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Cavalier now warning of $2m loss

NZN 31/05/2017 Pattrick Smellie

Cavalier Corp's outlook has deteriorated further since its last earnings downgrade in February and the carpet maker is warning it now expects to post a loss of around $2 million.

Weaker demand in the New Zealand retail sector and exceptional competitor activity on both sides of the Tasman were behind the second outlook downgrade this year.

The company had forecast earnings of between $3m and $5m, on a normalised earnings after tax basis in the year to June 30, last November, but pulled that back to a predicted break-even in an announcement in early February.

"Difficult trading conditions" persisted in Australia, chief executive Paul Alston said in a statement to the NZX.

"Cavalier has responded and will continue to respond as necessary to defend share in these markets."

February's depressed wool market had continued, adversely impacting the performance of the wool acquisition business and earnings from the 27.5 per cent interest in Cavalier Wool Holdings, Mr Alston said.

However, the directors were still expecting improved performance in 2017/18 when the benefit of significantly reduced wool price and other cost-out measures came through, he said.

Cavalier shares closed yesterday at 55 cents, having fallen 18 per cent in the last 12 months.

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