Very mixed results continue from the current reporting season.
We’ve seen that in finance, resources, materials and now in retailing and distribution.
Next week we will get the outstanding result from the retailing sector, with the interim from Woolworths.
It will rank second in terms of performance, but not size or quality behind the 40% surge in earnings from JB Hi-Fi.
The Reject Shop was a stand out this week with higher earnings and interim dividend, but fashionwear retailer, Noni-B was crunched, as the company had warned twice in the half, while Funtastic, the children’s products maker and distributor, revealed badly impaired results yesterday.
And, even a success like The Reject Shop found itself commenting that it had wound back sales and profit hopes for the rest of 2009 because of the gathering economic slide.
Funtastic announced write-offs and provisions of $63.5 million for 2008 and warned that earnings for the coming year will be "materially" lower than last year.
Like so many other companies, it revealed a trading halt ahead of the market update as it joined the rush to seek fresh capital to replace debt or soothe nervy bankers.
Funtastic has a calendar year as the basis for its financial year, so it reported the results of what had been a rough 12 months for it.
It was caught up in the ugly collapse of ABC Learning late last year and has lost millions of dollars as a result.
At more than $43 million, the cost of the involvement with ABC Learning in Australia and in the US is well over half the total write-downs and provisions of $63.5 million. $49.2 million of those will be non-cash items.
Earnings before interest, tax and amortisation (EBITA), before significant one off items, would be $28 million for the 2008 financial year, "broadly in line with previous guidance" the company said.(Source,comsec)
Funtastic says a business review ahead of 2009 had put in place plans to deal with the possibility of softer consumer demand and higher input costs as a result of the weaker Australian dollar.
"Given the possible loss of our Judius (ABC Learning-related) business and expectations of softening consumer demand, the board has forecast EBITA to be materially lower than the 2008 year," Funtastic said in a statement.
The company said it had made total provisions of $11.3 million for bad and doubtful debts of the ABC Group and 123 Group.
There is also a net non-cash intangible write off of $25.2 million for Funtastic’s Judius Pty Ltd subsidiary, which supplies educational toys and furniture to the ABC Learning Centres Group as well as other stocks and child care businesses in Australia and New Zealand.
Funtastic said it had finished 2008 cash flow positive from operations.
It is expected to report full year accounts on February 27.
Funtastic said it expected to end its trading halt before the start of trading on February 23.
Its shares last traded at 15.5c.
The company was involved in an abortive buyout proposal with Archer Capital earlier in the year.
Discount retailer The Reject Shop has posted a 10% rise in first half profit, and lifted interim dividend 10% to 32c a share in a rare example of shareholders being rewarded, not stiffed by boards busy battening down the hatches or trying to repair the damage to balance sheets after ill-advised deals.
And the company says that while it is confident of achieving its earlier forecast full year profit, it has reshaped its expectations for earnings and sales to take account of the worsening economic conditions.
The Reject Shop said 2009 interim net profit reached $15.561 million on sales up a solid 16.6% to $221.616 million.
Shares in the retailer fell slightly yesterday a day after a solid rise in the wake of the profit figures, which will be one of the best from the sector this half.
Despite the extremely volatile trading conditions and market uncertainty, The Reject Shop endorsed its earlier guidance.
It said in the statement that it is confident of achieving its full year guidance of NPAT between $18.6 million to $18.8 million, "reflecting the strong first half result and a prudent second half plan.
But it said that in "light of current market conditions, the Company has moderated its sales and margin expectations for the reminder of the year, However, has accordingly aligned its cost structure.
"Despite uncertain market conditions the Company still believes in its business model and is continuing with its long term growth plans.
"Eight new stores are planned in the second half although immediate profit contribution from these stores is not expected to cover their opening costs.
SAP is scheduled for implementation in the latter part of the half, and further investment will be made towards the new Queensland Distribution Centre.
"The Company still plans to open approximately 20 new stores per annum with a long term projected national footprint of up to 400 stores.
"This will be supported by significant investment in all areas, with particular focus in the short term on Information Technology and Logistics.
"Given the sound financial position, the Board has declared a fully franked interim dividend of 32 cents per share reflecting t
