her deep understanding of the aviation industry, expressing confidence in her ability to make a valuable contribution to Qantas.

Keighery's appointment leaves Optus in a lurch, currently without a head of corporate affairs.

This comes at a time when Optus is also striving to repair its image following a significant network outage and the resignation of its previous CEO.

As Qantas gears up for a period of transition and renewal, the industry watches keenly to see how these strategic moves play out in the dynamic and challenging world of aviation.

Bayer's Legal Battle Down Under

Bayer AG is facing a critical legal test in Australia, as a judge prepares to rule on whether the company's popular weedkiller, Roundup, caused cancer.

This class action lawsuit, consolidating over 1,000 claimants, is the first of its kind in Australia to reach such an advanced stage.

The heart of the case lies in the allegation that exposure to glyphosate, the herbicide in Roundup, led to non-Hodgkin lymphoma, a type of blood cancer.

Bayer has been grappling with similar claims globally, having already settled for billions in the U.S. In one striking instance, a Pennsylvania man was awarded $2.25 billion, significantly impacting Bayer's share price.

This Australian lawsuit, primarily against Bayer's subsidiaries, could set a precedent in a country where Roundup is extensively used. If the Federal Court in Victoria finds Roundup culpable for causing lymphoma, the next phase will assess Bayer's negligence and potential damages.

Bayer maintains that Roundup and glyphosate are safe, standing firmly behind its products, which have been in global use for nearly half a century.

The lead plaintiff, Kelvin McNickle, alleges he developed lymphoma after using Roundup for over 20 years. His case is among five filed in Australia, with the others either stayed or pending based on the outcome of this trial.

Bayer's acquisition of Monsanto in 2018, the original producer of Roundup, added to the complexity, as Bayer inherited ongoing legal challenges.

The outcome of this Australian case could have significant implications for Bayer's global operations and the ongoing debate over glyphosate's safety.

That’s All!

If you’ve read all the way up to here, we just wanted to let you know that you’re an absolute legend!

Time to go to work and show off how clued up you are about what’s going on in the business world 💪

Keep an eye out for tomorrow's newsletter. Until then, have an awesome day folks!