For its first-half trading period to October, Smiths City revenue declined 4.6% to $108.6million while after-tax profit plunged from $1.37million a year ago to $2000.
Smiths City chairman Craig Boyce said the decline in revenue and same store sales was greater than the 3%-4% forecast in October, following weaker-than-expected trading during the last few weeks of the half year.
A "key focus" during the half was the rebranding of two stores in Auckland and one in Whangarei, which had been completed. The sites had reopened and were "trading well", he said.
"However, as we signalled in October, the imposition of lending restrictions on real estate earlier this year, significant reductions in home sales, uncertainty in the lead-up to the election and during the formation of the government, weighed on consumer confidence and spending on the home," Mr Boyce said in a statement yesterday.
Smiths City shares, down more than 19% on a year ago, traded down 1.7% following yesterday’s announcement, at 58.c
Smiths City faced a raft of issues during the period, including increased competition, loss of sales, inventory clearances at lower profit margins and a $300,000 loss from closing a Wellington site, its last appliance-only format store.
"These conditions prevailed until the end of the half-year period and beyond and have resulted in intense competition, especially in the home electronics, digital products and whiteware categories, which are particularly exposed to competition from online retailers," Mr Boyce said.
However, Mr Boyce said many of the factors were short term and he expected all of the upper North Island stores to make a good contribution to the second-half trading, which was historically stronger than the first.
Management was continuing to drive business efficiencies, maintain inventories to suit trading conditions and drive other costs out of the business.
Smiths City maintained net cash and cash equivalents of $9.9million and total debt of $55.9million, held against receivables. It had deferred its planned $5.7million capital distribution.
Mr Boyce said the full year’s outcome was linked to the success during the crucial Christmas trading period, and ongoing success of the two Auckland stores.
