Business stories from the past week, compiled by Jason Maywald:
1) News.com.au: Coles’ bold plan could sink rival
It was an easy to miss bullet point at the strategy day of Coles conglomerate Wesfarmers last week.
It was buried on page 58 of the tome of documents given to investors so you’d be forgiven for not hearing about it, especially given all the coverage from the event was about the closure of a fifth of all Target stores.
But, there it was in black and white: Coles plans to open a slew of convenience stores, far smaller than its current supermarkets.
Retail analysts have said there’s one retailer who could be very badly affected by Coles’ move to downsize — the already struggling IGA.
2) AFR.com.au: Toys ‘R’ Us liabilities outweight assets fourfold
Hopes are fading for a rescue of Toys ‘R’ Us in Australia after a new report showed creditors outweighed assets fourfold.
Toys ‘R’ Us (Australia) owed $94.9 million to unsecured creditors when it went into voluntary administration last month, but the realisable value of its assets was just $22.8 million, according to a report lodged with the corporate regulator on Friday.
Assets included $47.5 million of stock, which was estimated to have a realisable value of just $15 million, and cash of $6.7 million
About $88.8 million was owed to an affiliated company, most likely Toys ‘R’ Us in the US, which collapsed in March, and $3.02 million owed to employees. The Australian subsidiary also had contingent liabilities in the form of landlord lease commitments worth $141.4 million.
3) News.com.au: Australia leading the world in decline of small business startups
Australia is leading the world in the decline of small business start-ups, spelling bad news for the future prosperity of the nation in the face of an ageing population, a new book has warned.
Between 2003 and 2014, Australia’s small business entry rate declined by 40 per cent, a substantially larger decline than the US, UK and Canada, according to the book Demographics and Entrepreneurship, a joint publication by Liberal-aligned think tank, the Institute of Public Affairs, and Canada’s Fraser Institute.
The book, subtitled Mitigating the Effects of an Aging Population, is a collection of 10 essays making the case for governments to cut red tape, reduce taxes and create an entrepreneurship-friendly environment to combat stagnant productivity.
4) SMH.com.au: NAB’s loans without guarantees driving growth, says exec
Almost half the small firms accessing finance through National Australia Bank’s unsecured lending product have shown double digit growth in their turnover in the next six months, says the bank’s executive general manager business direct and small business Leigh O’Neill
NAB has targetted unsecured lending aggressively through its QuickBiz product in a market where it is competing with fintech companies such as Prospa, OnDeck and Moula.
Prospa last week pulled its planned Australian Securities Exchange float in the wake of discussions with the corporate regulator, the Australian Securities and Investments Commission (ASIC), over the terms of its contracts.
5) AFR.com.au: Go Healthy shakes up vitamins with big Chinese backer
One of New Zealand’s biggest vitamins brands, which is being bankrolled by 80 per cent owner Chinese private equity firm CDH Investments, is aiming to become a top five player in Australia’s $3.5 billion vitamins market within two years.
Go Healthy, which operates at the premium end of the market with distinctive black and gold labels on its products, is steering clear of the big supermarket chains but has 50-plus products on the shelves of 1200 outlets of big pharmacy players including category killer Chemist Warehouse and pharmacy chains Amcal and Guardian.