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Performance Initiatives Underwrite Prg Result

Media Release

Margin Retention And Performance Initiatives Underwrite Prg Result

Auckland – June 14, 2001 –Pacific Retail Group (NZSE: PRG) today announced a profit after tax and unusual items of $10.4 million for the twelve months ended 31 March 2001, up from $7.7 million last year.

Revenues from the Group’s operating units, Noel Leeming, Bond & Bond, Computer City, Living & Giving and Pacific Retail Finance, were $402.2 million compared to $360.0 million last year.

Pacific Retail Group
Report for the Year Ended 31 March 2001
$000 (audited)
31 Mar 2001 31 Mar 2000
Operating revenue $402,229 $359,975
Operating surplus before unusual items and tax $20,197 $15,475
Operating surplus before tax $18,812 $13,205
Operating surplus after tax & losses of associate $10,361 $7,699

Chairman, Maurice Kidd said “The Board is pleased with the result and confident the business is now in a sound state as a result of actions undertaken over the period. However we still have a number of key initiatives yet to be fully implemented.

The company has also improved its working capital management but we need to continue to improve our performance as we operate in a highly competitive retail sector.

The internal appointment of Peter Halkett as Chief Executive has resulted in continued stability and consistency of decision making. He leads a strong and experienced management team focused on delivering sustainable profitability.”

Orion Ventures Ltd has now been restructured into the Group as part of the company’s computer and Internet strategy. Restructuring costs arising after the purchase are represented as an unusual trading loss of $1.4 million, and the remaining equity investment of $1.9 million has been written off. “We anticipate no further losses or write off as a result of our investment in Orion,” said Mr Kidd.

Chief Executive Officer, Peter Halkett said the result reflected the company’s continuing improvement in performance

“The result was achieved on the back of effective marketing, managed discounting, and the careful control of interest-free credit. With the Group performing well in growth areas such as computers and communications products, as well as increasing whiteware market share, we have not only seen our sales increase but also enhanced margin retention.

We have also concentrated on putting in place good basic retail systems and structures that allow us to better manage the business. We expect further benefits from longer term projects such as logistics and stock management improvements to start coming on stream over the next few months.

Pacific Retail Finance also continued to perform well, and we are now looking at a number of growth opportunities for that business.

We are pleased with the performance of the Living and Giving chain for the six months since we acquired the business and are now putting in place structures and systems to allow significant growth.”

Mr Halkett also commented on the impact of duties imposed on Korean whiteware: “We are disappointed by the Commerce Minister’s decision, and by a process which has caused unnecessary disruption to our customers and distraction to management. However the action has had, and will have, no commercial impact on Pacific Retail Group. The experience has, however, encouraged us to source other international whiteware, which will leave us in an even stronger competitive position.”

Mr Halkett noted that Pacific Retail Group is pursuing a clear business strategy of investing in growth areas and expanding categories, undertaking key initiatives and longer term projects to improve the fundamentals of business and, at the same time, locking in the improvements gained over the past 18 months.

Company Background

Pacific Retail Group is an NZSE-listed retail company. The appliance, electronics, computer and homeware retailer has 97 stores and annual sales of over $400 million, trading through its Noel Leeming, Bond & Bond, Computer City, Living & Giving and finance activities through Pacific Retail Finance brands.

ENDS

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