Appliance and furniture retailer, Smiths City Group, reported a 46 per cent drop in first-half profit after facing new restructuring costs.
The group’s net profit fell to $1.4 million, or 2.6 cents per share, in the six months ending October 31, from $2.6 million, or 4.8 cents, a year earlier, the Christchurch-based company said in a statement.
Stripping out $695,000 of restructuring costs and a $1.8 million gain on a property sale in 2015, trading profit rose 67 per cent to $113.9 million on a 7.2 per cent increase in revenue to $113.9 million.
This increase, according to the statement from the company, rises to 18 per cent ahead of last year if revenue from discontinued operations is removed from the prior year result.
“Both margin and revenue improved on a same-store basis (7.7 per cent increase in revenue compared to the same period in the year prior and a pleasing 1 percent increase in gross margin),” said Roy Campbell, chief executive.
“The improvement in our trading activities derives in part from our reset of our marketing activities based on the research carried out early in the year; in part from our focus on in-store execution and our continued enhancement of our product selection,” Campbell said.
According to Smiths City, growth was higher in its 13 North Island stores than in the South Island with some regional areas affected by the downturn.
“Overall, however, our stores performed well in both maintaining sales and pushing for higher margins. While supplier rebates are lower as a result of a change in buying policies directed at “what sells” and stock reduction, this is more than compensated by higher profits and lower stock,” Campbell said.
The board has declared a fully imputed half year dividend of 1.0 cent per share, unchanged from last year, payable on February 10 with a record date of February 3. It will be fully imputed as the company uses up its remaining carry forward tax losses
Last month Smiths City said the acquisition of Furniture City, giving it a bigger presence in the North Island, underpinned the increase in sales, while also agreeing to new terms for its finance business.
“Attention to inventory, debt and sales levels have resulted in a leaner, more profitable, more competitive Smiths City that we are justifiably proud of,” Campbell said. “Given our strengthened position, it is appropriate for the management and board to identify opportunities for growth, from both organic and acquisitive perspectives with a view to providing greater returns for our shareholders and with a clear view to ensuring the longevity of this iconic Kiwi brand that New Zealanders depend on every day.”
