Loss kicks off year of two halves

Postie Plus slumped to a January half-year loss of $700,000 compared with a net profit a year earlier of $3.1 million, but the retailer is predicting a year of two halves.

It forecast a second-half net profit of $3 million, which would result in a full-year profit of $2.3 million.

The company yesterday tempered its optimism for the rest of the year by saying major risks included price deflation, a warm winter, competitor activity, a less buoyant retail environment and inflation.

No interim dividend will be paid compared with a 3cps dividend paid a year earlier.

Postie Plus shares, which listed at $1.25 in September 2003, closed unchanged at 73c.

The half-year loss was on sales of $55.2 million compared with $52.4 million a year earlier. The higher revenue came from opening more stores; same-store sales were down 5 per cent.

The company said it was affected by a wet and cold summer season, particularly through prime selling periods, although same-store sales were up 6 per cent in this period.

It said a competitive market and the late summer saw Postie Plus margins drop 1 per cent and Arbuckles chain margins fall 3.4 per cent.

Modernisation and repositioning of Arbuckles would take time to translate into increased sales.

"Some refinement of the business is still required," the company said.

The strong dollar had seen some lines drop in price by up to 20 per cent.

The company's Baby City chain improved with the introduction of Fly Buys in November.

Attempts to modernise the Rendells chain had not translated into higher sales and the Auckland branches were being converted into Postie Plus stores.

Stock control and distribution had been improved but benefits would not flow until the 2005/2006 financial year.

The company said it was sticking to its strategy of buying retail businesses and applying the Postie Plus model to them.

"Decisions made in the first half of the current year will benefit future years, in particular the conversion of Rendells to Postie Plus ... "

- NZPA