Postie Plus Group reports wider annual loss on inventory write down

Thursday 7th November 2013

Postie Plus Group, the worst performer on the New Zealand stock exchange this year, said its annual loss was wider than previously stated as it wrote down the value of its inventory even more.

The retailer said late yesterday its loss widened to $13.2 million in the 12 months ended Aug. 4, from a Sept. 27 estimate of $11.6 million, and a $180,000 loss a year earlier. Postie Plus shares were released from a trading halt late yesterday, and last changed hands at 11 cents, taking its decline so far this year to 54 percent.

The wider loss was reported after the company wrote down an additional $1.4 million of inventory, taking the total write down of stock for the year to $4 million, chairman Richard Punter said in the statement.

Postie Plus chalked up its worst result in five years after sales and margins were impacted during the 2013 financial year by "extreme difficulties" caused by the company outsourcing its distribution centre as part of a move to Auckland from Christchurch, to be closer to its major market.

Problems emerged with the distribution centre in the first half of the year and were unresolved until the second half, causing delays in stock and resulting in discounting of clearance stock, Punter said.

The problems occurred when Postie Plus sent 30,000 stock units from Christchurch to Auckland to be held in readiness for restocking its stores while at the same time as new seasonal stock arrived from overseas suppliers via Ports of Auckland.

That overwhelmed the new distribution centre's processing systems which combined with problems matching stock to stores, delaying the dispatch of stock, the company said.

School uniform supplies, through the company's Schooltex unit, were particularly affected, and it lost some of its seasonal sales and its reputation as a reliable supplier was compromised, the company said.

Distribution is now returning to normal and the company plans to reduce its range of stock by 15 to 20 percent, eliminating the slowest moving and lowest margin stock, the company said.

Postie Plus reiterated that it is working through a tight cash flow position with the support of its bank and creditors, and it plans to redress losses from the distribution centre provider.

BusinessDesk.co.nz

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