Another rough trading update from small Sydney women’s fashionwear retailer Noni B (NBL). It revealed write downs and a prospective loss for the year, news that sent the shares down 9.1% to 35c at one stage.
The share rallied in late trading close at 38c, down 1.3%.
Now there are suggestions the Kindl family, which controls nearly 40% or so of the company’s shares, may be looking to privatise the group.
The immediate cause of the company’s problems, including a big write down, was the unseasonally warm autumn in many states, especially NSW and Victoria.
That’s adding to the existing weak first quarter (the company had warned a month or so ago that the March quarter, particular March had produced a 14% slide in sales).
Now the near summer-like weather has crunched the company’s sales in April and May.
Not helping has been the fall in consumer confidence in the wake of the lead up to, and the announcement of the recent federal budget and its severe cuts.
And then there’s the continuing reluctance for consumers to only buy at a discount (or online).
NBL 2Y – Warm weather chills NBL sales
Noni B said in an announcement to the ASX yesterday that as a result of these factors, it was announcing a one-off non cash writedown of $5.5 million would be applied to the carrying value of the remaining intangibles on the company’s balance sheet.
Combined with already tough trading conditions, which saw that 14% drop in first quarter sales, Noni B said it was now expecting a full year after tax loss (before the $5.5 million write down) of between $1.8 million and $2.2 million, subject to June trading conditions.
Falling sales for the 11 months mean they are down nearly 8% on a year earlier.
It reported a first half profit of $1.9 million, meaning the June half year will have seen a profit collapse of up to $4.1 million, which is a nasty shock.
Noni B said sales had suffered from consumers now expecting large discounts when buying clothes, which the company had tried to resist in order to protect its margins.
The company had tried to sell its clothing products at full margin in the March quarter, but consumers had resisted that, hence the very sharp fall in sales.
The company once again complained of fickle customers.
It said promotions in the fourth quarter were designed to boost sales in the past two months, but that plan had been undermined by the warm autumn, and the fall in spending associated with the poor publicity about the recent Federal budget.
The company also told the market that independent directors of the Noni B board were considering discussions with the Kindl family – who own around 38% of the company’s issued shares – in respect of ”strategic alternatives” to the company’s capital structure.
It said the board would inform shareholders of any material developments in this regard. The company has also commenced a management restructure in order to return the company to profitability.
Noni B has 212 stores nationally. Joint CEOs are David and James Kindl.
David and James both own 10.91% of the company while two other members of the Kindl family own another 18%.
