If Westfield is any guide - diluting the controlling Lowy family shareholding to put $3 billion in the tin at a 13% discount - Frank Lowy is battening down the hatches for a rough ride in retail world-wide.
Forget growth, for many in retail as elsewhere it is now about survival.
Former private equity play Pacific Brands, tipped back onto the share market with little cash but the usual bucket-load of debt, has spooked its retailers by going direct.
Here is a missive from one:
"Not only is Pac Brands going at 20%, double the industry USD dollar increase, for the end of Febuary, but they now have dropped this on us - direct selling of all brands.
"Most of the trade think (know) PB is desperate to bolster earnings with the borrowings so it is a full-on cash grab.
"There will be loads of anger (phones were running hot last night) at this bypassing of retailers, and it is not that you can't buy online - quite a few independents have set up their own websites at some. It is a calculated puff piece to the market by Malcolm Ford (PacBrands general manager) and it should be seen as just that.
"Free shipping etc ... it's very aggressive. PacBrands has already maxed pricing deals (rebates etc) to the majors at the expense of independents. And if they tell you it is for country mail-order blah - well that is where their best independents still are! The announcement is very telling, and would worry me if I had PB shares.
Also, Colorado is in trouble with its $640 million borrowings and about to breach covenants. This would be a major problem for Pac Brands (and Westfield etc) as they still do supply some of Mathers/Williams stocklines, e.g. Hush Puppies, Clarks, GroShu, Dunlop, budget mens and women's fashion.
Back to School is over - mixed reports - and February will be the telling month for Pac Brands and many of their retailer customers and landlords as Xmas/Summer comes home to roost. Retail is difficult enough without another nibbling at the edges. Last year saw a number of far-sighted shoe retailers trim down and over summer some fall over 9eg ShooBiz/Figgins). More to come.
It is no wonder that many retailers are fast reducing their dependence on PacBrands, who once was the dominant supplier (think over 60% of some stores stock not too many years ago) by far for independents - this announcement will ensure that those who still do large business will make sure they seek out other suppliers and brands fast!
