Retail chain posts $1.6m profit
South Island-based retail chain Smiths City has reported a $1.687 million net profit for the six months to October 31, a 2.6 per cent increase on the same period last year, describing trading conditions as "difficult".
Operating revenues for the six months were $109.675 million, just below year-ago levels of $109.859 million.
Trading conditions in the six months to the end of October continued to be "difficult", Smiths City chairman Craig Boyce said.
"Household spending is restrained, appliance prices have fallen leading to lower dollar margins, competitor activity is aggressive and business expenses, particularly occupancy and insurance expenses, have risen considerably.
"Given these conditions, the board is satisfied with the trading results achieved to date and recognises that trading conditions - outside of Christchurch - are expected to remain subdued."
Shareholders will receive an unimputed half-year dividend of 1 cent per share to be paid on February 15.
Boyce said the company would maximise trading opportunities like the Christchurch rebuild and seek alternative ways to reduce costs.
During the six months the company also reopened its last two Christchurch stores which had closed because of the earthquake - Furniture Concepts and Powerstore have reopened in the same building on Moorhouse Avenue.
Finance company interest was a major expense to the group, Boyce said.
Smiths City planned to change financiers for Smithcorp Finance by January 2014, a move that would result in significant savings in interest costs for the group, he said.
Managing director Rick Hellings said that while trading results in the July quarter were reasonably strong, the October quarter was softer, reflecting ongoing price deflation and a more uncertain economy. Trading conditions were particularly soft in the lower North Island.
The appliance market continued to be tough, particularly in consumer electronics. In the October quarter, flat screen television prices fell by more than 20 per cent.
In the last six months management had focused on increasing sales in its profitable lines.