Category: Stock Market

After surging to a 52-week high of $3.66 in late October, the share price of ASX mid-cap technology company Nitro Software Ltd (ASX:NTO) has come off the boil more recently. The Nitro share price has slid more than 20% lower this month and is down 2.14% to $2.74 in opening trade today.

It joins a growing list of companies, including the likes of Megaport Ltd (ASX:MP1) and Whispir Ltd (ASX:WSP), whose share prices all stormed to new highs this year, but have struggled to maintain their momentum as COVID-19 restrictions ease across the country.

About the company

Nitro develops a suite of software solutions that allow individuals and businesses to streamline and digitise document workflows. Companies can create, edit, sign and store important documents entirely online, reducing the need for traditional forms of hardcopy file management. Not only does this simplify workflows, but it can massively reduce printing costs for large companies, and even make them more environmentally friendly.

Despite facing stiff competition from US tech giant Adobe Inc, Nitro excelled during 2020. The COVID-19 pandemic disrupted its sales pipeline early on, but Nitro was able to tailor its product offering to meet the unique demands of the “new normal” of remote working. It made the extremely canny decision to make its eSignature solution free throughout 2020 to help support companies as they transitioned to working from home.

Results for the most recent quarter, ending 30 September 2020, were positive across just about all financial metrics. Cash receipts from customers increased by 17% quarter-on-quarter to $11.6 million, and subscription annualised recurring revenues (ARR) was ahead of prospectus forecasts. The company also ended the quarter with a strong balance sheet, comprising $44.4 million in cash and no debt.

Nitro remains bullish on the outlook for the remainder of this calendar year. Full year revenue is expected to be in line with its prospectus forecast at $40.5 million. Subscription ARR is anticipated to be between $26 million and $27 million, well ahead of the $24.4 million forecast in the prospectus.

Is the Nitro share price a buy?

Nitro is a favourite of our analysts here at Motley Fool. They’ve twice recommended it to our Extreme Opportunity subscribers. The first time was back in February, when Nitro shares were trading at around $1.70, and the second time was in early September.

Our analysts like the company’s rapid subscription growth, strong sales pipeline, and the savvy way it launched its new eSignature product. They were also impressed with how well the company adapted to working under COVID-19 restrictions.

If you agree with our Foolish analysts, now might be a good time to pick up shares of Nitro while the price is dipping. Who knows how far it could climb next year!

More reading

• 2 exciting mid cap ASX shares to buy
• Why the Whispir (ASX:WSP) share price is storming higher
• These ASX shares have more than doubled in value in 2020
• The Whispir Ltd (ASX:WSP) share price is now 35% off its 52-week high. Time to buy?
• Nitro (ASX:NTO) share price jumps up 5% on presentation

Rhys Brock owns shares of MEGAPORT FPO, Nitro Software Limited, and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO and Whispir Ltd. The Motley Fool Australia has recommended MEGAPORT FPO, Nitro Software Limited, and Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australian Competition and Consumer Commission (ACCC) has settled a case against Telstra Corporation Ltd (ASX: TLS) for “unconscionable conduct”.

The telco has agreed to the filing of court proceedings to potentially impose penalties totalling $50 million. The Federal Court will now decide what the exact penance will be.

Telstra admitted staff at 5 retail stores signed up 108 Indigenous customers to post-paid mobile phone contracts that they didn’t understand and couldn’t afford.

The sales staff used “unfair selling tactics and took advantage of a substantially stronger bargaining position” during those sign-ups.

“Many of the consumers spoke English as a second or third language, had difficulties understanding Telstra’s written contracts, and many were unemployed and relied on government benefits or pensions as the primary source of their limited income,” stated the ACCC.

“Some lived in remote areas where Telstra provided the only mobile network.”

Vulnerable customers devastated with debt

The average debt each customer racked up was more than $7,400. Many faced financial hardship with Telstra even referring some to debt collectors.

In many of the cases, the ACCC stated sales staff manipulated credit checks to allow those customers to sign contracts they otherwise would be barred from. This included inputting that the customer was employed when they weren’t.

Telstra chief Andrew Penn apologised for the conduct.

“While it was a small number of licensee stores that did not do the right thing, the impact on these vulnerable customers has been significant and this is not ok.”

“Early this year I visited the NT, SA and WA to meet with some of the affected communities and customers to apologise and hear first-hand of the impact of these sales practices on them.”

The dodgy sales tactics were admitted at Telstra-licenced stores in Alice Springs (NT), Casuarina (NT), Palmerston (NT), Arndale (SA) and Broome (WA) between January 2016 and August 2018.

“Even though Telstra became increasingly aware of elements of the improper practices by sales staff at Telstra licensed stores over time, it failed to act quickly enough to stop it, and these practices continued and caused further, serious and avoidable financial hardship to Indigenous consumers,” said ACCC chair Rod Sims.

“This case exposes extremely serious conduct which exploited social, language, literacy and cultural vulnerabilities of these Indigenous consumers.”

‘Extreme anxiety’ about going to jail

Sims said the personal toll on the affected customers was immense.

“For example, one consumer had a debt of over $19,000. Another experienced extreme anxiety worrying they would go to jail if they didn’t pay, and yet another used money withdrawn from their superannuation towards paying their Telstra debt,” Sims said.

“Telstra is Australia’s largest telecommunications provider. It has clearly failed to meet community expectations for appropriate business behaviour.”

The telco has since waived the debts, fully refunded payments and instituted mechanisms to reduce the chance that such sales tactics could be used.

The company has also agreed to expand its Indigenous telephone helpline and upgrade its digital literacy program for customers in remote areas.

“This case is a reminder to all businesses to ensure that they comply with Australian Consumer Law in their dealings with all consumers, especially vulnerable consumers in regional or remote communities,” said Sims.

Penn said Telstra wanted to be “a responsible business” and do right by the community but it had failed this time.

“We need to acknowledge when that happens, and today is unfortunately one of those times,” he said. 

“Disappointingly these customers did not receive the standard of care or service they should expect from us, and we did not then act quickly enough to fix the issues once they became known.”

More reading

• Here’s why this broker says the Telstra (ASX:TLS) share price is cheap
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• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 2 ASX dividend shares with huge yields
• Why the Telstra (ASX:TLS) share price can go even higher from here

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares in soft tissue regeneration company, Aroa Biosurgery Ltd (ASX: ARX), are falling lower this morning after the company reported a 10% decline in revenue for the first half of FY21. At the time of writing, the Aroa Biosurgery share price is trading 3.03% lower at $1.28. The company also reported a decline in normalised earnings before interest, tax, depreciation, and ammortisation (EBITDA), reporting a loss of NZ$2.3 million compared to positive earnings of NZ$2.15 million a year earlier.

What else did Aroa Biosurgery report today?

Aroa says that even though its revenues were down by 10% to NZ$9 million, it is still  ahead of the company’s COVID-19 adjusted planning assumptions.

The company ended the half-year in a strong financial position with cash on hand of NZ$38.7 million.

Aroa says it expects to deliver revenue growth in the second half of FY21 to NZ$21 million as restrictions are expected to ease.

A quick look into Aroa Biosurgery

Aroa Biosurgery is a New Zealand-based, soft tissue regeneration company focused on improving the rate and quality of healing in complex wounds and soft tissue reconstruction.

Its products are mainly offered in the United States, and target chronic wounds and soft tissue reconstruction including for hernias, breast reconstructions and trauma, limb salvage, and tumour surgery.

Aroa says its total addressable market for the entire Aroa product portfolio has grown from $1.5 billion to more than $2.5 billion in the US this year. 

In July, the company received US Food and Drug Administration (FDA) clearance for its Symphony product. This product will be used to reduce the time to wound closure, particularly where patients have severely impaired healing. Aroa expects to commercially launch Symphony in 2021. 

How has the Aroa Biosurgery share price performed in 2020?

Aroa Biosurgery first listed on the ASX on 24 July this year after raising $45 million at 75 cents per share, with an indicative market capitalisation of $225 million. Minutes after listing, the Aora share price shot up to $1.52, before retreating to $1.35 at close of trading that day. 

The Aroa share price is currently trading around 26% lower than its all time high reached on 30 July and has a market cap of $387 million. 

More reading

• Why the Galaxy Resources (ASX:GXY) share price is tumbling lower today
• Why the WiseTech Global (ASX:WTC) share price is climbing higher today
• The real earnings growth driver for ASX bank stocks in FY21 isn’t what you think
• Down 17%, is Apple stock a buy?
• Origin Energy (ASX:ORG) share price on watch after investor update

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Galaxy Resources Limited (ASX: GXY) share price has ended its winning streak and is dropping lower today.

At the time of writing, the lithium miner’s shares are down 3.5% to $1.93.

Why is the Galaxy share price tumbling lower?

This morning the company’s shares returned from a trading halt after successfully completing its fully underwritten institutional placement and entitlement offer.

According to the release, Galaxy raised a total of $124 million from institutional investors at $1.70 per new share. This represents a 15% discount to its last close price of $2.00.

Galaxy received significant demand during the institutional offer bookbuild from high-quality, eligible existing and new institutional investors located in Australia and internationally. It revealed a take-up by eligible existing institutional shareholders of approximately 92%.

It will now push ahead with its fully underwritten retail entitlement offer to raise a further ~$37 million. This will bring the total raised to $161 million.

Upon completion, Galaxy’s balance sheet will be strengthened with pro-forma cash and financial assets to increase from US$102 million (as of 1 November 2020) to US$219 million (before offer costs).

Why is Galaxy raising funds?

Management advised that the proceeds from the offer will be applied to Sal de Vida Stage 1 and fund pre-development activities to progress James Bay to a construction ready status.

Galaxy’s CEO, Simon Hay, commented: “We are delighted by the strong response we have received for the Equity Financing from a broad range of high quality, domestic and international institutions which we believe, underlines the quality of our asset portfolio. Securing these funds is an important milestone for Galaxy as we seek to commit to execute and develop Sal de Vida into a successful, lowest-quartile cost lithium brine operation.”

“The Equity Financing proceeds will also be used to accelerate James Bay to a construction ready status which Galaxy believes is timely given the project’s high-grade nature and location, positioning Galaxy to take advantage of the expected growth in electric vehicle demand in Europe and North America,” he concluded.

More reading

• Here’s why the Galaxy Resources (ASX:GXY) share price is in a trading halt
• Are ASX lithium shares making a comeback?
• ASX shares that made 52-week highs last week
• Here are the 10 most shorted shares on the ASX
• Why the Galaxy (ASX:GXY) share price could push higher

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The WiseTech Global Ltd (ASX: WTC) share price is climbing higher following the release of its annual general meeting presentation.

At the time of writing, the logistics solutions company’s shares are up 2% to $30.73.

What happened at the WiseTech Global AGM?

As with all annual general meetings, the company started by providing investors with a reminder of how it performed in FY 2020.

For the 12 months ended 30 June, WiseTech Global delivered a 23% increase in revenue to $429.4 million. This was driven by a combination of acquisitions and its core CargoWise offering.

The latter continued its strong growth and recorded revenue of $263 million, up 20% on FY 2019. Management advised that this reflects new customer signings and increased usage by existing customers.

On the bottom line, excluding a fair value gain of $111 million, its underlying net profit after tax was flat at $52.6 million. This was due to increased depreciation and amortisation expenses from its increased investment in research and development and the amortisation from acquisition product development.

What is expected in FY 2021?

In August, WiseTech provided full year guidance for revenue of $470 million to $510 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $155 million to $180 million.

This represents growth in the range of 9% to 19% and 22% to 42%, respectively, year on year.

This morning WiseTech has reaffirmed this guidance. However, it has warned that the ongoing and longer-term impacts of COVID-19 are still not completely predictable.

One thing management is much more certain on is its long term growth prospects beyond COVID-19.

WiseTech’s CEO, Richard White, commented: “Looking ahead, with penetration of automated, truly global logistics solutions still in early stages, WiseTech’s opportunity for growth is vast. We believe CargoWise is the market-leading platform for global logistics execution and is well-positioned to strengthen its position in the global market over the near-term and long-term.”

“… longer term, COVID-19 market disruptions have provided a tailwind for growing our market share as the need for digitalisation across the global logistics execution market accelerates and significantly increases the value and demand for CargoWise,” he added.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 5 things to watch on the ASX 200 next week
• Why are ASX tech shares all over the place today?
• The OFX (ASX:OFX) share price slumps with ASX tech stocks after posting its results

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Virgin Money UK CDI (ASX: VUK) share price will be on watch this morning after the bank posted a big drop in FY20 profit.

But don’t be too caught up in the profit numbers. The real growth driver for the sector isn’t what you think.

The announcement comes on the day that the S&P/ASX 200 Index (Index:^AXJO) is expected to open softer along with other ASX banks.

The UK lender unveiled a 77% crash in full year underlying net profit to £124 million ($225.5 million). This was largely driven by a huge increase in impairments to £501 million from £153 million in FY19.

Virgin Money share price on edge

But even ignoring impairments, operating profit fell 10% to £625 million due to margin squeeze and base rate cuts.

The banks net interest margin (NIM) fell 10 basis points to 1.56%, while non-interest income declined due to lower activity.

The key drag was a 3% drop in mortgage lending to £58.3 billion as the COVID‐19 lockdown in the UK impinged on the housing market.

How much bad news is priced into ASX banks?

This was offset somewhat by growth in business lending (up 13.6%) and personal lending (up 3.9%). But lending to these two segments only amounted to around £14 billion in total.

However, the weak results won’t surprise anyone. It’s much the same story when ASX banks turned in their earnings report cards.

The National Australia Bank Ltd. (ASX: NAB) share price, Westpac Banking Corp (ASX: WBC) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price rallied despite the big profit drops.

The key to ASX bank earnings growth isn’t lending

This is because investors believe the worst is over for bank earnings. While earnings growth is likely to be missing in action in FY21, there’s an expectation that the large provisioning they put aside for bad debts will be lowered.

This is an important point for investors. Every dollar that’s removed from impairments and provisions flows straight to net profit.

Even if lending growth stagnates, bank earning can soar in FY21 if the banks can release some of the emergency funds they’ve put aside.

We are starting to see signs of this. Commonwealth Bank of Australia (ASX: CBA) made such a move with the blessing of our banking regulator.

In my view, this is what’s driving the re-rating in the banking sector.

Foolish takeaway on the Virgin Money share price

While Virgin Money operates in the UK and is driven by different factors, its huge impairments give it a lot of fat that can be moved back to its bottom line if economic conditions and confidence improve.

This is good news for the Virgin Money share price as management painted a lacklustre outlook for FY21. Net interest margin is likely to be “broadly stable” this financial year, which to me means it could dip more.

But with a number of promising COVID vaccines in the making, the UK economy could see a bounce back next year – just in time for Virgin Money to lower its impairments.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX stock of the day: Platinum (ASX:PTM) shares up 6%
• Why the Cann Group (ASX:CAN) share price is up 76% this week
• US markets hit record high, is the ASX 200 next?
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Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Following a huge run-up in 2019 and the first half of 2020, shares of Apple Inc (NASDAQ: AAPL) have taken a breather recently. The tech stock is down 17% from an all-time high of about $138 this summer.

Is weakness in the tech giant’s stock a buying opportunity? Or should investors hope for an even bigger sell-off before they take a position in the iPhone maker?

Apple’s business is stronger than ever

It’s difficult to criticise Apple’s business. The company generated $275 billion of revenue in the trailing 12 months, up from $260 billion one year earlier. Meanwhile, Apple raked in an incredible $73 billion of free cash flow (cash from operations less capital expenditures).

One potential critique an investor might bring up is the company’s decline in iPhone revenue in Apple’s most recent quarter. iPhone revenue fell 26% year over year during the period.  But Apple bulls would quickly point out that the tech company was up against an unfair comparison during the period since this year’s iPhone launch was delayed by pandemic-related supply chain challenges. In fact, if you rewind one quarter — when Apple wasn’t up against an unfair comparison — Apple demonstrated growth across every product segment and every geographic region. In the company’s most recent quarter, every segment other than the iPhone saw strong double-digit growth despite supply chain constraints for some products. Management went as far as to confidently forecast that its iPhone segment would return to growth during the current quarter.

Then there’s Apple’s $192 billion of cash and marketable securities. Even when subtracting out low interest rate debt, excess cash is $79 billion.

With both a strong business and a healthy balance sheet, the company is unsurprisingly returning lots of cash to shareholders. In the fourth quarter of fiscal 2020 alone, Apple returned $22 billion to shareholders through dividends and repurchases.

But what about that pricey valuation?

Apple’s demonstrating broad-based growth, generating more than $70 billion annually in free cash flow, and sitting on a mountain of cash. But is it worth $2 trillion? This is approximately where the company’s stock price today puts its market capitalisation.

Unfortunately, even though Apple looks well positioned to deliver double-digit earnings growth in the coming years, the stock’s valuation is too steep to make this a no-brainer buy today. Shares currently trade at 35 times earnings — a steep premium that prices in strong growth for years to come.

Sure, Apple stock may be a good buy for investors looking for dividend income. Apple currently has a dividend yield of 0.8%, and it’s grown that dividend payout every year since it was initiated in 2012. But for investors looking for strong share price appreciation over the next five years, it might be worth waiting to see if the stock falls further before buying.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

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• What COVID-19? World’s 5 most valuable brands are up 54%

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia has recommended Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Origin Energy Ltd (ASX: ORG) share price will be on watch today after the energy company released an investor update.

What was included in the update?

Origin’s update gave investors a summary on how it performed in FY 2020 and its expectations for FY 2021.

In respect to the former, the company had a mixed year and delivered a flat underlying profit of $1,023 million in FY 2020. This was driven by lower corporate and LNG hedging costs being partly offset by a lower electricity margin.

This led to the Origin board declaring a total dividend of 25 cents per share, which was also flat on the prior year.

What is Origin expecting in FY 2021?

This morning Origin reconfirmed its Energy Markets guidance for FY 2021.

It continues to expect underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $1,150 million to $1,300 million. This will be down 11% to 21% from $1,459 million in FY 2020.

Positively, management has upgraded its Integrated Gas guidance for FY 2021. It now expects production of 675-705 PJ, compared to prior guidance of 650-680 PJ. It has also lowered its distribution breakeven to US$25-29/boe, compared to its prior guidance of US$27-31/boe.

Based on these estimates, management is estimating a free cash flow (FCF) yield of 12% to 15% for FY 2021. It notes that this reflects its resilient businesses with low cost operations and limited near term investment required.

This bodes well for its dividends, with management noting that its dividend payout ratio will be 30% to 50% of free cash flow.

Furthermore, it advised that free cash flow surplus cash will be allocated based on the greatest need and highest risk adjusted return. This includes maintaining its target capital structure, investing in growth, and additional returns to shareholders.

Is Origin a buy?

One broker that is positive on Origin is UBS. Earlier this month it put a buy rating and $7.40 price target on the company’s shares.

Based on the current Origin share price, this price target implies potential upside of 41% over the next 12 months excluding dividends.

It believes its shares are undervalued based on current spot oil prices.

More reading

• Why Origin, Qantas, Webjet, & Westpac shares are storming higher
• Could these ASX renewable energy shares benefit from the Biden win?
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• Why the Fortescue (ASX:FMG) share price is shooting up more than 5% today
• ASX 200 events this week that could move the market

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Three ASX-listed retail giants have been singled out as the worst in the industry for not committing to pay a living wage to factory workers in poverty-stricken countries.

Myer Holdings Ltd (ASX: MYR), Premier Investments Limited (ASX: PMV) and Mosaic Brands Ltd (ASX: MOZ) were also named in an Oxfam report as the worst-rated companies for transparency of supply chains.

According to the report titled Shopping for a Bargain, all three ASX businesses continued to hide their supplier factory names and locations to avoid scrutiny. 

All three refuse to make a “credible, public commitment” to paying living wages to factory workers.

Twelve major retailers have over the years publicly made a promise to Oxfam that factory workers, who are mostly women living in poverty, would be paid enough to cover basic essentials.

The Motley Fool has contacted Myer and Premier Investments for comment.

Mosaic Brands head of compliance, Nic Williams, denied the company refused to participate in the study, saying it offered to “provide the information we could within the bounds of our commercial relationships”.

“Mosaic Brands requires independent and valid audits of all our factory suppliers,” he told The Motley Fool.

“Audit requirements that align with our commitments to the ETI Basecode, which includes employment practices, working conditions, and wages and many other factors.” 

COVID-19 devastated the people who make our clothes

The report depicted alleged abuse of third-world suppliers by Australian fashion retailers this year when COVID-19 struck.

“Practically overnight, major global fashion retailers that have profited for decades from paying poverty wages to workers in countries with little social protection and lax labour laws, cancelled orders and delayed or cancelled payments to their suppliers, many demanding discounts on work already completed,” Oxfam stated.

“In response, factory owners stood down hundreds of thousands of garment workers — approximately 80% of whom are women — without pay, leaving the people who make our clothes without any income, facing a global pandemic in extreme poverty.”

Some retailers backed down after public outcry from customers and suppliers, and have since paid for orders placed before the pandemic.

But the initial response demonstrates how Australian retailers can use their power to devastate people already living in abject poverty, stated the report.

The study was the first detailed inquiry into the supply chains of ten fashion chains operating in Australia with factories in Bangladesh:

• Best & Less (owned by Pepkor Holdings Ltd (JSE: PPH))
• Big W (Woolworths Group Ltd (ASX: WOW))
• Cotton On
• H & M Hennes & Mauritz AB (STO: HM-B) 
• Zara (Industria de Diseno Textil SA (BME: ITX))
• The Just Group (Premier Investments) 
• Kmart (Wesfarmers Ltd (ASX: WES))
• Myer
• Noni B (Mosaic Brands) 
• Target Australia (Wesfarmers)

All the companies aside from Myer, Premier and Mosaic had made commitments to pay factory workers a living wage.

Williams said the study was not “an accurate picture” of how Australian retailers operate in Bangladesh.

“The report does not state how many Mosaic suppliers were interviewed and does not reflect the extensive safety and wage auditing processes we have in place in Bangladesh and globally.”

Australians have massive impact on poverty

Oxfam Australia Chief Executive, Lyn Morgain, said purchasing practices heavily favouring Australian retailers forces third-world factories into poor conditions.

“These poor purchasing practices of brands are making it impossible for factories to increase wages, despite many of the same brands making public commitments to ensure the payment of living wages,” she said.

“Instead, wages are trapping workers – mainly women – and their families in a cycle of poverty.”

The study was conducted with Monash University and University of Liberal Arts Bangladesh. It interviewed both retailers and suppliers for their thoughts.

Not surprisingly, the retailers always rated themselves better than what the factories did.

“This may indicate the brands’ failure to fully understand the impact of their purchasing decisions on the factories and the workers in their supply chains.”

Expensive clothing doesn’t always equate to fair working conditions, according to the report.

“Clothing production for some of the world’s most luxurious brands is carried out at factories which pay some of the poorest wages.”

Morgain also called on customers to do their part to pressure retailers into doing the right thing.

“With just one month today until Christmas, shoppers should demand big brands end this cycle and do better in the way they do business… giving real meaning to their commitments to end poverty wages for the women making our clothes.”

More reading

• Why these ASX 200 shares just hit record highs
• Why ASX, Kogan, Myer, & Northern Star shares are dropping lower
• Why the Myer (ASX:MYR) share price is at an 8-month high
• JobKeeper saved 700,000 jobs, reveals RBA
• ASX shares that made 52-week highs last week

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There are some leading ASX growth shares that are seeing falling share prices. The broader e-commerce sector is being sold off.

Global share markets are rising in response to positive news about COVID-19 vaccines. BioNTech (with Pfizer), Oxford University (with AstraZeneca) and Moderna have all done trials which show the vaccines have a high level of effectiveness.

However, e-commerce businesses which have seen elevated customer demand during 2020 have seen their share prices fall backwards over the last few weeks.

But the Motley Fool Share Advisor service still rates the following two ASX growth shares as buys:

Kogan.com Ltd (ASX: KGN)

The Kogan.com share price fell by 5.1% yesterday and it has fallen by 35% since 9 November 2020.

It wasn’t long ago that the company held its annual general meeting (AGM) and gave investors a trading update for the financial year to date to October 2020. The ASX growth shares said that its gross profit was up 99.8%, its gross profit had increased by 131% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) had jumped 268.8%.

There has been a strong performance from its Kogan marketplace and product divisions. The last couple months of the calendar year are important for the company because they include online sales events as well as Christmas. To take advantage of this, Kogan.com has been investing in marketing to increase its customer numbers and grow awareness of the brand. Management believe this will be a long-term positive for the company.

The CEO and founder of Kogan.com, Ruslan Kogan, said with the FY20 report release: “There is a retail revolution taking place as more and more shoppers learn about the benefits of e-commerce. We’re seeing record numbers of first time customers, who then go on to make repeat purchases at a 40% faster pace than previously. For us this is a very exciting trend that shows that once customers learn about shopping online, they change their ongoing behaviour. Once someone discovers the benefits of online hopping, I struggle to see why they would ever go back to the old way of doing things. After almost 15 years of preparation, the revolution occurring in retail represents a significant opportunity for Kogan.com.”

According to Commsec estimates, the Kogan.com share price is valued at 24x FY23’s estimated earnings.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price fell by 9.5% and it has fallen by 22% since 9 November 2020.

The ASX growth share also recently held its AGM. It said that, on top of 74% revenue growth in FY20, it has grown revenue in the financial year to date (to 19 October) by 138%. It also generated $8.6 million of EBITDA in the first quarter of FY21 which was more than the entire FY20 EBITDA of $8.5 million (which represented growth of 467%). Cashflow was positive in FY20, it finished the year with no debt and $38.1 million of cash. It also grew its active customer number by 77% year on year to 480,000.

Revenue growth was also in the triple digits at the start of the second quarter of FY21, with growth of more than 100%. In the trading update it said that its contribution margin continued to be ahead of its 15% target with customer satisfaction of around 70%.

According to Commsec estimates, the Temple & Webster share price is valued at 31x FY23’s estimated earnings.

More reading

• The 13 ASX shares that could have doubled your money in 2020
• Why Mesoblast, Temple & Webster, Xero, & Zip shares are dropping lower
• Why the Kogan (ASX:KGN) share price is underperforming
• 2 rapidly growing ASX shares rated as buys
• Why ASX, Kogan, Myer, & Northern Star shares are dropping lower

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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