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Smith City revenue up as finance arm grows

NZ Newswire logoNZ Newswire 20/06/2017 Paul McBeth

Smiths City Group's annual profit has more than halved without the one-off gain from the sale of its Colombo St store last year.

Net profit fell to $2.4 million in the 12 months ended April 30, from $5.6m a year earlier when it benefited from a $1.8 million gain on the property sale and $2.5 million of tax credits, the Christchurch-based company said on Wednesday.

Underlying earnings climbed 54 per cent to $2m as the appliance and furniture retailer faced a smaller restructuring bill which helped offset increasingly tight competition. Revenue increased 2.5 per cent to $227.4m.

Smiths City's finance division delivered the lion's share of the company's earnings, increasing profit to $3.7m from $3m a year earlier, even as revenue shrank 11 per cent to $9.2m.

The retail division's earnings fell to $700,000 from $900,000 a year earlier, while revenue rose 3.1 per cent to $218.2m.

"In the face of rising interest rates and consumer uncertainty, the core Smiths City retail stores have turned in a creditable performance," chairman Craig Boyce said.

"The finance business, while still delivering strong earnings, has lost ground as our competitors have aggressively expanded the availability of credit."

The retailer is two years into a five-year transformation programme where it wants to drop low margin business and expand its presence in Auckland.

To help broaden its reach in the North Island it bought Furniture City last year, however, Mr Boyce said sales at the new acquisition had struggled and in the coming months it will be rebranded under the retailer's new 'live better' brand and store formats.

The shares last traded at 67 cents and have declined 2.9 per cent so far this year.

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