Retailer Smiths City has completed a major restructuring and is now debt-free, putting it in a strong balance-sheet position to grow its business for the future, chairman Craig Boyce says.
The company reported a trading profit of $2.38million for the six months ended October, down 2.8% from the $2.45million reported in the previous corresponding period.
Revenue was down 2.9% to $109.5million from $106.2million.
The reported profit was down 62.2% to $1.7million in 2015 compared with $4.4million in the pcp, which was boosted by insurance money received for its quake-damaged property.
The sale of the group's ‘‘flagship'' Colombo St store, in Christchurch, was completed during October. The company received $19.6million net of costs and reported a profit of $1.8million before tax on the sale, he said.
An unimputed half-year dividend of 1c per share would be paid on February 12. Smiths City has tax losses accumulated from previous trading years and does not pay tax. In the period under review, the group claimed $87,000 tax back to add to its before-tax profit of $1.7million.
The only debt remaining is held by Smiths City Finance, the group's finance arm.
‘‘We were pleased to maintain our sales broadly consistent with last year's level on a ‘same stores basis' after adjusting for the unprofitable Powerstore and LV Martin stores that have been closed.''
Demand in some areas of the South Island had been affected by the reduction in dairy and sheep farm incomes but that had been compensated for by better trading in group stores in Wellington and the Bay of Plenty, Mr Boyce said.
‘‘We are looking ahead with more confidence as the changes already made and planned are intended to improve retail profitability through higher margins and lower costs.''Ongoing reviews of areas of the business would further strengthen the market share and profitability, he said.
There would be further restructuring costs as action was taken to address areas which had held Smiths City back. Those were necessary and one-off.
At a glance
• Rebranded all retail operations as Smiths City by absorbing sub-brands Powerstore and LV Martin to simplify merchandise and promotional activity
• Eliminated loss-making parts of the business and reduced costs
• Reviewed buying and logistics operations
• Debt-free balance sheet, except for finance arm
