By Paul McBeth
Friday 19th December 2008
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The retailer is looking to minimise costs and maintain its market position as the wider retail sector faces higher import costs and a dwindling domestic economy with rising unemployment.
"While our profit may well be down, the heart of the business remains very sound and we have the financial ability to ride out these times," Chairman Warren Bell told a shareholders' annual meeting. He said that "we have sometimes been criticised for carrying excess cash on our balance sheet. It is times like these that the benefits of that strategy bear fruit."
The company's profit fell 26% in the year ended Aug. 1 to $15.9 million, as sales fell 3.2% to $193.7 million. Since the end of the financial year, sales are down 4% in the lead-up to Christmas, and Bell expects "profit will be significantly down on last year." They will update the NZX in late January.
The shares rose 0.4% to $2.28 today and have fallen more than 40% this year.
Bell said the company was continuing to develop its Glassons business in Australia, but was putting its aggressive roll-out plan on hold until the economic climate improves.
It has the capacity to take advantage of any rental opportunities as tenants get out of unsustainable rising rents, and he expects the post-Christmas period will see greater stress in the retail sector as the recession bites.
The post-Christmas season is also expected to hurt consumer confidence as more people are made redundant.
With the retail environment looking grim for next year, Bell says the company will focus on "doing the 'basics well' and to the best of our ability."
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