Episode 104: David Jones and Qantas Hook Up, Koala Pulls IPO, Mecca, JB Hi-Fi's Golden Run, GetSwift's Tale of Destruction, Apple's Woes and Mike's Switch 2 Review
The guys chat about an unlikely loyalty partnership, Mecca's belated 2023 results, JB Hi-Fi's legacy of success, the GetSwift founder goes viral, and Apple's continuing troubles.
The Contrarians catchup
Adir had a memorable experience when someone mistook him and his son for brothers at a café in Tel Aviv.
Adam had an awful Apple customer experience where his phone was wiped, meaning he couldn’t use the phone to pay for the repairs, and couldn’t start his car without the Tesla app. “Literally your whole life revolves around this phone and they make it so hard for you to fix it.”
The guys talk about good and bad customer experience, and how sometimes customer experience that is too good is unfortunately a sign of a business that may not make it.
Mike pre-ordered the Nintendo Switch 2 from Officeworks of all places, but they misplaced his order, made him wait for 30 minutes in the store, and randomly found a spare in the back that he took home.
Adam voices his annoyance at interest rates dropping and house prices going up. Adir: “If you make people feel like there are more rate cuts on the way, then they start behaving as if those rate cuts have happened.”
Koala didn’t IPO this week, blaming it on tariffs. Adir: “Koala’s done an extremely difficult thing, which is to basically say ‘we need to figure out a way to stop losing money and try to start making some whilst continuing to grow’. And they've, executed a lot of that strategy.”
Billionaire retailer Brett Blundy is heading back to what he knows best, with the opening of Léays, a lingerie, sleepwear and beauty emporium, which marks a return to the category on which he built his fortune. Adam said “he doesn’t really miss”.
Could the Country Road brand die?
The boss of Country Road has quit a year after a scandal concerning the behaviour of executives and a steep downturn in sales. Raju Vuppalapati is departing after four years in charge.
Country Road is owned by South African conglomerate Woolworths Holdings, which also owns Mimco, Witchery, Politix and Trenery.
Adir: “I think Country Road can be resurrected. I'm just not sure it can be resurrected by the people that they're putting into resurrect it. I think that it needs to capture a younger audience and reposition itself.”
Adam: “What does it take for a brand to die, or become irrelevant? It feels to me like Country Road has become largely irrelevant. It was a great brand 10 years ago.”
Adir: “Heritage brands, or brands with a history they can point back to - you can resuscitate those brands. It just takes the right person to resuscitate them, and you need to heavily lean into the heritage nature of those brands.”
Mecca releases 2023 financials
In 2023, Australian beauty retailer Mecca reported a record annual revenue of $1.2B. They also expanded their debt by $70M, increasing borrowings to $324M - a bold financial move that says ‘we’re in this for the long haul’, like getting someone’s name tattooed. We know this because they just released their 2023 financials.
Adir: “You're telling me that all of the effort to sell $1.2B of stuff produces $28M of NPAT, so multiply that by 1.42 or something to just put the tax back into it and take it north of 40. It's amazing how low the margins are. I mean it's running on 3-4% pre-tax profit margins.”
Adam: “Mecca as a business should be scaling profitability significantly, I thought it would be making sort of $100M bucks at this level of revenue for a business at that sort of level. It's surprising that it's not given its customer love, given it's got all that cornered resource, it's got scale, it’s got brand, it's got some great competitive advantages and we love that. And they never discount.”
JB Hi-Fi's golden run
JB Hi-Fi, Australia’s largest home entertainment retailer worth $11.3B, said sales grew 6.5%, or by 6% on a same-store basis, at its flagship Australian JB Hi-Fi stores in the three months to the end of March.
JB Hi-Fi New Zealand’s same-store sales were up 7.5% in the March quarter, while The Good Guys grew comparable sales by 4.1%. Sales at E&S were up by 0.9% on a same-store basis.
The share price is sitting at $109, up 50% in the past year.
Adam: “There are two types of businesses that can succeed. Those that try to charge as much as they can, and businesses that try to charge as little as I can. What they do so brilliantly is when you have the price and it looks like it's been handwritten, like someone just discount it. That's all obviously professionally done. That's printed to give the impression of giving great value when they're probably the same price as Myer.”
Adam: “I think what they've done so well is just keep up with consumer tastes. Now they’re a massive seller of Apple products, when they never sold any Apple products 10 years ago. Just that ability to be able to pick that consumer mood before it happens. They've just been an unbelievable story.”
Adir: “JB is a much better business in Australia than Best Buy is in the US. Look, I think they've got issues in the US.”
Five other stories worth following:
The $187B gaming industry just got flashier. Summer Game Fest unveiled “Resident Evil 9,” a “Game of Thrones” strategy game, and “Death Stranding 2.” The standout? “Wu-Tang: Rise of the Deceiver,” where players fight alongside the Clan using their skills and wisdom. That’s pure gamer bait.
A judge has approved a multibillion-dollar settlement allowing colleges to directly pay student athletes starting July 1. The decision ends five years of legal battles and reshapes NCAA Division I sports, giving players a cut of the revenue they help generate. NCAA calls it a "new beginning”.
US–China trade officials are meeting in London, seeking to ease restrictions. The US wants access to Chinese rare earth minerals; China wants curbs lifted on tech like jet engines. Talks build on a May agreement to pause tariffs, with hopes of progress before Friday’s wrap-up.
Broadway’s biggest night crowned Sarah Snook, Nicole Scherzinger, Cole Escola, and Darren Criss as lead acting winners. The ceremony honoured Hamilton’s 10th anniversary with a special cast performance. Held at Radio City Music Hall, it capped a record-breaking season with celebration and theatrical sparkle.
Apple’s WWDC returns, but recent misses have dulled the shine. After past hits like the M2 chip and Vision Pro, last year’s AI announcements underwhelmed. This year may open Apple’s AI models to developers, with Translate app updates likely. Bigger plans are expected for WWDC26.