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1H11 profit drop at retail fashion group Noni B
24
Feb '11
Noni B Limited, the retail fashion group, announced an after-tax profit of $1.5 million for the six months to 26 December 2010. This compares with guidance of $1.5 - $1.9 million and with an after-tax profit of $3.6 million for the first half of FY2010. Sales were $61.4 million (pcp: $62.5 million), and comparable store sales were down 2.1 per cent.

Cash flow from operations was $7.1 million (pcp: $10.6 million). The company had cash of $8.7 million at 26 December 2010, compared with $9.3 million a year earlier, and no bank borrowings.

While the directors believe Noni B is well placed to increase sales and earnings when consumer confidence recovers, they have decided to adopt a cautious stance and pay an interim dividend of 1.0 cents fully franked, with a record date of 14 April 2011 and payable to shareholders on 28 April 2011.

'As already announced, low consumer confidence since the federal election has had a major impact on demand, and the cool, wet weather during early summer delayed purchases of our summer ranges,' said David Kindl, Joint Managing Director.

'While inventory remains under control and we have avoided the most aggressive discounting, we have had to meet the market, resulting in a slight decrease in our gross profit margin. '

'We are continuing to manage costs carefully, although marketing spend has been increased with the aim of expanding market share. We have also increased investment in staff training and all business and store managers have now completed a nationally-recognised retail qualification to enhance their retail skills. Both these initiatives are focused on long-term strengthening of our brand image, service delivery and customer base.'

'Five new stores were opened during the half year, including one each in the Sydney and Perth central business districts, and one non-performing store was closed. At 26 December 2010 our total number of stores was 217. While we continue to review growth opportunities, we will only open further stores where we can obtain leases that reflect the present retail conditions.'

Outlook
'Our new season's ranges have been well received,' said Mr Kindl. 'We are cautious, however, about demand during the coming months as consumer confidence remains volatile and may be affected by the prospect of higher energy costs and the flood levy. 'Trading in some stores was disrupted by the floods in Queensland and Victoria and by Cyclone Yasi; fortunately our staff are all safe and there was no serious damage to stock or equipment.

'We are continuing to manage tightly those aspects of our business that we can control, and are confident that our strong brand and reputation for quality fashion and value will enable Noni B to rebound when demand improves.'

Noni B Limited

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