Clive Peeters has announced that his company is on track to meet a forecasted operating profit after tax of $12.2 million for the 2006 financial year despite concern among analysts six months ago when the Company was in the market to raise $40 million in capital
CEO, Greg Smith, has said that Company plans to meet their forecast, despite poor market conditions over the last six months. The latest figures represent a 68 per cent increase in operating profit after tax of $5.9 million for the six months to 31 December, 2005.The result includesthree month of contribution from the recently acquired Michard King and Rick Hart stores. Rick Hart thew Perth based retailer has also entered into an agreement to take over the Perth Myer Megamart store which was rejected by Harvey Norman. The new store will operate seven days a week as a flagship Rick Hart outlet. The acquisition comes following the recent purchase of the Rick Hart chain of stores by Clive Peeters in September 2005.
The Clive Peeters group announced a half-year operating profit of $5.9 million for the six months to December 31 2005. The result was helped in no small part by the Rick Hart acquisition. Rick Hart stores contributed sales growth of 15.5 per cent for the period for its new owner, compared to overall sales growth for the Clive Peeters group of 2.1 per cent. The acquisition of the Rick Hart stores is part of the Clive Peeters strategy to expand into new markets, which also includes Clive Peeters branded stores in Sydney and Hobart.
According to a statement released by the company, comparable store sales growth for the six months was -2.8 per cent for Clive Peeters stores and 15.5 per cent for Rick Hart stores, with overall growth for the group of 2.1 per cent. Clive Peeters was able to apply its existing buying power across the combined group to achieve an uplift in gross profit margins to 25.2 per cent as forecast in the prospectus. Operating costs were 4.7 per cent lower than forecast, which resulted in Clive Peeters meeting its operating profit after tax forecast for the first half.
According to Smith, sales were adversely impacted during September and the first half of October due to petrol price pressures, housing market deterioration and consumer sentiment. “Sales in November and December were strong. This trend continued into January and February, with sales in line with typical seasonal trends,” Smith said. While sales were slightly down on prospectus forecast, Smith believes operating profit remained on target due to profit margins being increased in line with prospectus forecasts and operating costs being carefully managed in line with sales levels.
According to Smith, integration of the Rick Hart stores acquired in September 2005 has progressed well, with the successful implementation of Clive Peeters’ information technology systems across all stores and all duplicate back office functions being removed and now operating centrally out of Victoria. Since publicly listing, Smith said Clive Peeters has been able to apply its buying power to the Rick Hart stores as forecast, and has introduced additional product categories including computers and home entertainment packages.
Refurbishment and rebadging of the acquired Michael King store in Malvern was completed within three weeks of the acquisition, with new product categories of home entertainment, computers and peripherals and air-conditioning introduced.