Smiths City yesterday showed the effect of the downturn in retail spending by reporting a reduced operating profit of $3.6 million for the 12 months ending April.
The profit was down 3.3% on the $3.7 million reported in the previous corresponding period (pcp).
Operating revenue for the period decreased from $271.9 million to $252.4 million in the period, down 7.2%, and reflected the sale of the Christchurch-based building supplies business.
Same-store sales revenue fell 2.2% in the period.
A final unimputed dividend of 3c was declared (4c last year).
Chairman Craig Boyce said the lower dividend reflected the need to be prudent with cash reserves in difficult trading conditions.
"Retail trading conditions over the last two years have been challenging, and the period since Christmas 2007 particularly difficult, as household budgets have come under extra pressure from the continually increasing costs of food, electricity, petrol and interest.
"In conditions such as these, it is acknowledged that big-ticket products - kitchen appliances, furniture, flooring - are among the first items to be cut from discretionary household expenditure."
Given those difficult trading conditions, a profit result in line with last year was considered satisfactory, Mr Boyce said.
Looking ahead, it was difficult to see any real changes to the overall economic environment.
"While tax cuts and a strong rural economy would ordinarily be in our favour, this Government appears determined to control inflation through stifling any growth in consumer spending."
As a result, there was unlikely to be any growth in demand, but there would be rises in costs such as fuel, interest and rentals.
