KEY POINTS:
Postie Plus Group says its summer sales promotions have been too successful, with low margins dragging it from profit to an almost certain loss for the half-year to January 31.
The retailer issued second-quarter sales results to January 31 of $31.7 million, up 12 per cent on last year. Increases in same store sales were not published in the report to the NZX, but Postie Plus said they were up 5 per cent.
But the increase was achieved with heavy discounting and chairman Peter Van Rij said that a net loss of $500,000 for the half-year was now "unavoidable".
The market reacted by taking 10c off the share price. It closed last night on 85c.
Van Rij said that "in line with a number of retailers in the apparel sector, the group faced a difficult retail season".
Chief executive Ron Boskell said the company had been expecting to announce a half-year profit of around $500,000 in the first half on March 22, so the discounting had probably cost the company $1 million overall.
The sales promotions - built on discounts increasing as people bought more items - had been advertised and run before Christmas.
Despite the loss from lower margins becoming apparent before Christmas, there was a commitment to continue with discounts into the New Year, Boskell said.
But Stephen Wright of sharebroker ASB Securities said the result was surprising and he was struck by the volatility of the company's earnings.
"The good news is that they say they are heavily biased to the second half."
