Postie Plus forecasts first-half loss

Postie Plus today said it expects to post a loss for the first half of the year, after bad weather and poor market conditions continued to hamper its operations in the normally busy Christmas period.

The retailer said in December it expected its full year profit for the 2004/2005-year to be "below the previous year" but did not elaborate. Today the group released forecast figures for the first half and full year.

Net profit before tax for the first half year was expected to slump to a $700,000 loss, against a net profit of $3.1m for the first half of last year. But the group expected a turnaround later this year, forecasting a second-half net $2.9m profit, leading to a full year profit of $2.3m. This compares to a second-half net profit of $2.9m last year, and a full year profit of $6m.

Postie Plus said in a statement its sales were tracking above last year's figures, but its same-store sales for the period were down.

The group forecast total sales of $54m for the half year ended January 31, against sales of $52.4m for the same period last year, second-half sales of $59m, against $56.1m the year earlier, and full-year sales of $113m against $108.5m last year.

The group said it would review the payment of an interim and final dividend at "the appropriate times".

Apart from the poor weather, other factors cited in the forecast first-half loss included: higher levels of discounting throughout the market, deflationary pressure from the high New Zealand dollar, and the poor performance of Auckland's Rendells stores.

These stores were converted to Postie Plus outlets in December 2004 -- a move the group said would strengthen its core business.

The group said there would be additional redundancies and restructuring costs associated with converting the Rendells branches to Postie Plus.

The group said it was undertaking a detailed review of its business with a focus on streamlining and reducing overheads.

Already the group has reduced overheads by more than $1m.

Improvements in stock management and distribution will also be implemented but the group said real benefits from the changes would not be felt for around 12 months.

Chairman Peter van Rij said the group's directors remained committed to achieving long-term growth.

"The business restructuring and overhead reduction initiatives address priority areas of concern and in the directors' view should provide a platform for return to profitability from the second half of the current year and for subsequent years," he said in a statement.

Shares in Postie Plus fell 4c to 81c in early trading, having ranged between 83c and $1.37 over the past 12 months.

- NZPA