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Postie sales up; Schooltex is to be expanded with PPGL
27
Sep '10
The national apparel and nursery equipment retailer Postie Plus Group Ltd has achieved positive earnings of $781,000 for the 2009-10 year. Whilst the pre-tax profit did not meet the company's expectations, it reflected flat consumer spending patterns.

The directors were pleased to see sales increase by 3% to $113m in a difficult retail environment, said the chairman Mr Peter van Rij, but deteriorating fourth quarter sales and the need to meet a very competitive market by reducing margin led to pre-tax profit easing by 6.5% over the previous year.

In what has been a difficult year it is pleasing to note that Postie has continued to increase market share in the apparel segment.

"PPGL's trading year began positively and we had an excellent start to the second half that placed group performance on track to secure a much higher result for 2010 than we achieved in 2009.

The national economic uncertainty during the second half of our year was widely reported and the resulting consumer confidence dip was clearly shown in the national retail sales data during this period.

The trading period to 1 August 2010 was three days shorter than in 2009, noted Mr van Rij.

"Following an adjustment for deferred tax of $157,000, our reported profit of $415,000 compares with $615,000 in 2009. The adjustment relates to the change in the company tax rate from 30cents to 28cents in the Government's 2010 Budget.

"It is important that investors appreciate that this adjustment is of a non-cash nature and does not affect the operational performance of the company."

During the period, PPGL made sound progress in:

• Further reducing the Cost of Doing Business by 2.2% versus last year,
• Achieving further savings in distribution expenses of $448,000 on greater sales.
• Maintaining strong control of inventory
• Providing a stronger balance sheet through lowering borrowings ($2.4m), receivables and improving the equity position.
• Improved positive cash flows from operations of $3.7m

The cumulative costs savings over the past two years from our distribution supply chain now exceeds our target projected for the three years post-consolidation of logistics.

"Whilst we have locked in the efficiency gains sought in our internal systems, the weakness in retail spending patterns requires us to continue to act prudently to protect the overall interests of shareholders," said Mr van Rij. "A dividend will not be paid for the 2010 year. However, a return to regular dividends is a goal of the PPGL board."

Outlook
The current trading year began on a more satisfactory note with August producing stronger performance data for the group, said the chief executive Mr Ron Boskell.

"Whilst it is early days, we saw a combination of good results from the new spring season's fashion offer and some delayed sales from the winter period."

The company has improved efficiencies across the business and is currently investing in a major refresh exercise for the postie retail chain and in other growth oriented initiatives as a sign of the confidence it has in the business as it looks ahead.

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