DECJUBA stares down currency storm

Global economic upheaval is putting an emphasis back on supply chains and currency hedging for a new guard of leading Australian retailers.

Opportunity awaits battle-hardened innovators that manage these pressures while maintaining focus on the strategies that have gotten them to this position; namely, analytics for product demand, payments technology to meet customers anywhere, and relentless efficiency to maintain cost competitiveness.

Composure in transition

In 2008, female-founded Australian fashion brand DECJUBA had just eight stores and the global financial crisis was peaking. Tania Austin, one of the masterminds behind Cotton On, purchased the brand.

In March, with DECJUBA boasting more than 140 stores across Australia and New Zealand, Austin handed over the reins to Chief Operating Officer Audrey Nania.

“I think I've been incredibly lucky to be part of this business for the last 16 years, and we've got an incredible foundation,” Nania, who started at DECJUBA as an Assistant Planner, told ANZ Instituional Insights.

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Like Austin, Nania steps into the CEO role amid a challenging global economic backdrop, as outlined by DECJUBA Chief Financial Officer Mark Huynh.

“Domestically, although top line macro metrics appear to be in a reasonable state – unemployment, inflation, GDP – the impact of higher interest rates, the higher inflation rate across the last two years, and the uncertainty globally continues to drag our customer’s shopping choices,” Huynh said.

Further, growing tensions between the US and China over trade policy have disrupted currency markets.

“Staying ahead of fluctuating rates and hedging, that's really important for us as a business,” Nania added.

Choppy currencies loom over Asian supply chains

Australian retail’s supply chains run through Asia. In the 2021 financial year, China alone accounted for 28 per cent of Australia's business import value and 36 per cent of import transactions, according to the Australian Bureau of Statistics.

While DECJUBA sources many items locally, the company has partners in China, Vietnam, Indonesia, Sri Lanka, Bangladesh and Pakistan, all of which need to be paid in US dollars.

Andrew Mitchell, ANZ Director Institutional FX, has been advising DECJUBA on currency hedging strategy for a decade. Mitchell said an eight-cent move in the AUD/USD equates to a 12 per cent change in the bottom line of a company like DECJUBA.

“Audrey and her team are very practiced at this nowadays,” he said. “We’ve seen movements of this magnitude over the journey with episodes like China’s slowdown in 2015-16, COVID-19 and global interest rate movements. It’s part of the job when you’re bringing product in from the Asia Pacific and DECJUBA has managed the risk prudently and responsively.”

But an environment of heightened geopolitical risk meant currency markets will be front of mind for all importers and exporters for the foreseeable future, Mitchell said.

“Large swings in currency aren’t a problem in and of themselves. But, when they happen quickly, like a three-to-four-month period, that doesn’t give customers much time to react," he said.

“Given all the questions marks about tariffs and trade flows, the risk of currency market breakouts occurring on a shortened timeframe is higher than usual. While it’s a risk to manage, choppy markets are also an opportunity for customers like DECJUBA that lean into it.”

Competition and COVID-19

DECJUBA has thrived in an era where dozens of Australian retailers have declined or closed entirely.

According to the corporate regulator, retail insolvencies doubled in 2024. Meanwhile, the Australian Retailers Association said 77 per cent of companies were struggling with operational costs.

The arrival of genuine online retail experiences and international competitors, often fast-fashion clothing retailers, dramatically increased competition in terms of outlets, channels and speed.

Nania acknowledged the landscape of retail has shifted a lot in the last decade.

“Customers’ needs, wants and demands are so much faster now,” she said. “They want everything to be accessible and they want it at the best price possible.”

COVID-19 cut retailers off from their customers base and disrupted supply chains. This was followed by an inflation outbreak and higher than usual inventories.

Nania agreed with the suggestion DECJUBA had emerged from the pandemic stronger, pointing to the emphasis leadership has placed on relationships with vendors and third parties throughout the company’s history.

“It's really important for us to have these relationships that set us up for the last 16 years,” she said.

“After the pandemic, it was tricky because a lot of retailers were closing. We used the time to imagine what was possible and what we could leverage during an unfortunate period.”

Omni-channel transformation isn’t over

Yehudi Collard, ANZ Director Corporate Banking, told Insights that some extent the pandemic and its aftermath distracted from the massive transformation that retail is undergoing in the way it builds relationships with its customers.

“You have to manage the seasonality of the business, you have to manage the product at the right time for that season,” he said. “You need to have merchant facilities in place, but there’s a significant number of people that want to shop online, so you have to have that omnichannel experience to be successful.”

According to the ANZ Retail Insights paper from March, Australian clothing retailers that reported consistent revenue growth over the past three years had ‘omni-channel’ and ‘technology and analytics’ were in the top five strategy themes. To reinforce the point, while online revenue growth has come off a peak of 20 per cent in fiscal 2022, it was still above 16 per cent for 2024. Overall revenue growth was at just 2.1 per cent.

“The challenge for retailers is to have the right product, in the right place, at the right time, for the right price,” Collard said. “We’re coming out of an era where companies that didn’t rise to this challenge were forced to close.

“Our sense is that the retailers that made the leap and survived the pandemic have some really exciting opportunities to expand internationally. They’ve just got to stay ahead of the currency markets.”

Alexander Liddington-Cox is a Contributor at ANZ Institutional Insights