Profit increase in competitive market for Smiths City.
Photo by Craig Baxter.
Christchurch-based retailer Smiths City has reported a
significantly improved profit for the six months ending
Operating earnings are up 22% to $2.1 million in the period
compared with a profit of $1.72 million in the previous
corresponding period. The profit was helped by the company
paying less in interest in the period. Trading profit was up
12.8% to $2.73 million.
Smiths City has available carry forward tax losses of $10.8
million and no income tax is payable. However, this year the
company paid a deferred tax charge of $197,000 to take the
reported profit down to $1.9 million, up 12.8% on the $1.69
million reported in the pcp.
Revenue in the period fell 1.1% to $108.4 million.
Chairman Craig Boyce said retail trading conditions had
renained competitive in the period. Prices - particularly for
consumer electronic products - were under pressure, margins
were squeezed and property costs continued to increase.
''The increase in profit has been a result of the company
managing these conditions effectively while retaining the
majority of the benefits of the restructured financing
arrangements introduced towards the end of the previous
From a geographic viewpoint, in Christchurch, the rebuild,
while gathering momentum, had been slower than expected and
Smiths City had been affected by competitors that had
reopened. Outside Christchurch, rural South Island had been
strong, results were improving in Wellington and were in line
with budget while the upper North Island economy remained
flat, Mr Boyce said.
Managing director Rick Hellings said management had
concentrated on increasing sales in its profitable lines over
the past six months. That included focusing on furniture,
kitchen appliances and bedding.
By product, the retailer continued to make strong gains in
its flooring, whiteware and bedding operations. However, the
appliance market continued to face tough times, particularly
in the consumer electronics area, where the prices for
televisions had fallen significantly.
Looking ahead, the company did not expect to see any
significant change in the retail environment and was planning
accordingly, he said.
Growth in sales would come, in Christchurch as the
residential rebuild gained momentum, and by expanding its
retail presence in the North Island.
Growth in margins would come from targeting higher margin
products and controlling costs in retail was a necessity, Mr