Smith and Browne faces difficult conditions

Press, 27 February 1980, Page 27

Smith and Browne faces difficult conditions

p.A. Auckland Higher expenses were the main factor in Simth and Brown Maple Furnishing, Ltd, sustaining a 16.7 per cent profit downturn in the six months to December. 31. The unaudited net profit for the half-year fell $146,000 to $730,000, but the interim dividend is being held at a tax-free 7 per cent (3.5 c a share).

Sales in the six months rose 10.6 per cent to $28.5 million, but the directors say that the retail trade experienced an erratic pattern of sales. Consumers lacked sufficient confidence to enter into commitments for the

purchase of home furnishings, and major appliances, which now represent a very big item of expenditure in household budgets. Smaller, and less expensive, items moved more freely, and this helped sustain sales. However, the increase in dollar sales for the half was barely sufficient to keep pace with inflation, the report says.

Wage and fuel price increases impinged heavily on trading results, and because of the competitive nature of the company’s trade, promotion expenditure was also increased.

Looking ahead, the directors say that the retailing of furnishings, and home appli-

ances, will be difficult in the immediate future, because building activity is depressed, and population static. It is not expected that the Government will take action in the immediate futute to stimulate the economy, they say.

Conditions will require continued aggressive marketing, and promotion, to ensure that the company obtains its share of the market. New forms of control, and data processing are being investigated to help meet the rigorous conditions imposed by inflation. In October, a new store was opened in Howick. To date, this is trading beyond expectations, the directors say. During December, the St George jam factory in Filleul Street, Auckland was bought. This site is being developed as a new store. The latest profit was after tax $120,000 lower . at $597,000. In the last full year to June 30, Smith and Brown increased net. proft 28 per cent to $2,447,000 after sales rose 30.4 per cent. The annual dividend ! rate was raised from. 16.5-per cent to 18.0 per. cent. <-,! The current" ; interim dividend wil be payed on March i 7, and.. shares ' will be ex dividend ion. March 6.