Operating earnings (EBITDA) were ahead of Credit Suisse forecasts. Growth appears robust but the broker notes the prior period did not include the Oboz business.
Underlying deterioration in earnings reflected weak trading in the NZ business and unfavourable Australian currency translation.
The broker also notes a clear uplift in core inventory, which drove a significant increase in working capital outflow.
Credit Suisse does not believe the market is adequately pricing in the attractive growth of the Oboz business or the upside potential from wholesaling. Outperform rating maintained. Target is reduced to NZ$2.75 from NZ$2.90.
Sector: Retailing.
Current Price is $2.13. Target price not assessed.
