It’s a sad reflection on the state of Australia’s discretionary retail sector that one of its biggest players, Mosaic Brands with 700 stores and almost 3000 staff, will disappear after an administrator’s auction couldn’t find any buyers.
Iconic names like Katies, Noni B, Rockmans and Rivers that have been part of the landscape for decades may evaporate without a trace, other than a line of creditors. After a hunt for possible buyers, the receivers and managers of Mosaic this week said they would be shutting all the stores in the group over the coming months.
Mosaic, whose brands catered to a value-seeking demographic, had its own particular set of financial challenges. But the fact that its individual businesses couldn’t be sold for even bargain-basement prices says plenty about the cost of living struggles being faced by many Australian consumers.
The discretionary retail sector is Jonesing for an interest rate cut to breathe some life into moribund sales growth and shrinking margins.
Mosaic owns the Rivers brand along with Noni B and Millers. The company called in administrators last year.
We have seen a string of profit downgrades from the sector that has now been under pressure for more than a year.
The landscape is characterised by deep discounting, which hasn’t been enough to lure customers back to the shops.
The latest example is one of our largest and best known brands, Country Road, which also owns Mimco, Witchery and Trenery. Its parent company, the South African group Woolworths, has reported a sales slump in the 26 weeks to the end of December 2024 as the business grappled with deep discounting across the Australian market.
It said sales for the 26 weeks to December 29 fell by 6.2 per cent and 7.8 per cent on a comparable stores measurement.
The company said in a trading update on Tuesday that the Australian consumer was feeling the sustained effect of high interest rates and elevated living costs, which continue to weigh on consumer behaviour and discretionary spending. It compared its Australian performance with sales in South Africa, which were not as depressed thanks to easing interest rates and moderating inflation.
