Assignment #3: Another comparison

Another fellow ACCT11059 student, Kelly Morton, also had a retailer. I couldn’t help myself and wanted to create a mega graph! So I plotted my company: OrotonGroup, Sue’s company: Noni B, and Kelly’s company: Michael Hill’s  Economic Profit and Profit Margins below.

If you haven’t read my first retail comparison, have a quick read through here.

Here goes.. mega graph:

OrotonGroup_NoniB and Michael Hill 2

In this light, 2014 really wasn’t a great year for our retail companies. The ABS data analysis from my previous blog post also shows a dip.

I think this graph shows though, that despite having a commonality of poor performance in 2014, every company is just so different. For example, Michael Hill had the lowest numbers of Economic Profit, despite having the highest, and most consistent profit margins (based on our restated financials).

The graph does show the average lines for Economic Profit and Profit Margin are very close together which I think is interesting.

Lots to talk about. Please leave comments below!

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4 comments

  1. It looks like 2014 was not a good year to own a retail store. I find this very interesting because looking at MHIL annual reports they had a major change in figures between 2013 and 2014. For me it was a massive a significant change on their annual reports so considering that other stores also had such changes prompts me to ask what happened? I know the mining regions, especially Mackay suffered a lot with the crash of the mining boom but what sparked such downturn overall during this period? Is it a domino effect? Did other industries and regions suffer from the mining downturn? Or was there something else that we missed in 2014?

    I was not overly happy with MHIL results after calculating these ratios; however, after looking at the comparison of these three companies I am not as disappointed as I was. To see that MHIL had the highest and most consistent profit margin over OrotonGroup and Noni B was very fascinating. It also informed me that they do not have a very good economic profit which is a real shame.

    I’d be interested to know what either Sue or yourself thought in regards to your findings? Were you surprised or disappointed? Maybe you were happy with the comparison…

    Like

    • I agree, a downturn in mining as one of the factors effecting consumer spending. I know from my marketing assignment, household discretionary spending in WA has been at very low levels over the past couple of years. Like, Mackay, mining activity is also a huge influence on jobs, wages, and spending.

      It’s also important to remember the increase competition from overseas online retailers might also impact the Australian market, for example Net-a-Porter, Wiggle, ASOS etc.

      As far s a disappointing in OrotonGroup, I can’t say that I am. The ratios are and financials are a reflection of the challenges of Oroton’s business – which is not only selling their own retail goods, but distribution of international brands in Australia. If a big seller for them, like Ralph Lauren was making lots of sales and the company pulled the plug on the relationship that isn’t a fault of Oroton – more like becoming a victim of their own success as an effective distributor.

      Also Australian retailers have a long way to go as far as catching up to other countries in customer experience. Also their effectiveness in being able to keep up with the fast fashion trends that is prevailing in the retail industry today. It’s not really a wonder that people are shopping online in this case, and more over, using their discretionary spend in other areas. Discretionary spend might be constrained in economic downturn, but that doesn’t mean fashion retailers have to bear all of the brunt of that effect – why not travel, or household goods, less renovations, less booze, going out to dinner or movies etc.?

      Liked by 1 person

  2. I am not sure who the target market is for MHIL and the OrotonGroup but the mature lady targeted by Noni B, tightened her belt in 2014 following the Federal Budget according to the Chairman’s Report in the 2014 Annual Report. There was also unseasonally warm weather which reduced sales of their winter offering. The 2013 report noted that wages had increased across the board but also due to the introduction of Sunday trading in Western Australia and I guess this would have had a flow on effect in 2014.
    The biggest issue for Noni B has been the write-offs of intangibles due to poor performance leading to a decline in value.
    Your companies look far more attractive than their dowdy Aunt Noni B, MHIL looking particularly attractive with their profit margin defying the industry trend.

    Liked by 1 person

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