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Renaissance posts first-half loss on shrinking margins from Apple products, impairment

Tuesday 21st May 2013

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Renaissance Corp, the retailer of Apple products and design school operator, turned to a first-half loss on disappointing sales, shrinking margins and an impairment charge at its Yoobee stores.

The net loss was $3.1 million in the six months ended March 31, from a profit of $1.96 million a year earlier. Sales fell to $24.7 million from $77 million a year earlier, which was before the company shrank its balance sheet with the sale of its IT business. Year-earlier sales from continuing operations were $28 million.

Chairman Colin Giffney called the result "bitterly disappointing" and reflected overheads in retailing that are "too high by comparison with our Apple-only international peers."

Revenue from Apple products fell 26 percent in the first half as its gross margin shrank to 8 percent from 11 percent a year earlier. That partly reflected Apple's decision to reduce its own margin on the mini iPad when it was introduced.

"On top of that, many of our competitors use Apple product as a loss leader to attract customers to their store," Giffney said. "It has been a tough environment."

The Yoobee stores continued to miss budgeted revenue during the first half, including its revised targets in December. It took a $2.99 million impairment to write off goodwill on its retail division.

Its Yoobee design school, previously known as Natcoll Design Technology, had a better performance, with earnings before interest and tax of $853,000, which it said was a good performance given the high New Zealand dollar and slow international student market.

The shares last traded unchanged at 16 cents, giving the company a market value of $6.9 million, and have gained 14 percent in the past 12 months.

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