Smiths City FY profit halves from year-earlier result bolstered by asset sale; earnings improve
By Paul McBeth
June 21 (BusinessDesk) – Smiths City Group's annual profit more than halved without the one-off gain from the sale of
its Colombo St store in 2016, although underlying earnings jumped from wider margins in its finance division and a
smaller restructuring bill.
Net profit fell to $2.4 million, or 4.5 cents per share, in the 12 months ended April 30, from $5.6 million, or 10.6
cents, a year earlier when it benefited from a $1.8 million gain on a property sale and $2.5 million of tax credits, the
Christchurch-based company said in a statement. Underlying earnings climbed 54 percent to $2 million as the appliance
and furniture retailer faced a smaller restructuring bill which helped offset increasingly tight competition. Revenue
increased 2.5 percent to $227.4 million.
Smiths City's finance division delivered the lion's share of the company's earnings, increasing profit to $3.7 million
from $3 million a year earlier, even as revenue shrank 11 percent to $9.2 million. The retail division's earnings fell
to $700,000 from $900,000 a year earlier, while revenue rose 3.1 percent to $218.2 million.
"In the face of rising interest rates and consumer uncertainty, the core Smiths City retail stores have turned in a
creditable performance," chairman Craig Boyce said. "The finance business, while still delivering strong earnings, has
lost ground as our competitors have aggressively expanded the availability of credit."
The retailer is two years into a five-year transformation programme where it wants to drop low margin business and
expand its presence in Auckland.
To help broaden its reach in the North Island it bought Furniture City last year, however, Boyce said sales at the new
acquisition had struggled and in the coming months it will be rebranded under the retailer's new ‘live better’ brand and
store formats.
The board declared a final dividend of 2.5 cents per share, payable on Aug. 11 with an Aug. 4 record date, taking the
total return to 3.5 cents, unchanged from a year earlier.
Earlier this month the company announced plans for a $5.7 million capital return through a compulsory share buyback,
which need approvals from the High Court, Inland Revenue, the retailer's lender ASB Bank and shareholders.
Chief executive Roy Campbell said demand for consumer durables was weakening as interest rates increase and with growing
uncertainty in the housing market, while rural areas are still recovering from last year's downturn in global dairy
prices.
"Nevertheless, the rollout of the new ‘live better’ brand livery across our national network, the transition of flagship
stores to the new format and the refresh of our finance offer will position us well to compete effectively and continue
to build on the Smiths City heritage," he said.
The shares last traded at 67 cents and have declined 2.9 percent so far this year, lagging behind an 8.1 percent gain on
the S/NZX All Index.
(BusinessDesk)
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