Fashion retail group Noni B has blamed the pre-election environment for the company’s full-year net loss, joining a chorus of other businesses and industries – but experts say the excuse may be a cop-out.
In the year to June 30, Noni B reported a loss of $3.5 million, down from a profit of $2.7 million last financial year.
The loss was largely the result of a one-off goodwill impairment of $5 million. Excluding this, the brand made a net profit of $1.5 million.
Despite the fall in profits, comparable sales were up by 1.5% and revenue increased to $125 million.
Announcing the results, Noni B managing director David Kindl said Australians are uncertain about the economy.
“The women’s fashion market remains challenging and sales throughout the sector have been impacted in July and August by pre-election caution,” he says.
Such talk is common among businesses. The general uncertainty caused by the prolonged election cycle causes consumers to save, rather than spend.
But retail expert and partner at Lowe Lippmann, David Gordon, told SmartCompany this “might be a bit of a cop out”.
“If you compare their results to Speciality Fashion Group, well SFG did quite well.”
“An election definitely does usually create a period of uncertainty in terms of business and consumer, but this has been an unusual election because of the longer leaf up and the message I’m getting from the marketplace is that the reaction hasn’t been as marked as it usual is,” he says.
A number of retailers have posted sizeable profits for the full-year, including Super Retail Group which recorded a net profit increase of 23% for the full-year. JB Hi-Fi’s full-year net profit also recorded a sizeable boost, up 11.2% to $116.4 million. Its sales for the region also increased by 5.8%.
Gordon says the long lead up to the election has meant it hasn’t become an issue in people’s lives, meaning it hasn’t had the same effect on retail spend as it has previously.
“If business and the consumer had to sustain a reaction to the election for over six months, it would be too emotionally draining and it would bring everything to a halt, and we know this isn’t happening as there are some retailers doing as well as many other sectors of the economy,” he says.
When the election date was originally announced by Julia Gillard, business identities criticised the early announcement, anticipating it would disrupt the economy.
Fairfax media chairman and Reserve Bank of Australia board member Roger Corbett labelled it “destabilising” for the business community, particularly the retail sector.
But consumer behaviour expert at Deakin University’s Graduate School of Business, Paul Harrison, has said elections aren’t important to the general population.
“It takes a significant event for us to change our behaviour. There was a [large] shift in that behaviour when the threat of the GFC became clear,” he recently told LeadingCompany.
“For most consumers, it’s a bit complicated to understand what it [the election] means. And so 95% of their retail purchases will continue. The other 5% they will put off, but only if they’re already risk averse to them,” he said.
Gordon says Noni B’s real issue is related to its stock and product range.
“The range and product is a big thing for it and there will be times, understandably, when some of the seasons aren’t as successful as others,” he says.