Smiths City more than doubles 1H profit on insurance payment

Smiths City Group, the Christchurch-based retail chain, more than doubled first-half profit as it recognised a $2.9 million insurance payment to help repair its flagship Colombo St store, though trading remained competitive and underlying earnings decline.

Net profit rose to $4.3 million, or 8.52 cents per share, in the six months ended Oct. 31, from $1.9 million, or 3.61 cents, a year earlier, the company said in a statement. Trading profit fell to $2.4 million from $2.7 million, with revenue up 0.9 percent to $109.5 million.

"Trading conditions through the second quarter and into November were very competitive, however the run-up towards Christmas has been stronger with the traditional spending pattern emerging," the company said. "Whilst Canterbury continues to show some growth, the fall in the Fonterra pay-out may have some impact on demand in the rural sector, although we have not seen that yet and our feeling is that large parts of the rural sector are better placed to handle these conditions than may have been the case in the past."

Smiths City is currently looking for a new chief executive after long-serving head Rick Hellings announced he would step down next year. Hellings will stay with the company to help with the transition, and the board has hired EQI Global Executive Search and Recruitment Company to find a replacement.

The retailer's bottom line was bolstered by insurance proceeds as part of the work to rebuild the Colombo St store in Christchurch, which was substantially damaged in the 2011 Canterbury earthquakes. The cost of repairs was added to the value of the property, which was recognised at $16.6 million as at Oct. 31, and the board has received an independent valuation of the site of $17.8 million.

The board declared an interim dividend of 1 cent per share, unchanged from a year earlier, payable on Feb. 13 with a record date of Feb. 5.

The share were unchanged at 53 cents, and have declined 12 percent this year.

Smiths City's retail businesses generated a segment profit of just $9,000 in the first half compared to $753,000 a year earlier, on largely flat revenue of $104.1 million. Its finance unit boosted profit 16 percent to $2.1 million on a 4 percent lift in revenue to $5.3 million.

The retailer reported an operational cash outflow of $2.8 million, compared to an outflow of $792,000 a year earlier, leaving it with cash of $335,000 at the Oct. 31 balance date.