Services expand but tough for retailers
MOTORCYCLE Holdings, one of Australia’s largest motorbike dealership operators, is set to buy an accessories and parts retailer for $ 123.2 million. The company yesterday said the acquisition is expected to increase its annual revenues by about 30 per cent to $ 310 million, and double earnings to $ 30 million.
ASX- listed MotorCycle Holdings said the Cassons’ retail and wholesale business will increase the group’s existing retail accessory business and expand its distribution network.
Cassons principals Rob and John Casson, will take up senior executive positions with MotorCycle.
Cassons has eight retail outlets under the name Motorcycle Accessories Supermarket in NSW and Victoria, as well as online. ACTIVITY in the Australian services sector is still expanding but at a slower pace, with business conditions variable across sectors and states.
The retail and hospitality trades are finding conditions particularly tough as higher household electricity costs and slow wages growth curb consumer spending. Retailers are also feeling the pinch of growing competition from online and offshore sellers.
The Australian Industry Group yesterday said all businesses were being affected by rising energy costs, which was putting pressure on margins and proving difficult to pass on to customers already reluctant to spend. The Australian Industry Group’s Performance of Services Index ( PSI) fell 0.9 points to 52.1.0 points in September, but stayed above the 50- point level signifying expansion.
The overall services sector has now expanded for seven months in a row.
However, Ai Group chief executive Innes Willox said, while the big services sub- sectors are doing reasonably well, growth is not broadbased.
“Some big variations in conditions are still apparent across sectors and across states,” Mr Willox said in a statement.
He said business- oriented sub- sectors such as property and business services, finance and insurance, and communications are reporting positive demand generated by the construction and mining sectors, mostly in the eastern states.
But retail and hospitality services are experiencing reduced spending by consumers due to higher household electricity costs, flat wages growth, and poor consumer confidence.
Businesses in Western Australia are finding it tougher than those in the eastern states. Six of the nine services sub- sectors in the Ai Group’s index expanded in September.
Personal and recreational services; finance and insurance; communications; and health, education and community services grew at a faster rate. Wholesale trade grew at the same rate, and growth in property and business services slowed.
Activity in the retail sector shrank at a faster pace, the hospitality industry contracted to a record low, and transport and storage slipped back into contraction.