Friday 22nd March 2013
|Text too small?
Postie Plus Group, the retailer whose shares have plunged 38 percent this year, is reeling from a wider first-half loss as it deals with major problems at its outsourced distribution centre, burning through cash in the process.
The Auckland-based retailer made a net loss of $1.8 million, or 4.61 cents per share, in the six months ended Feb. 3, from a loss of $775,000, or 1.94 cents, a year earlier, it said in a statement. Earlier this month Postie Plus said it was bracing for an annual loss and would post a pretax loss from continuing operations of $2.6 million in the first half.
"The impact on store operations of distribution difficulties is the fundamental cause of the significant first half loss," chairman Richard Punter said. "The directors realize that he challenge of taking PPGL to higher volumes and increased sales in the second six months is one still to be overcome and the annual result will be affected by impacted margin."
The thinner margins caused Postie Plus to breach its banking covenants and it is still in talks with its lenders. That's the second time in as many years that the retailer breached the conditions of its bank loans, after missing its interest to earnings before interest and tax ratio covenant of 1.5 times for the rolling 12 months to April 2012.
The retailer increased its borrowings to $13.8 million as at Feb. 3, lifting its gearing ratio to 88 percent from 54 percent a year earlier. The extra $4 million in debt covered an outflow of cash in the period, with the retailer seeing a net cash outflow of $2.2 million from its operations and a net cash outflow of $1.4 million. At the end of the period, Postie Plus held cash and equivalents of just $43,000.
Last year Postie Plus outsourced its distribution systems and processes to a purpose-built centre in Mangere as part of its shift to Auckland, where it saw greater opportunities.
The company is working "intensively" with its logistics and distribution provider, who has lifted its resources to address the situation, Postie Plus said.
The shares last traded at 15 cents, valuing the company at $6 million.
No comments yet
Pumpkin Patch today's best NX50 performer after return to profit in 2013
Postie Plus expects loss in 2013 earnings as sales fall 10.5 percent
Postie Plus appoints No 1 Shoes executive Binns as new CEO
Postie Plus 3rd-quarter sales from continuing ops fall 14 percent on stock disruptions
Postie Plus gains extension of banking facilities, avoids breach
Postie Plus warns of further potential breaches of banking covenants
Postie Plus renegotiates banking covenants because of potential breach
Postie Plus posts full-year loss on costs
Postie Plus FY sales fall 4.4% on sale of Babycity, flat Postie revenue
Postie Plus says Ron Boskill to step down after 7 years as CEO