Now this is retail competition. There’s been much excited media talk about a price war in the Australian supermarket sector, but the reality is that compared to the trench warfare now racking the UK industry, our “war” resembles a genteel exchange of views over a cup of tea as Woolworths and Metcash insist on doing as much damage to themselves as they can manage, thereby allowing Aldi and Coles to make hay/profits at will. Just take a look at the latest casualty report from the trenches in the UK battle and compare to what we know in Australia. For the first time ever, Aldi and its fellow German deep discounter, Lidl, had their combined UK market share reach 10% in the 12 weeks to November 8; that’s a doubling in the past three years! And they’ve done it through deep price discounting, or “competition” (a word that sends Australian business into a state of shock and sprinting to the government for help) against much larger rivals.
According to the latest survey of the UK retailing sector from Kantar Worldpanel, Aldi lifted its sales 16.5% in the 12 weeks to November 8 from the same period a year ago, and Lidl lifted its sales by a huge 19%. With prices being slashed, the losers were many: Tesco, the biggest supermarket chain, suffered a 2.5% year-on-year slide; there was a 3.5% slide at Asda (No. 2 and owned by Walmart); and Morrison’s sales dropped 1.7% from a year ago. Among the majors, only Sainsbury’s had a rise in the period from 2014 — just 1.5%. Kantar says Aldi and Lidl attracted an extra million visitors a week over the 12-week period, compared with the same period in 2014, and the average spend per visit rose 4%, well above inflation. — Glenn Dyer
Qantas leap. Alan Joyce, the airline’s CEO crossed his fingers and promised on a stack of annual reports that the company would keep a lid on debt, would boost cash flow and do everything it could to be a good airline financially by retaining a strong balance sheet, with short-term liquidity of cash and revolving credit facilities to remain above $2 billion. And hey presto, out of the shadows came S&P with a ratings upgrade for Qantas, to BBB — stable, the second lowest investment grade rating (BBB minus would be the lowest).
S&P’s move restored the rating it had taken away back in late 2013 when Qantas was a very weak airline, staggering under self-inflicted costs from a fruitless capacity war with Virgin, over staffing and high fuel costs and a dud international business. Now that’s changed, thanks to cost cuts and reductions in capacity, and especially those cheaper fuel costs. The S&P move means Qantas is one of just six airlines around the world with an investment-grade rating. — Glenn Dyer
Profits from pigs, not papers. Poor old Piers Akerman, the News Corp tabloid columnist and serial worrier about all things small-l liberal, as well as everything on (and in) the ABC; nearly two years on we still remember poor Piers’ fulminations about Peppa The Pig and how she was a danger to the world as we know it because the ABC was broadcasting Pig, and Piers had spotted something he thought was suss:
“Even the cartoon character Peppa Pig pushes a weird feminist line that would be closer to the hearts of Labor’s Handbag Hit Squad than the preschool audience it is aimed at, he wrote in a column on his blog and published in News Corp Papers in December 2013.”
It was part of another anti-ABC rave from Akerman. And even some silly Liberal Party senators got stuck into the issue the next year at Senate Estimates. But Piers and his callow cheer squad missed a very important point or two. The ABC wasn’t the only broadcaster of Pig — so was Nick Jr, the cable TV channel owned by Viacom and shown on Foxtel, 50% owned by Piers’ long-time paymasters, News Corp. Pig remains the most watched children’s cartoon on Foxtel — ranking second overall in the cartoon stakes behind The Simpsons.
But Piers and his cohort of backslappers missed a further point — Pig, or rather her creators, Entertainment One, are a capitalist exemplar. The latest results for Entertainment One, released overnight Tuesday reveal a 42% jump in pre-tax profit to more than 42 million pounds (well over A$85 million) for the six months to September (an annual rate of more than A$170 million, but it will be closer to A$200 million given the sharp growth seen in the latest half year). Revenue in the TV business, (where Pig resides), jumped 77% to 81.6 million pounds, or more than A$170 million, or over A$350 million for the full year (but based on the growth rate, it could be more than a$400 million). So rather than a “feminist line” as Piers saw, MPig and her creators are determinedly capitalist, making as much money as possible by chasing after every dollar of profit they can find. Profits are a difficult concept for many at News Corp to understand, especially at The Australian and some of its lesser tabloids. In fact, Entertainment One could be more profitable this year than News Corp Australia’s newspaper operations. — Glenn Dyer