NAOS Asset Management

“The trend is not Mr Hounsell’s friend — a sales drop of 4.8 per cent, which is nearly one in every $20 of sales disappearing, is something that even Father Christmas can’t turn around.”

Solomon Lew, Chairman, Premier Investments [commenting on Myer's FY19 1Q sales figures]

As part of the NAOS investment process, we pay particular attention to the comments made by company CEOs and business leaders in order to gain a greater understanding of the current investment environment and key trends that may be emerging. Below are quotes from the week which in our view detail some of the most important and prominent industrytrends and economic factors impacting their businesses.

Retail

"In unprecedented times, Baby Bunting's top four specialty baby goods competitors all entered external administration resulting in significant price deflation as a result of distressed retailing. Despite this, Baby Bunting was still able to grow sales and transaction volumes within the difficult trading environment. The focus for the year ahead is to grow our business by continuing to deliver to our customers the broadest range, at the best value, conveniently across multiple channels while providing excellent service and advice."

Matt Spencer, CEO, Baby Bunting

“The trend is not Mr Hounsell’s friend — a sales drop of 4.8 per cent, which is nearly one in every $20 of sales disappearing, is something that even Father Christmas can’t turn around.”

Solomon Lew, Chairman, Premier Investments [commenting on Myer's FY19 1Q sales figures]

"When you strip a few internal things out, it was a flat year. Even our vegan cheeseburger is doing OK, much to my surprise...I've long since learnt that what people say they're gonna eat and what they do eat are different things. Look at Sumo Salad, it opens 100 restaurants then nearly goes broke."

Jack Cowin, Founder, Hungry Jacks

"We've had oil go up in price because of the drought, the sunflower oil we use for our fish and chips has gone way up in price and fuel's gone way up in price, so a box of fish and chips has gone up by a dollar or two depending on what type of fish and chips you get."

Andrew Mitchell, GM, Coffs Harbour Fishermans Co-op

"Earlier this year, Amazon assessed changes to the Australian GST law as a global company with multiple international stores and, in order to remain compliant with the legislation, made the difficult decision to suspend exports from our international stores to Australia...Following the announcement of these changes, we listened to the customer feedback and assessed how we could respond. Since that time, our teams have continued to focus their efforts on building the complex infrastructure needed to enable exports of low-value goods to Australia and remain compliant with GST laws.”

Amazon Company Statement

"We see that customer behaviours are changing, that people are not visiting in all the stores in the same way."

Jan Gardberg, Country Manager, Ikea Australia

NBN

“As you know from our corporate plan announcement in August we revised our revenue forecasts after making changes to our pricing last year. We have naturally no intention of diverging from our overall revenue projections outlined in our latest corporate plan."

Stephen Rue, Co-CEO, NBN Co

Banking

"Yes, I had moved to a firm recommendation to remove commissions to mortgage brokers. It certainly would have been a high risk move to try and reshape the industry ourselves. We could have suffered a material degradation in volume."

Matt Comyn, CEO, CBA

Housing

“There is no doubt that jobs growth in Sydney and Melbourne will quickly soak up the oversupply, (but) everyone is sitting on the sidelines and waiting to see what happens.”

Brendan Crotty, Chairman, National Housing Finance and Investment Corporation

Construction and Infrastructure

"Here we have seen a sharp contraction in new residential consents in the most recent quarter. This is particularly evident in the apartment or multi-family portion of the market....This is currently impacting our Australian businesses, particularly Stramit, Laminex and Tradelink, and feels like a medium term trend that has some distance left to run yet. In contrast to this the strength of the infrastructure project pipeline on the Eastern Seaboard continues to look strong for the medium term and provides some offset to what we are seeing in the residential sector."

Ross Taylor, CEO, Fletcher Buildings Group

"Investment in infrastructure is healthy, with prospects continuing in the water and irrigation market, as well as in the Australian renewables sector."

Rob Welletri, Managing Director, Monadelphous

"Although interest rates have picked up and housing turnover has been pressured, the home improvement backdrop remains strong, driven by robust real residential investment, home price appreciation which continues to encourage homeowners to engage in discretionary projects."

Marvin Ellison, CEO, Lowe's Companies 

"There is a strong pipeline over the next three years in infrastructure and mining construction projects. Customers are expressing a preference to hire equipment rather than incur capital expenditure, which was often the case in previous cycles."

Tony Spassopoulos, CEO, Boom Logistics

Agriculture

"The increase in global beef supply, which is likely to extend into 2019, has led to competitive pressure on pricing."

Hugh Killen, Managing Director, Australian Agriculture Company

Energy

"The shortage of domestic gas supply on the east coast is set to be exacerbated in coming years through the lack of developed and undeveloped reserves."

Ryan Stokes, CEO, Seven Group Holdings

Logistics

"The dynamics inherent in the logistics industry causing pain points for operators worldwide — increasing regulation, tariffs and taxes, trade wars, capital constraints, economic changes, margin pressures, to name just a few — create ever stronger tailwinds for great adoption and use of CargoWise One [WiseTech's software platform].”

Richard White, Managing Director, WiseTech Global Limited   

Employment

"Generally, we are starting to see labour pressures in our business."

Vik Bansal, CEO, Cleanaway



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