South Island retailer Smiths City yesterday reported a significant turnaround in fortunes with its reported profit rising nearly 62% to $1.64 million in the year ended April.
The increased profit came from falling operating revenues of $226 million.
Same-store retail sales in the revue period fell 3.8%.
The profit from trading activities of $1.64 million rose 97.1% from $832,000.
As a result of carry-forward tax, no tax was payable.
Smiths City still has tax losses of $22.3 million to carry forward for future years.
The dividend remained unchanged at 1c per share.
Managing-director Rick Hellings acknowledged the profit increase came off a low base and that in normal trading conditions, the profit recorded last year would not be acceptable.
"However, as a retail organisation we have to work within the market as it exists.
The increased profits are a direct result of improvements we have made to our business."
Smiths City had closed operations that were not profitable and were not considered strategically important.
At the same time, while margins, particularly in appliances, were under pressure, the company had improved results through reducing costs and concentrating on improving its performance town by town, he said.
The company took the Smiths City brand back to Wellington during the year, opening stores in Porirua in December and Upper Hutt in March.
"The results from Wellington have exceeded expectations and we are actively seeking to increase our footprint in that region."
Sales in March, April and May were ahead of the same month in the previous year on a same stores basis, Mr Hellings said.
Looking ahead, the company would continue to respond to the competitive retail conditions by matching offers in the market place to ensure it held market share across all product categories in which it could trade profitably.
In particular, Smiths City would concentrate on improving on the gains in market share it had made in the furniture business this year.
Those moves would ensure that Smiths City remained in a strong position to take advantage of improvements in the overall market that would inevitably occur as the wider economy improved, he said.
In the short term, retail conditions were not expected to change markedly and a rise in GST to 15% on October 1 made predictions difficult.
"We are confident that the moves we have already made to improve profitability are sustainable and will continue to yield improvements in our results," Mr Hellings said.
