Bendon warns of lower earnings

By Phil Boeyen, ShareChat Business News Editor

Wednesday 28th February 2001

Lingerie maker Bendon (NZSE: BEN) is the latest casualty in the Australian retail downturn and says a flat market there will see a drop in earnings for the year ended March.

The company, which has around 50% market share in New Zealand and 20% in Australia, says the current trading environment has presented a very challenging situation.

"Australia particularly is facing quite a serious downturn in consumer spending confidence which has been brought about, in the main, by the introduction of GST and the advent of the Olympic Games," the company says in a statement.

"These 'events' have created, on one hand retail goods that are 10% more expensive, and on the other hand, taken out of the system millions of dollars of discretionary expenditure. This has left the Australian market fairly flat and Bendon's major stockists are facing a downturn in sales, leading to significant problem of higher inventories."

Bendon says as a result of the downturn it is forecasting overall earnings before interest and tax, and before non-recurring items, will be 10 to 15% lower for the current financial year.

"This situation dictates a difficult course for Bendon to navigate and the company is not expecting a return to normal sales levels until retail inventories are considerably reduced."

Although Bendon's entry to the UK market is going well and it plans to confirm the first orders soon, the company says any sales there will not significantly influence the current year's trading.

It will also be writing off $1 million in the current year related to one-off costs in setting up the UK market.

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