Why Is Australia's Decline In Sales

Australia
Compared to 2012 when there were 13 new stores opened, only 2 new Charlie & Me stores were opened in 2014. Nonetheless, with a total number of 131 stores, Australia accounts for 62% of PPL’s total revenue, making it the biggest market for PPL. This makes Australia’s 22% decrease in sales from 2013 to 2014 even more alarming. The trading conditions in Australia continued to be difficult during the 2014 financial year. Therefore, the decline in sales was largely due to the subdued demand caused by a fall in gross domestic income and slowing economic conditions as a result of less demand for iron ore from China. With less income, consumers are less likely to buy high end children's wear. They are more likely to switch to cheaper alternatives

The expenses percentage increased from 51% in 2013 to 56% in 2014, meaning for every $1 of sales 56c is used to cover expenses, which seems unsatisfactory. This is mainly due to sales falling with more than expenses. Another reason for this increase is that impairment costs increased by 465%, which is actually unsatisfactory because it means that the value of the company has been reduced since the reputation of the company has become worse due to PPL making a loss, making employees redundant, and reducing donations. Moreover, impairment also incurred when PPL wrote-down $3.1 million of IT software that has become out of date. Additionally, $3.2 million of out-of-fashion inventories that has also been written-down due to the delayed stock. Despite expense % increasing, It is more sensible to look at the % change in expenses (-9%) in this case because selling costs, administrative expenses, and financial costs all fell. Therefore, PPL has actually reduced its expenses in attempt to prevent profitability from declining further. Firstly, they cut down on donations. In 2013, PPL donated two cartons of clothing to KCC children. But in 2014, there were no news on continued donations because PPL simply does not have the money to make any donations. When a company is making a loss, its priorities is to cover its day to day expenses to continue operation instead of adding value to its reputations. Although this would alleviate some of the loss in profit, it would negatively impact PPL’s reputation to consumers and shareholders as it may discourage consumers to shop at PPL in the future. Secondly, directors’ and employees remuneration and employees’ have also fallen in the past year due to a director, David Jackson, leaving the company and PPL