Weather, earthquakes and a large South Island receivership all took their toll on listed retailer Smiths City Group which yesterday reported a reduced profit for the six months ended October 31.
The operating profit was down 22.4% to $790,000 from $1.02 million in the previous corresponding period.
The group does not pay tax.
Revenue fell 2.7% to $109.5 million from $112.6 million in the period.
Chairman Craig Boyce said after seeing some small improvements in trading conditions during the winter months, second-quarter retail conditions worsened considerably.
In particular, consumer confidence in the South Island was affected by:
- The earthquake in Canterbury which had a major effect on the Colombo St store through September, October and November.
- The receivership of South Canterbury Finance.
- The considerable stock losses from the unseasonal snow in Southland.
In addition, the big-ticket retail markets suffered a fall in sales after the increase in the rate of GST to 15% on October 1, he said.
"The combination of uncontrollable circumstances like this is unprecedented and while November, relative to last year, improved on October, the market remains fragile and very competitive."
The early part of December saw trading at about last year's levels although heavy discounting across all product segments was putting pressure on margins.
It was too early to make any forecast for the second-half year result, Mr Boyce said.
The group continued to focus on the medium-term strategy of building Smith City's presence in the Wellington market.
In addition, the Porirua store was increased in size by integrating the adjacent LV Martin store, enabling the Smiths City store to stock a full range of appliances, furnishing and sports products, he said.
Managing director Rick Hellings said the past few months had been difficult, as all product categories were affected by the downturn in consumer demand.
The appliance market had been hurt by major price reductions.
Managers and staff concentrated on controlling stock levels and, where possible, margins to ensure the company rode out the cycle to the maximum advantage.
Smithcorp Finance, the group's wholly owned finance company, continued to trade well and contributed positively to the half-year result, he said.
"December trading has been competitive with heavy discounting across all product categories, and this is not anticipated to change as we go through 2011."
However, the company was looking forward to "a better 2011", Mr Hellings said.
