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PRG reports increased revenues

NZSE Announcement

Auckland, 30th May: Pacific Retail Group (PRG) reports increased revenues and improved annual operating profit

Pacific Retail Group (PRG) today announced an operating profit of $25.057 million before tax and abnormals, up 24.1% from $20.197 million last year. Revenues increased 10.4% to $444.234 million for the full year to 31 March 2002, up from $402.229 million last year.

The Group comprises retail chains Noel Leeming, Bond and Bond, Computer City, Living & Giving, new computer retail brand Big Byte and the consumer finance division - Pacific Retail Finance. In addition, but not included in the trading result, is recently acquired lingerie manufacturer/retailer Bendon.

“Work previously undertaken across the Group to improve basic retail systems and structures, closer relationships with key suppliers as well as new concepts like the contract manager scheme are now starting to deliver improved profitability,” said Chief Executive Peter Halkett. “On top of this our new brand development and initiatives undertaken by Pacific Retail Finance have contributed to the increased profit.”

The Group achieved sales growth above the 6.2% experienced by the sector (Retail Trade Survey), a strong performance in a competitive environment. Looking forward, Noel Leeming will pilot furniture retailing in two new purpose built stores in Auckland, leveraging our big ticket expertise and our large database of existing customers. This also provides additional growth for Pacific Retail Finance.

“Bond and Bond continues to increase its range of appliance and consumer electronics and the size and number of its stores,” said Mr Halkett.

The Group launched the first of its successful Big Byte stores in October last year and plans to grow the Big Byte chain to 10 to 12 stores nationwide. The large format specialist computer, technology and communications stores cater to the more sophisticated home buyer and small business customer.

Living & Giving, the Group’s gift and homeware retailer, has increased in size from 6 to 15 stores during the period. Living & Giving will over the next 2-3 years continue its national expansion and consider new category opportunities including more exclusive and unique merchandise.

Chairman Maurice Kidd said that Pacific Retail Finance has during the year expanded outside its core role of supplying hire purchase finance to the appliance division during the year.

“Pacific Retail Finance is capitalising on growth opportunities in the wider consumer finance sector and has increased its range of products and expanded its third party financing business. We are very pleased with the growth we have achieved from the finance company to date,” he said.

Pacific Retail Finance’s first ranking secured debenture, which was launched in July 2001, had raised more than $33.659 million by 31 March 2002.

In line with the Board’s objective of delivering shareholder value, it will continue to retain funds for reinvestment in its growth and development strategies rather than pay a dividend. As part of this commitment to growth the Group acquired Bendon in March 2002 and intends operating it as a separate business unit.

“Although Bendon has 23 retail stores, the acquisition represents a move outside of our core retail sector, but one where our commercial skills and sales and marketing expertise will add value” said Mr Halkett.

“In terms of the future,” Mr Halkett said, we are determined to maintain sales and profit growth and this will occur by locking in efficiency gains, capitalising upon internal expansion opportunities and pursuing appropriate acquisitions.”

Store numbers as at 31 March 2002

Noel Leeming 46
Bond & Bond 37
Big Byte 2
Computer city 1
Living & Giving 15
Total 101

Plus Bendon stores

Bennett and Bain 9
Bendon 2
Outlet stores 12 (6 NZ, 6 Australia)
Total 23


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