Smiths City posts 2.6 percent gain in 1H profit in difficult trading conditions

Smiths City Group, the Christchurch-based department store operator, posted a 2.6 percent gain in first-half profit saying retail conditions are difficult, especially for consumer electronics.

Profit was $1.69 million in the six months ended Oct. 31, from $1.64 million a year earlier, the company said in a statement. Sales fell 0.2 percent to $109.7 million.

Trading conditions "have been difficult," said chairman Craig Boyce. "Household spending is restrained, appliance prices have fallen leading to lower dollar margins, competitor activity aggressive and business expenses, particularly occupancy and insurances expenses, have risen considerably."

The shares rose 3.7 percent to 56 cents and are up 23 percent this year. The retailer will pay an interim dividend of 1 cent a share, unchanged from a year earlier.

Smiths City has agreed to a banking facility with a major lender and will terminate its relationship with its existing financier in January 2014. The change will result in significant savings in interest costs, it said, without identifying the lenders involved.

The company focussed on sales of its most profitable lines, furniture and bedding, in the first half while re-opening stores shuttered by the Canterbury earthquakes.

It doesn't expect improvement in retail conditions any time soon, it said.

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