PRG Living And Giving Market Update - Fy06 Profit

PRG LIVING AND GIVING MARKET UPDATE: FY06 PROFIT FORECAST

NZX release: 23 March 2005

Pacific Retail Group is forecasting a small profit for its Living & Giving business in the forthcoming financial year, FY06, as the specialist homeware retailer reaps the rewards of a comprehensive restructuring and repositioning programme.

Living & Giving is now operating from a base of 10 stores, following last month's closure of its non-strategic WestCity store. No further closures are planned, with the 10 stores equipped to deliver ongoing trading improvements and sustainable growth going forward.

Following a recent review of Living & Giving, PRG Chairman Maurice Kidd says the PRG Board is committed to retaining its investment in the business.

"The directors are very pleased with Living & Giving's progress to date, including month-by-month growth in average sales, increased customer numbers and improved stock turn. We are delighted that the business is now well positioned to deliver PRG an ongoing return on investment," Kidd says.

Steve Smith, PRG Acting Chief Executive, says while Living & Giving is a relatively small player in PRG's portfolio of investments, its completion of restructuring is pleasing.

"Living & Giving is now running as an autonomous business. With a combination of focused and experienced management, a clear vision and a competitive business strategy, we can now start to leverage the strengths of the business - its brand name and customer base," Smith says.

Last month's West City store closure brings to five the number of non-strategic stores closed this financial year. One-off closure and lease exit costs of $1.4 million will be reported for the year to 31 March 2005.

Leaving aside the one-off costs, Living & Giving is forecasting an EBITA loss of $1.6 million for the year to 31 March 2005. This is an improvement on the $2.75 million EBITA loss for the year to 31 March 2004, excluding $0.15 million of closure and lease exit costs.

Living & Giving's turnover for the year to 31 March 2005 is forecast at $13.4 million, and this is expected to rise modestly in FY06.

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About Living and Giving:

Living & Giving's repositioning is based on fashionability and outstanding customer service, married with lifestyle-oriented store layouts and the provision of quality international brands sourced through New Zealand-based suppliers.

Directors Fran Stanley and Mike Ferrand say the business has successfully carved out a new niche in homeware retailing with a compelling blend of stylish, quality homeware brands and selected giftware.

"The changes have been based on extensive research which showed customers were tired of seeing the same products everywhere, and that they wanted quality brands which were well presented and supported with excellent service,' they say.

"We also found that Living & Giving's previous sole focus on giftware was simply not viable in an intensely competitive market which has been impacted by a rise in the number of discount retailers."

Brands stocked at Living & Giving stores include Typhoon, Robert Welch, Schott Commercial, Look, Jamie Oliver and Nigella Lawson branded cookware, and Luigi Bormioli glassware.

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