Postie Plus expects narrower annual loss; first-half sales slide 9.9 percent

Tuesday 11th March 2014

Postie Plus, whose shares have plunged 44 percent over the past 12 months, expects to narrow its annual loss as it tries to revive profitability.

The retailer expects to have a "significant" net loss before tax in the year ending Aug. 3, though smaller than last year's loss of $10.6 million, the Auckland-based company said in a statement. The forecast came as the company said sales fell 9.9 percent to $39 million in the six months ended Feb. 3 while gross margins improved.

Postie Plus has struggled to deal with the poorly executed outsourcing of a purpose-built distribution centre in Mangere when it relocated to Auckland in 2012, where it saw greater opportunities. The disruption to its supply chain put the operation under pressure, leaving it with too much debt and limited cash flow.

"The 'profit improvement plan' set in motion at the start of last year continues to deliver against our targets and we are confident it will continue to do so," chief executive Richard Binns said. "We are now reviewing sales by category and removing non-performing items."

The first-half period doesn't capture the retailer's sale of its SchoolTex school uniform brand, which was bought by Warehouse Group for $9 million. Postie Plus will use the cash to repay debt, and has been given space by its lenders until July 2014 with an extension of its credit facilities.

The shares were unchanged at 9 cents today, and have dropped 22 percent this year. That values the retailer at $3.6 million.

Postie Plus will report its first-half result by April 1.

BusinessDesk.co.nz

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