Postie Plus continues to improve position

NZX-Media Statement 12 December 2008

Postie Plus continues to improve its Operational and Financial Position

Postie Plus Group is making steady progress in turning around the losses of last year with growth in market share, improving margins and healthier inventory levels in the build up to Christmas, CEO Ron Boskell says.

“The retail market is fragile but we are performing better than a year ago and are well positioned to compete hard for the consumer dollar and return to profitability despite the very tough trading conditions,” Mr Boskell said.

“Like all retailers we had weak sales in August and September but margins showed improvement and we held market share. October was better as margins continued to lift and we grew market share. November was a poor month for all retailers but again we increased our share of the apparel market and importantly our inventory position is in good shape and not ballooning. We are not projecting results for the December-January Christmas and Back to School period as there are too many uncertainties on the economic front at this stage, but we are cautiously confident that our aggressive and wide reaching profit improvement programme is indeed working.”

Important gains to Postie Plus Group’s position were being generated from improved cash flow, dramatic reduction in stock levels, a new warehousing system, improved purchasing and planning disciplines, the sale of Arbuckles, upgraded information systems, a reinvigorated brand offer and ongoing restructuring.

“We have also taken advantage of the current volatility in foreign exchange markets and the turbulent retail climate to realign our foreign exchange portfolio,” Mr Boskell said. “We considered it prudent to realise these gains on our forward cover and apply the cash generated to reduce bank debt by $3.6 million and to further strengthen our balance sheet.”
The realignment of cover will not materially affect earnings before interest and tax over the next six months-12 months. Under International Financial Reporting Standards (IFRS) the gains that have been realised are required to be taken to earnings in the period in which the original foreign currency contract was due to mature. The timing of the recognition of these gains through earnings will be the same as if the realignment had not taken place.

“As a result of these ongoing initiatives and improvements, we are well equipped, well positioned and on track to post better results for the first six months than last year,” Mr Boskell says. “We expect that the second half should be better than the first half but it will be a slow boil and still expect it will be well into the final quarter before we recover the losses and cross the line to deliver a modest profit.”

ENDS

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