GUS improves profit to $1.6M

Press, 30 August 1989, Page 39

GUS improves profit to $1.6M

GUS Wholesalers Cooperative Society, the unlisted Christchurch-based supermarket operator and grocery trade distributor, has significantly improved its after tax and extraordinaries profit to $1,595,629 for the year ended March 31. The result compares with $242,483 in 1988 and follows two years when investments in new sites took their toll in interest expense, depreciation charges and establishment costs.

It was achieved on sales of $215,553,673, up 6.1 per cent over the previous year. Tax took $560,530 against $139,973 in 1988. The society was well placed to strengthen its position in the market place, its annual report said.

Operating profit before funding costs and after rebates was 21 per cent higher than the previous year. The society’s chairman, Mr A. J. Saville, attributed this to improved productivity and tighter control of costs and overheads. Funding costs were down 10 per cent because of the decline in interest rates, he

said. These factors combined to produce a pre-tax profit of $2,156,159, 280 per cent up on the 1988 figure. However, the ratio of earnings to turnover, at 1 per cent before tax (0.3 per cent in 1988) and 0.7 per cent after tax (0.2 per cent) reflected the industry’s tight margins, Mr Saville said. Shareholders’ funds now stand at $13,676,838 a proprietorship ratio of 22.5 per cent which the society intends to raise to 35' per cent over the next 5 years. In the retail trade the society is associated with the Super Value, Dollarwise, Super 7, IGA and Value Rite stores. It also owns seven supermarkets through GUS Supermarket Holdings, which experienced a successful year in spite of intense competition in the Christchurch market.

The supermarkets are Merivale Super Value, New Brighton Dollarwise, Sydenham Mall SuperValue, Church Corner Dollarwise, Barrington Park Super Value, Hornby Super Value and Linwood

City Super Value. The society’s central wholesaling warehouse at Hornby became fully operational in February and already has generated considerable sales growth. The society’s property arm, GUS Properties, has begun a major extension to the Westport SuperValue outlet and expects work to start soon on the revamped Collingwood Street Super Value supermarket site in Nelson. GUS Properties has $1,869,229 falling due by way of secured debenture repayment on September 30. A public float is not contemplated but existing debenture-holders will be given the opportunity to renew their investment. GUS Properties (N.S.W.) is winding down its involvement in land development in New South Wales and intends to withdraw from that market.

The society said it was maintaining its rebate to members at a similar level to the previous year. For competitive reasons it does not reveal the figure of the rebate, which is based on purchases.