Two of New Zealand's prominent retailers, Kathmandu Holdings and Postie Plus, are blaming the tough economic environment for tighter margins.
Kathmandu yesterday reported its first full-year result as a listed company.
Sales were up 14% to $245.8 million and earnings before interest and tax (ebit), excluding IPO costs, was up 12.4% to $47.9 million for the year ended July 31.
The maiden dividend was 7c, up on the listing prospectus.
Chief executive Peter Halkett said the company was confident that given reasonable economic conditions, there would be further improvement in profitability.
"The impact of the economic environment on consumer confidence, and cost pressures both domestically and internationally are a challenge."
Kathmandu continued to target a total store network of 150 locations in Australia and New Zealand, he said.
Postie Plus reported operating earnings of $781,000 for the year ended August, a fall of 6.5% from last year.
Chairman Peter van Rij said the result reflected flat consumer spending patterns.
Deteriorating fourth-quarter sales and the need to meet a very competitive market by reducing margins led to the fall in before-tax profit.
Revenue increased by 3% to $113 million in the difficult retail environment, he said.
No dividend would be paid.
During the year, Kathmandu founder Jan Cameron increased her stake in Postie Plus to 19.6%.
She sold out of Kathmandu before the company was listed.
Craigs Investment Partners broker Chris Timms said that although the Kathmandu profit was below forecast it still looked reasonable.
The result was driven by new stores with 15 being opened in the year compared with the 12 expected.
Same store growth was flat on 1% which meant the profit was mainly driven from the United Kingdom operations.
It was a small part of the business but it had the largest growth.
Kathmandu and Postie Plus were facing a competitive environment, he said.
Postie Plus was facing a future of increased sales but discounted prices were keeping its margins tight.
"It has similar concerns about the flat economic environment and said a dip in consumer confidence led to sales data falling.
"Consumers have cut back their spending as they try to get their personal balance sheets back in line."
Mr Timms expected both Kathmandu and Postie Plus to show in their next half-year reports a pre-GST increase rise in sales.
GST rises next Friday to 15% from the current 12.5%.
The rally in sales would probably be offset by a fall in sales after October 1, Mr Timms said.
Kathmandu was not likely to be as affected by rising GST as Postie Plus, which sells family-oriented ranges such as school uniforms and baby clothes.
