Postie Plus sees tough slog through to Xmas, better 2011

Postie Plus Group, which posted a 6.5 per cent drop in full-year pretax earnings, said retailing will continue to struggle through to Christmas though better trading in 2011 should lead to resumption in dividends.

Earnings before tax fell to $781,000 in the 12 months ended August 1, from $835 million a year earlier, the Christchurch-based retailer said in a statement. Net income tumbled 33 per cent to $415,000, reflecting an adjustment for deferred tax.

The company is in the processing of revamping its Postie apparel and Babycity stores after trialling a new look in a small number of outlets in 2010 which resulted in a better than expected pick up in trading.

It is also expanding its school and sports uniform business after acquiring Auckland-based Uniforms Plus, which supplies about 60 schools.

"I don't see any improvement in retail sales this side of Christmas," chief executive Ron Boskell told BusinessDesk.

"From our point of view we're going to go out and grow our market share."

Earnings dwindled in the latest year even as sales grew 3.1 per cent to $113.8 million as the retailer discounted stock, leading to margin erosion. Boskell said May, June and July had been "a disaster for retail, particularly for apparel" as it became obvious the economy "wasn't in pick-up mode."

Government figures yesterday confirmed the economy stumbled in the second quarter, slowing to a 0.2 per cent pace - a quarter of the rate of growth economists had expected.

Postie Plus won't pay a final dividend but Boskell said he would be "the most disappointed man in New Zealand" if the retailer doesn't resume dividend payments in 2011.

Shares of the retailer last traded at 32 cents, valuing the company at $12.8 million. The shares have fallen 20 per cent in the past 12 months.

As part of its expansion into specialty apparel, Postie Plus's Legendz brand is the official sponsor of the Commonwealth Games bowls team and as part of the contract, will be the preferred supplier of white wear for all New Zealand bowling clubs starting in December.