Postie Plus slides to half year loss

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 today was predicting a year of two halves.

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

The company tempered its optimism for the rest of the year by saying major risks included price deflation, lack of a winter, competitor activity, less buoyant retail environment, inflationary pressures.

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

Postie Plus shares, which lised at $1.25 in September 2003, were down 1c to 72c shortly after the result.

The half year loss was on sales of $55.2m compared with $52.4m a year earlier. The higher revenue came from opening more stores and 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 very competitive market and the lack of summer saw Postie Plus margins drop 1.0 per cent and Arbuckles chain margins fall 3.4 per cent.

Modernisation and repositioning of Arbuckles would take time to translate into increased sales, the company said.

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

The strong New Zealand dollar had seen some lines drop in price by 10-20 per cent.

The company's Baby City chain had been improved by 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 which had proved more profitable.

Stock control and distribution had been improved but benefits would not flow until the 2005/2006 financial year. The company said it was establised as a vehicle to buy retail businesses and apply the Postie Plus model to them, and it was sticking to its strategy.

"Decisions made in the first half of the current year will benefit future years, in particular the conversion of Rendells to Postie Plus, simplification of the business structure and related overhead reductions."

Clustering of the different businesses has proved successful and this format would be gradually rolled out over the next few years.

- NZPA