Smiths City puts off capital return until next year as tight trading leads to earnings downgrade
By Paul McBeth
Oct. 25 (BusinessDesk) - Smiths City Group has delayed a planned $5.7 million capital return to shareholders a second
time as increasingly tight trading conditions prompted the retail chain to downgrade its first-half earnings outlook.
Christchurch-based Smiths City won't consider the capital return until 2018 as stiff competition and the need for more
investment in its transformation programme led the board to maintain a more conservative capital structure. The retailer
already delayed plans to pay 72 cents per share in a compulsory acquisition and cancellation of three shares in every 20
over outstanding regulatory issues, having first floated the return in June.
The retail environment has attracted strong competition, especially in consumer electronics, digital products, and
whiteware, and Smiths City said revenue will likely fall 3 percent in the six months ending Oct. 31 from the $113.9
million reported a year earlier, implying first-half sales of about $110.5 million.
"We expect group profitability to be lower than the same six months last year, with a weaker retail performance
partially offset by a strong performance from our finance operations," chair Craig Boyce said in a statement. "In the
face of these challenges, it is appropriate the company maintains a more conservative level of gearing. The Smiths City
board has resolved to review the position during the 2018 calendar year."
In August, Smiths City said there was a significant opportunity in expanding the high margin finance division, which
delivers the lion's share of the company's earnings.
The company's shares were unchanged at 62 cents.
(BusinessDesk)