Postie Plus sales down 5pc, but margins improving

Postie Plus managing director Ron Boskell

Retailer Postie Plus Group's half year sales fell 5 per cent from a year earlier, but the company said margins improved and the decline eased in the second quarter.

For the six months to the end of January the company had operating revenues of $49.9 million, down from $52.5m a year earlier.

In the first quarter sales were down 8.8 per cent from the corresponding quarter a year before to $19.9m, while in the second quarter the decline was 2.3 per cent to $30m.

Net loss for the half year was $2.7m, compared to $2.9m a year earlier.

The company runs Postie Plus and Baby City stores.

It said it was on track to deliver a "modest full year profit" in a generally stronger second half, provided the recession did not worsen.

No interim dividend would be paid due to the economic environment and the results.

Managing director Ron Boskell said the company was quietly confident it would turn around the losses at the end of this financial year.

"But we anticipate it will be a late run in the final quarter for us to reach the line and deliver the modest profit we seek."

The result was good considering the state of the market and the rocky start in the first quarter when retailers had to battle for every sale, he said.

Margins were continuing to lift and the group had entered the second half with a clean stock position for the crucial winter selling period.

Inventories were down 30 per cent in total compared with the prior first half, with apparel inventories reduced by 15 per cent, Boskell said.

The business was also benefiting from cost containment and operational efficiencies.

Coupled with savings from the lower inventories, bank debt had been reduced by $6m, or 32 per cent, compared with the same period last year.

Savings in finance costs would come through in the second half.

"We started the 2008-09 year in a much stronger position than we have been in for some years," said Boskell.

"We were free from the crippling stock overhang we have had to contend with since 2006, the legacy of inefficient warehousing, logistics and retail delivery systems and Arbuckles' accumulating losses."

Postie Plus sold the Arbuckles chain of manchester and homewares stores last year.

Postie Plus shares last traded yesterday at 30c. They have fallen from a year high of 61c a year ago, but are up from the year low of 20c reached in February.

- NZPA