Is this the first of what will be a string of bad news reports from listed retailers for the first half of 2017-18?
Blaming weak trading conditions at its Priceline chain, Australian Pharmaceutical Industries API expects its net profit for the six months to February to be down around 9% at $26.5 million, down from $29.1 million a year earlier.
It is the second profit warning from API since August – the first trimmed the 2016-17 figure. Now expectations for a better 2017-18 have been punctured.
The company told the ASX yesterday that as a result its interim dividend would likely be held steady at 3.5 cents per share.
And API said it now saw annual net profit only marginally above the figure for 2016-17 of $54.2 million.
CEO Richard Vincent said in the statement to the ASX that suppressed retail spending had persisted until late in the key Christmas trading period, curtailing sales growth at Priceline Pharmacies.
Overall network sales, including dispensary, for the financial year to date were up 2%, but on a like-for-like basis front-of-store retail sales had fallen 2.4%. This a fall of 0.4% in retail sales in 2017, with the second half weaker than the first (meaning the weakness has continued into the new financial year).
“In contrast to the strong sales we experienced during 2016, consumer spending remained subdued throughout the 2017 calendar year and we did not see that change during the Christmas period," Mr Vincent said.
"We expect to see benefits flow from the steps we have taken to address the tougher retail environment. Foremost among these are investments to enhance our total customer experience, both in-store and via our digital transformation program that is designed to enrich our Sister Club loyalty program and advance our on-line capability into the future.”
API said it had been cutting costs and had ‘streamlined’ its retail leadership team.
The shares dipped 3.6% to $1.48. API holds its AGM tomorrow.
