The China connection...

Australian financiers must be worried.... what better way to stifle concerns that you are too exposed to the pitfalls of your biggest trading partner and engine of growth (or as Niall Fergusson would put it, your new colonial master), than to have a serious heavyweight economist interview to dispel any concerns about all those annoying images of ghost cities which have been making the press recently.

Over to Professor Garnaut (whose son John Garnaut is a top China analyst) batting away some pointed questions from Tony Jones and not an upbeat conclusion:

ROSS GARNAUT: Yeah. I think we've got some big adjustments coming and that's going to be quite difficult for us. China's growth being a couple of percentage points below the average of the few decades past does take the edge of things, but more important for Australia is the big structural change occurring in China. That's all written into the 12th five-year plan from 2011 to 2015, a deliberate policy of trying to increase the consumption share of total expenditure....

In fact the interview is excellent and covers a number of key aspects - link here.

Of course this would not be a worry for Australian banks in particular if they did not have a large exposure to China and rest of Asia (or was it just China?)...

....Australia’s banks have more-than quadrupled their exposure to Asia in the past five years as they seek to cash in on the resource-rich nation’s growing trade ties with the region, the country’s central bank said.....That hasn’t substantially increased their risk profile, the central bank said, although credit risk remains an “an area to watch.”... (here).

Oh dear...

RBA speaks Chinese, happy outlook

Before you worry that RBA bank governor has availed himself of Mandarin or Cantonese, fear not as this post relates to RBA policies and announcements.  This blog has been advocating for a while that, possibly owing to great trade flows, the RBA has chosen to throw its lot very much in with its biggest trade partner and not join the currency war (or even talk about the currency war).  The RBA is in denial, about the need for radical banking regulatory overhaul, the need to recognise the high AUD is hollowing out the economy and the failure to recognise the rapid end of the mining boom.

Recent announcements on this point that banking reform had gone too far (or would shortly go too far) were made this week by APRA and the RBA- ironically as Australia is one of the first to abandon interest rate quotes for fixings in favour of actual trades following the LIBOR scandal.

So perhaps even more ironically to discover today that this argument is doing the rounds in respect of China's weaker banks.  The Chinese banking sector is a constant battleground between entrenched state owned enterprise interests and reformers:

...The China Banking Regulatory Commission’s decision Wednesday to tighten rules covering increasingly popular wealth-management products ....Although bank stocks were getting slammed on Thursday – with small- and medium-sized lenders hit much harder than the Big Four ...Analysts at Barclays said the larger lenders could be less impacted by the CBRC regulations, given that their exposure to wealth-management products is lower as a percentage of total assets... (here).

Will Australia want to be joined up with Chinese financial policy for much longer?

The Cyprus connection...

Australia is not Cyprus.  Professor Ross Garnaut said as much during an interview with the ABC's Tony Jones this week (more on that later).  Of course Australia is not a small country tied into an unpalatable and unfunctioning monetary union like a Mediterranean peripheral country.  So why the headline.

Well Australia is tied strongly to China and... is very dependent on offshore financing.  Since the GFC started in 2007 Ozzie banks were exposed for the relatively small deposit bases - something they have been remedying in recent years (though not without using this as an excuse to gouge depositors).  This in itself is not particularly remarkable - the Aussie dollar and bond markets have swelled with surging inflows as worldwide investors have galloped in for healthy returns and interest rates in Australia's booming economy.

But therein lies the risk - should a sudden reversal of sentiment cause a 180 degree turn and a rush of money out of the country, how exposed will #Ozeconomy be? It's hard to say but one tweet by respected economist Stephen Koukoulas raised an eyebrow.  Though justifying the current strong position there does seem to be a hint of possible future vulnerability for Australia:

All is fine for now but worth remembering that confidence is precious...

UPDATE - Bloomberg has an article indicating that foreign interest in Australian bonds is falling:

...Banks held A$76.2 billion ($79.5 billion) of securities issued by regional borrowing authorities, or 37 percent of the outstanding debt, at the end of 2012, according to data from the statistics bureau. That’s up from A$71 billion, or 35 percent, at the end of the third quarter. The share of foreigners’ holdings fell to 32 percent, the lowest level since June 30, 2009....(here)

Pettis on risks to Australia...

Great interview out (here).  Some highlights: (in response to the impact changing Chiinese growth will have)

...First of all investment growth will slow down significantly and maybe even go negative which means that China, which is a disproportionately large source of demand for hard commodities, 60 per cent of iron ore, 40 per cent of global copper, etc, that demand is going to go down significantly. That will hurt the commodity exporting sector which is unfortunately very important in Australia.

The other important consequence is that as China rebalances almost by definition that means China’s export competitiveness will be eroded which is very good for the manufacturing sectors around the world. So in Australia we’ll see the commodity sector get badly hurt, the manufacturing sector do relatively well but in the short term the balance will be negative. I think growth rates will slow down significantly here....

More on RBA reticence

It has been noted on this blog that the RBA is clinging to its mining first policy and failing to engage with the rest of the world's central banks as they battle the nascent currency war.  Following its comments seeking to reassure earlier in the week, there has been some decent commentary on Macrobusiness.com.au about comments of the RBA and APRA on the difficult policy reform environment and how out of step the two bodies are with the rest of planet earth.

As noted RBA Governor Stevens decried reform fatigue:

....a point in the financial regulatory sphere where the G20 should be looking for careful and sustained efforts at implementation of the regulatory reforms that have already been broadly agreed, but being wary of adding further reforms to the work program....(here)

Macrobusiness notes the underlying concern could stem from a number of concerns - the amount of reform already, concerns about a change of government with new policies and the capacity of banks to comply more or even "that the RBA is more worried about the approaching mining investment cliff than they are letting on".

All true but this blog has a slightly different view.  Macrobusiness also talk about recent speeches at a meeting of central bankers in London this week, in particular from Fed Chairman Bernanke which it seems he is basically justifying the total debasement of the US Dollar via money printing programs:

....Regarding the effects of monetary easing on exchange rates and exports, I would note that trade-weighted real exchange rates of emerging market economies, with some exceptions, have not changed much from their values shortly before the intensification of the financial crisis in late 2008. Moreover, even if the expansionary policies of the advanced economies were to lead to significant currency appreciation in emerging markets, the resulting drag on their competitiveness would have to be balanced against the positive effects of stronger advanced-economy demand..... (here)

At a time of recurrent flagging demand! It goes on...

...It is true that interest rate differentials associated with differences in national monetary policies can promote cross-border capital flows as investors seek higher returns. But my reading of recent research makes me skeptical that these policy differences are the dominant force behind capital flows to emerging market economies; differences in growth prospects across countries and swings in investor risk sentiment seem to have played a larger role...

If this were true then the record high run of the Australian dollar would be simply down to the country's economic opportunities and not because Australian government bonds pay rates far higher than nearly most of the world!

So there you have it - Macrobusiness interprets this positively and mildly - positively in the sense that the Fed's actions are innovative policies and the actions by the RBA are failure to get with the program. This blog broadly agrees but comes to a different conclusion.  There is a currency war going on the the Fed's policies are especially provocative.  It is not that the RBA is not following - so far the RBA seems to be ignoring the situation completely and hoping it will go away..!  It will not and Australia is vulnerable...

Are your deposits safe?

A question many watching the events in Cyprus will ask.  Without going into detail about the local deposit insurance scheme for Australian banks, it was interesting to note that some online observers noticed the following policy update from the Reserve Bank of New Zealand that has depositors seeing their funds partly frozen in the event the central bank enacts a resolution.

...In addition, a portion of depositors’ and other unsecured creditors’ funds will be frozen to bear any remaining losses. To the extent that these funds are not required to cover losses as more detailed assessment of the position of the bank is completed, these funds will be released to depositors. At a high level, this outcome replicates the outcome that would apply in the event that a failed bank was liquidated. The primary advantage of the OBR scheme, however, is that depositors would have access to a large proportion of their balances throughout the process. This contrasts with what would happen under a normal liquidation, where depositors might not have access to any of their funds for a significant period....(here).

Meanwhile regulator APRA has pushed for full implementation of capital and liquidity requirements on Australian banks - a sign of greater pressure on banks and slower future growth, but any sign of weakness?

...While Australia had a more moderate experience in the lead-up to the crisis, Mr Edey said there was no doubt that some parts of the global financial system overexpanded by "a significant margin". This had been driven by one-off factors, such as deregulation and low inflation, that had now run their course...."On any reading, it seems clear this will be an environment where it's harder in general for banks and for the system as a whole to grow," he said.... (here)

Beware of Oz banks!

That is the message coming from a couple of articles looking at work that has been done in analysing the overvaluations and high exposures to risk of some of Australia's largest banks.  As has been mentioned before it is not a good sign.

...The Reserve Bank's financial system guru says Australia's banks and wealth managers are probably past their growth heydays....Speaking at a financial sector leadership luncheon, the RBA's assistant governor (financial system) Malcolm Edey told the gathered heavy hitters that the days of spectacular growth in their sector most likely finished with the fall of Lehman Brothers, and the global financial crisis that ensued....

...."While it is difficult to specify what that might mean in numerical terms, a return to financial sector growth rates consistently higher than the growth of nominal GDP seems unlikely for the foreseeable future."...(here)

Similarly for those considering investments in Australian banks, there were words of caution from one analyst.

...Mott ends up scorning the new paradigm theory, cautioning that investors choosing to treat banks as yield plays is a dangerous approach given that they represent 19-times leveraged plays to the economy...."Valuing any bank as an annuity is courageous; just look overseas," he says. "Aussie banks are good -- but they are not infallible." (here)

What's wrong with the RBA

A well written piece looking at the short-sightedness of the RBA revealed by Philip Lowe in his speech this week.  While there was a logic to Lowe's statements, it is argued that they were unbalanced, skewed by bias and importantly not based on sound assumptions.  Couldn't agree more!

..., had macroprudential tools been used then the RBA would never have had to fear a blowoff in credit associated with the boom, rates wold have been much lower and the dollar too. We would not have had to embrace Dutch disease as a way of managing surging mining investment...

...Lowe’s internal balance (note it is not “external” balance leaving him an out later on) of course did have its casualties. The major ones being Australia’s non-mining tradable goods sectors: tourism, education, services generally and manufacturing especially. As we know, the last ABS private capex report showed manufacturing investment in outright collapse, running at 1989 levels before inflation adjustment: 

..The truth is it’s a punt and in this context it is hardly fair to describe Australia’s growth as  enjoying “internal balance”. If China does revert to mean, we’ll have nothing but under priced dirt to sell overseas...(here)

and that's not to mention the currency war!!

The Financial Times has a more sober analysis, focussing on the yield curve returning to normal (with its suggestion of a return to normal interest rate expectations).  As above, expectations of lower short term yields probably rests on assumptions which may simply not be true...wait and see.

Calling a market top

Life's pretty good for the Oz Corporate Sector.  Shares are looking up and for banks particularly.  A giddy piece by Myriam Robin painted a rosy picture, especially for the banks which "became more valuable by market capitalisation than all of those in the eurozone".

No worries about banking systems and debts exceeding the size and capacity of the underlying economy a la Cyprus then.  The Commonwealth Bank gets a special mention as it hit highest equity valuation for a day

...CBA has certainly been a very strong contributor, particularly because it’s attractive for investors seeking a lower risk.... Part of the reason why the banks, and indeed the whole economy, got through the GFC relatively unscathed is because of government-mandated limits on the amount of risks banks could take on. Our banks had relatively low levels of sub-prime debt, and were less highly leveraged than those overseas....(here)

A conventional view if not truly accurate.  CBA's mammoth position in the market is a result of it having swallowed up ailing Bankwest in a shotgun takeover in the midst of the outbreak of the GFC in 2008 (more details here).  And for better or for worse, the major banks oversized position has left them gouging their customers on deposits and mortgages and vulnerable to a turn in the wholesale markets.  Or to put it another way - being a large bank in a world where all other banks are trying to rapidly downsize is a bad thing!

As if to add to the sense that things can only head downhill, Chinese buyers are increasing their interest in Australia's financial sector:

..."What hasn't happened in a big way, but is starting to, is banking. Chinese banks finance a lot of banks around the world and we're starting to see them open branches in Perth and Sydney, looking to service Chinese clients here, but it is the beginning of what might be significant growth in the industry for China," he said....(here).

What bad could come from foreign investment and new funds? Well with Chinese investors, though capital rich, are not always successful investors.  In the mining sector, the most notorious failure is the $2.6bn Karara iron ore joint venture between China’s Anshan Iron and Steel and Australia’s Gindalbie Metals which has been weighed down by infrastructure design changes, rising material and labour costs, and currency movements and seen its budget blow out to $8 billion, then up to $10 billion (here).

Let's hope the new masters can handle the ride down from the top of the cycle when banks turn sour..

High price balconies

Showing a creative attitude and that evidently Sydney can still turn out good weather, one young accommodation seeker has taken to living on a balcony for the not paltry sum of $215 a week in inner Sydney while looking for a place to live.  Not only a tale of urban bohemia, Josh Chamberlin's story of moving to the pricey Sydney market illustrates the general degree of housing and mortgage stress in the  Sydney and Australian market - another side impact of central bank policy in allowing strong external financial flows to inflate asset bubbles including overpriced real estate markets.

One state government made noises this week about programs for increasing housing supply but these will doubtless get held up by delays and red tape.

Again more effects of hot money flows into Australia...

Receivership - coming to a company near you

Recent reports of failed businesses include high-tech Adelaide engineering company Priority Services, Potato company Mondello Farms and Victorian manufacturer the Starmaid Group.

....Priority Engineering Services had been operating in Elizabeth South since 1984 but a downturn in contracts has led to receivers moving in and staff yesterday being made redundant....Receiver Ferrier Hodgson was already talking to parties interested in leasing or buying the company's 10,000sqm site.

What links all of these together apart from general slowdown and industry specific factors?

...It is no secret that ...manufacturers are facing extremely challenging times...Companies are struggling under a high cost, high wage, high currency environment."

If you are confused about how the high currency and other policies could be causing damage to the economy while being proclaimed as good by the Reserve Bank of Australia, then you are not alone - so are we!  In fact we think the RBA is suffering from short sightedness or only looking through one eye

The one eyed central banker

Interesting statements from Deputy RBA governor Phillip Lowe that high AUD has been a boon for Australia.  In classical theory a high currency slows imports and curbs inflation.  But this analysis ignores hot money flows and asset bubbles....

..."Had we not experienced the sizeable appreciation (in the value of the Australian dollar) over recent years, it is highly likely that the economy would have overheated and that we would have had substantially higher inflation and substantially higher interest rates," he told an economics forum in Sydney on Tuesday...

Well possibly, but globally inflation is low and interest rates are at rock bottom and the rest of the world...

...."At the moment though, the available evidence does suggest that lower interest rates are doing their work broadly as expected." (here)

This is a very narrow analysis.  Will Dr Lowe agree with this analysis when the hot money recedes, the currency drops and low interest rates fail to stimulate as is occurring elsewhere?

All calm for now?

BANK shares, making up a record percentage of the stockmarket after their run to record and multi-year highs, show few signs of slowing as the global hunt for yield powers on, despite concerns about their valuation and investment risks (here).

...Australia’s bond market is benefiting from strong international demand for assets in the nation’s currency, Debelle said today. Sales of sovereign notes by Japanese investors have been “more than compensated for” by other asset managers boosting purchases, and the market has become more attractive to foreign borrowers, he said....

...“Kangaroo issuance has been supported by the broad-based reduction in spreads, the attractive basis, and foreign investors looking beyond AAA instruments for Australian dollar exposure,” he said. “These foreign investors have been notably active and Asian investor participation in particular continues to grow.” (here)

Another retailer goes bust...

More liquidations to be expected?

Mothercare customers have lost hundreds of dollars worth of gift cards and deposits since the baby clothing retailer was put into voluntary liquidation....

...Mothercare customers have lost hundreds of dollars worth of gift cards and deposits since the baby clothing retailer was put into voluntary liquidation.

The customers, many of whom are expectant mothers, are angry with the retailer, which has refused to honour gift cards or deposits after going into administration six weeks ago... (here)

RBA hacked...

...The Reserve Bank of Australia (RBA) said it had "on occasion been the target of cyber attacks", following a report in an Australian newspaper. (here)

Oz banks hooked on the English habit...

It is well known that Australian banks are hooked (that is dependent on) overseas funding (which was part of the reason for the recently introduced backstop facility by the RBA).  However the below report of a case in respect of overdraft charges bears a striking similarity to cases in respect of such charges in the UK, where banks had to pay billions in compensation...

...Australian banks are being targeted in a massive class action suit in New Zealand, which aims to recover about $800 million in overdraft penalty fees....A trans-Tasman grouping of legal firms calling itself Fair Play on Fees estimates that as many as 1 million New Zealanders are eligible to join the class action....

...Lead lawyer Andrew Hooker says the lawsuit, against the big four Australian-owned banks and Kiwibank, seeks to recoup excessive penalty payments taken by the banks over the past six years....He says the average fee for an overdrawn account, late credit card payment or bounced cheque is about $12. (here)

Rotten super

Interesting fraud case involving a self-managed superannuation fund (pension fund) - tip of the iceberg?

...Last week, ASIC asked the Federal Court to appoint liquidators to MOGS as part of its investigation into a self-managed super fund scheme that allegedly misappropriated $4.5m from almost 400 clients around the country....

....Mr Gore, son of the late Mike Gore, who built the Sanctuary Cove resort on the Gold Coast in the 1980s, was listed among BRW's top 200 richest Australians before the global financial crisis. But in April this year, he filed for bankruptcy, citing debts of $282.9m after a string of failed deals, including taking on the Sanctuary Cove project that had bankrupted his father....

...According to ASIC's statement of claim filed to the court and obtained by The Australian, it is alleged that only $455,000 of the $4.75 million raised by ActiveSuper and Royale Capital was used to buy 14 homes in Arizona via companies in the US, the British Virgin Islands and the Cayman Islands....The remainder of the money was allegedly used to create loans for MOGS, a company in which Mrs Gore is a director and which counted Mr Gore as a consultant... (here).

A Gough moment?

"Well may they say god save the surplus, but nothing can save the Prime Minister" was not said by former prime minister Gough Whitlam, but is the message from recent piece in the diplomat:

...Australia may be set for a record 22^nd straight year of economic expansion, but it will not save the federal budget or Prime Minister Julia Gillard’s job. That was the message from the latest economic data along with an election in West [sic] Australia state, where voters handed Gillard’s Labor Party another drubbing....

...while real (after-inflation) GDP met expectations, nominal growth only expanded by 0.5 percent in the quarter and 2 percent from a year earlier – well below the government’s previous forecasts....“It is unusual for nominal GDP to grow this slowly, and this continues to drag on the government’s revenue collections,” Swan admitted....(here)

More on the RBA backstop

Excellent piece from Chris Joyce on the RBA Backstop.  Question is does it show the full extent of the weakness of the Australian banks in their descent into crisis or is this the pre-emptive strike to hit out at the markets?  Yes Aussie banks are vulnerable coming off good times due to their reliance on wholesale funding, but will the RBA's actions be enough?

...In a globally unique policy, the Reserve Bank of Australia will supply banks with a permanent bailout facility worth up to $380 billion by 2015....The policy has been designed by the RBA to help banks satisfy stringent new liquidity tests which simulate “acute stress scenarios” that deny banks funding for 30 days under the post-GFC rules, Basel III....Local regulators argue that insufficient liquid assets such as government bonds meant they had no choice but to give the banks a new taxpayer-backed “line of credit” that could be tapped at a cost just above the RBA’s cash rate. Smaller building societies and credit unions are not subject to the liquidity tests and will not, therefore, have access to the bail-out fund....

...The Australian Financial Review has been told that the Swiss-based Basel Committee, which is the supra-national regulator of bank regulators, was initially opposed to what is known as the “Australian solution”. Only one other country, South Africa, has emulated it, although Singa­pore is evaluating it....

...With actual leverage of roughly 26.5 times, a 4 per cent fall in asset values would, on average, wipe out the major banks’ capital. While the banks are regarded as being durable institutions, it does not take much duress to invoke solvency threats. The Basel Committee’s second finding was that banks should hold more liquidity in the form of high-quality liquid assets to pay out depositors and wholesale bond holders during times of stress....(here)

ANZ in a bind

Readers may have spotted commentary about ANZ had released results recently which showed it was under greater pressure than some of its rivals (including CBA which managed to scoop up Bankwest for a song).  And not surprisingly come the job cuts...

...Australia & New Zealand Banking Group Ltd. (ANZ), Australia’s third-largest bank by market value, plans to cut about 50 jobs in institutional and international banking as lenders trim costs amid weak credit demand....Australian banks have relied on staff and pay cuts to protect profit as they confront the weakest demand for home lending since 1977. In 2012, ANZ announced plans to shed 1,000 jobs by September of that year as part of Chief Executive OfficerMichael Smith’s efforts to offset slumping loan growth (here)

But in fact all banks are trimming...

...Commonwealth Bank of Australia, the nation’s biggest lender by market value, will freeze base salaries for people making A$150,000 or more in its institutional banking and markets division, an internal memo showed in July....Westpac Banking Corp. (WBC), eliminated more than 500 roles early last year. National Australia Bank Ltd., is scheduled to brief investors on its technology program and its cost management plans on March.13.

Property got hot...

A question of who is resourced when it comes to extra-judicial muscle...

...Fairfax Media has found desperate companies are increasingly hiring self-described ''mediators'' like Ray ''Rugby'' Younan, James ''Big Jim'' Byrnes and Alex ''Little Al'' Taouil to resolve and collect debts....A series of high-profile multimillion-dollar bankruptcies over the last two years has created a domino effect resulting in out-of-pocket sub-contractors employing people with questionable pasts to chase debts for them....

...The Australian Securities and Investments Commission found one in four building companies go bust, the worst figures for any industry, with a total of 1113 insolvencies reported last year. Mr Parker said ''hoons and goons'' have always been in the building game but the economic downturn has made some builders ''do desperate things''. (here)

A splintered backstop for Oz banks

Great piece in AFR analysing the nature of the RBA's commitment to backstop Australia's large banks in case of emergency.  As has been so problematic in Europe, it seems the central bank is on the hook, and early.

...The Reserve Bank of Australia’s unique Committed Liquidity Facility – a little-known, taxpayer-backed “line of credit” to help banks overcome solvency crises – creates as many problems as it is intended to address. And it is not clear officials have thought these through....

...The Australian Prudential Regulation Authority appears to understand this nuance [of solvency]. Officials acknowledge that if a bank needed to draw on the CLF, it would be trading insolvent under the Banking Act in the absence of the taxpayer support, irrespective of whether it had “positive net worth”....The Committed Liquidity Facility opens a Pandora’s box of problems. The most obvious concern is that it inverts the logic of the Basel Committee’s post-GFC policy remedies by entrenching taxpayer loans as a first, rather than last, line of defence against bank collapses. (here)

Oz Banks face headwinds

...Fitch Ratings says a likely modest weakening in Australian banks' operating environment during 2013 is unlikely by itself to result in negative rating action. A more severe downturn could drive negative action although this is not the agency's base case. In a report published today, Fitch says it expects Australian banks' profit growth to come under pressure in 2013, due to likely subdued credit growth and a potential rise in impairment charges. However, loan losses should easily be absorbed by pre-impairment operating profits, as Australian banks are, and should remain, among the most profitable in the world... (here)

...S&P said that the outlook for the AA- rating held by the big four banks is “stable”, but warned there was a greater chance of a downgrade in 2013 than an upgrade....

“While our most likely scenario for the Australian banking sector in 2013 is continued ratings stability, we note that there remains downside risk, and we cannot discount the possibility of negative rating momentum,” the S&P report said, according to the AFR....(here)

Real victims in currency wars

While the RBA and the banking industry have been showing off their resilience to the ebbs and flows of currency markets, in the space of the real economy, real businesses are going to the wall. 

Focussing on the iconic sauce maker Rosella this Bloomberg piece said:

....Rosella’s receiver today said it was unable to find a buyer and will shut the saucemaker, leaving 70 workers without a job. The failure -- along with receiverships at book seller Angus & Robertson, founded in 1884, and Allans Music, in business for 16 decades -- illustrate Australia’s lopsided economy. A mining- investment boom is delivering the quickest growth in the developed world even as it masks other weaknesses....

....“It’s disappointing that these Australian icons are either disappearing or being severely diluted and undermined,” said Kumm, who spoke before today’s announcement. His great- grandfather Frederick Cato helped found the company in 1895. “We’re used to seeing those things on our shelves and there’s a sense of belongingness.”....

Bob Gregory, a professor at Australian National University in Canberra and former central-bank board member, predicts joblessness will worsen this year. The investment phase of the mining boom, which has been construction-oriented, will wane and government-budget cutbacks will curb infrastructure projects, hurting workers without college educations, he said....Some blue-collar enclaves in Australian capital cities already have unemployment approaching recession-plagued Spain’s record 26 percent...(here)

Meanwhile for another consumer retail business, footwear there was also bad news:

...SHOE Superstore is the latest retailer to fall into administration as the chief of parent company RCG Corporation warned that some sections of the consumer market were still reeling from the impact of the global financial crisis....RCG put Shoe Superstore, which includes nine stores employing about 50 staff, into the hands of administrators yesterday, less than four years after it acquired the business... (here).