In a series of full page advertisements Melbourne based retailer Clive Peeters has announced a new online business while also apologising to customers following the theft of over $19 Million dollars from the Company by a former Payroll Manager. The Company has also announced big losses.
In an announcement to the ASX Clive Peeters said that they had recorded an $11.3 million pre-tax loss; $4.8 million was attributed to the theft of funds from the business. In comparison JB Hi Fi reported a 40% increase in profits while Harvey Norman reported a net profit of $214.35 million for the year ending June 30, 2009.
Also tipped to be profitable and growing is The Good Guys who are tipped to be on track to deliver sales growth of 9% to $1.7 billion.
Sales at the struggling Clive Peeters group were down 7.1 per cent to $496.9 million, gross profit margin fell 7.9 per cent to 24.3 per cent and inventory reduced by $23.3 million, down 17.7 per cent.
The new web site announced in newspaper advertisements today is offering significant discounts on fridges, cook tops and a full range of appliances and will compete head on with online appliance sites from Winnings and the Big Brown Box.
Clive Peeters CEO Greg Smith said “We’ve weathered an unexpected storm with the misappropriation of Company funds by an employee however we are now on top of this issue”.
Smith who expects to see at least $16 Million dollars returned as cash flow to the struggling Company.
He said of his poor results “The conditions for the big ticket discretionary retail industry over FY 2009 have been challenging. Consumer sentiment hit a 16 year low, resulting in a decline in floor traffic across all stores and in all States”
Smith said “With the first evidence of sales softness emerging in Q4 2008, and continuing into Q1
2009, Clive Peeters quickly initiated strategies to compensate. We had to make cash and inventory management our highest priorities, at the expense of profitability, and set about reducing our overheads to improve our cash position. Inventory was reduced by $23.3m over FY 2009 to strengthen our cash liquidity”.
Despite this our normal supply of trading stock was sharply impacted by the tight cash conditions which existed throughout the whole year, and was not helped by industry shortages of panel TV stocks which applied for several months in H2 2009. The reductions in inventory and interruptions to supply of trading stock significantly affected Clive Peeters’ sales, rebate revenue and advertising recovery from suppliers, and materially impacted our trading performance over FY 2009.”
Greg Smith added “Increased competition, a shift towards lower margin home entertainment and technology products, and the loss of rebate revenue, also put pressure on margins, as the Company experienced its first decline in margins in over 15 years.”
Smith added ” We didn’t realise at the time was that the Company was also being affected by the major cash misappropriations over FY 2008 and FY 2009, which continued into July 2009, and which were detected at the beginning of August 2009. The $19.4m of cash misappropriated from our business has, in hindsight, affected our trading result over Q4 2008 (prior to which the Company was on track to meet its FY 2008 profit forecasts), and materially affected our trading results over FY 2009. We have previously announced that our cash reserves will be strengthened by the proceeds of sale of properties and assets that were purchased by the staff member and related parties out of the cash misappropriate”.
More to follow.