Retailer Smiths City Group has substantially increased its trading profit for the six months ended October and is back paying tax after a long period of claiming tax credits.
The Christchurch-headquartered group reported a trading profit of $2.2million for the period, up 62.7% on the $1.3million reported in the previous corresponding period.
Revenue was up 7.2% to $113.9million from $106.2million.
A fully imputed half-year dividend of 1c per share was declared, compared with a 1c per share unimputed dividend in the pcp.
Abnormal items of $695million took the profit before tax down to $1.46million, compared with $1.7million last year when the profit included the $1.8million gain on the sale of property.
This year, the group paid $94,000 in tax compared with a credit last year of $876million. The reported profit was $1.4million compared with $2.5million in the pcp. Earnings per share fell to 2.6c from 4.8c.
Chairman Craig Boyce said the had company continued the major restructuring which started last year to improve results and prepare for growth.
The focus had shifted to store and revenue growth, improvements in the customer product, service and finance offering, changes in focus to branding and promotion and an improvement in gross margin.
In addition, the group was seeking more economic delivery and logistics processes.
"Shareholders will be pleased we are now paying a fully imputed dividend which significantly increases the cash amount paid to them."
The company, as at last balance date, had remaining carry-forward tax losses of $6.8million and most of those would be used in the current trading year, he said.
As the group moved into next year, company tax advice would be payable. After taking tax advice, Smiths City had decided to anticipate that by paying the dividend fully imputed.
Sales in all regions were up on last year as outlined in the 7.7% increase in "same stores" growth, Mr Boyce said.
Growth was higher in the 13 North Island stores than in the South Island as some areas were affected by the rural downturn. However, the stores performed well in both maintaining sales and pushing for higher margins.
Supplier rebates were low as a result of a change in buying policies directed at "what sells" and stock reduction, but it was more than compensated by higher profits and lower stock levels, he said.
The board and management were continuously reviewing the company strategy and business plan. The acquisition of the furniture bedding chain Furniture City had enabled Smiths City to shift its mix of merchandise.
The low-margin appliance and whiteware business was now, for the first time, a lower percentage of sales than the higher-margin furniture business.
The finance product had changed to a more relevant "interest free" basis for fixed monthly instalment and the ongoing monthly "revolving credit" account. The Smiths City "store owned finance" offer remained a vital part of the brand and reason for customers to return, he said.
