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Smiths City boosts 1H profit 13 percent against stiff competition, shares gain

Friday 20th December 2013

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Smiths City, the Christchurch-based retailer, boosted first-half profit 13 percent even as its revenue dipped in the face of a competitive retail environment.

Net profit rose to $1.9 million, or 3.61 cents per share, in the six months ended Oct. 31, from $1.6 million, or 3.2 cents, a year earlier, the retailer said in a statement. Revenue slipped 1.1 percent to $108.5 million. The shares climbed 5.1 percent to 62 cents.

"The six months to October has seen retail trading conditions remain competitive with prices - particularly in consumer electronic products - under pressure, margins squeezed and property costs continuing to increase," the company said.

"The increase in profit has been a result of the company managing these conditions effectively while retaining the majority of the benefits of the restructured financing arrangements introduced towards the end of the prior financial year," it said.

Retailers have struggled in recent years as households have shied away from consumer spending and stores have been forced to compete more aggressively on price.

The company's retail business made a segment profit of $306,000 from $1.1 million a year earlier, on flat sales of $103.4 million. Its property activities made a profit of $349,000 from revenue of $540,000.

The company's finance segment revenue was flat at $5.1 million, though it more than doubled earnings to $1.8 million. Last year Smiths City switched its credit lines to ANZ Bank from a three-decade relationship with Fisher & Paykel Finance earlier this year.

The board declared an interim dividend of 1 cent per share, payable on Feb. 14 with a record date of Feb. 7.

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