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Postie Plus Group Reports 7.5 Pct Q3 Sales Fall To $29.5m

Fuseworks Media
Fuseworks Media

Wellington, June 9 NZPA - Retailer Postie Plus Group is reporting a 7.5 percent fall in third quarter sales to $29.5 million.

That took sales for the nine months to the end of April to $95.3m, down 1.75 percent from $97m in the corresponding period a year earlier.

Chairman Peter van Rij said the retail trading environment had been below expectations this year.

"The reason for the slowing of sales -- higher costs for fuel, mortgages, and food impacting on households -- are well documented," he said.

With the slowdown in sales in the third quarter along with some margin loss, it was unlikely the company would make any significant improvement on the first half loss of $2.9m.

As the fourth quarter was traditionally the strongest quarter for Postie Plus it would be unwise to provide guidance on the extent of the loss for the group, Mr van Rij said.

The July annual operating loss would include non-recurring abnormal net losses from restructuring of the group's distribution supply chain.

There would also be a pre-tax loss on the sale of Arbuckles assets in the order of $3.2m, mostly from goodwill.

"The one-off charges may be significant yet are part of a cost reduction drive as our response to tightening market conditions and will have the advantage of improving our future performance," Mr van Rij said.

Following a strategic review, the company had entered into an agreement to sell the assets of the Arbuckles chain of manchester and homewares stores to retailer Jan Cameron.

Ms Cameron had agreed to acquire the entire Arbuckles stock and a number of the Arbuckles stores, with the final number yet to be determined.

Stores not transferred would either be converted to other Postie Plus brands or closed as leases expired, Mr van Rij said.

"This divestment will have the medium to longer term benefit to Postie Plus Group Ltd of significantly reducing both operating costs, interest costs on stockholding and will remove ongoing losses from this brand in what has been an over supplied and increasingly commoditised market segment."

The sale of Arbuckles was subject to shareholder approval as the purchaser was a related party.

Chief executive Ron Boskell said the group had completed the shift of all apparel inventory and associated distribution to a Christchurch logistics centre on target before winter and would now book the costs related to the undertaking.

Postie Plus could then look forward to accruing significant cost savings from a streamlined supply chain in coming years.

Further initiatives would be introduced to extensively reduce costs across the organisation.

While the period leading up to May had been "very disappointing", Postie+ stores had seen signs of "reasonable" sales growth in the past six weeks.

A trading halt on Postie Plus shares, put in place earlier in the day, was lifted, with the company's shares down 1c to 43c, having ranged between 89c and 41c in the past year.

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