Clive dive as shares drop 20% after profit downgrade

By James Wells

MELBOURNE: Clive Peeters shares fell by over 20 per cent yesterday after the company issued a profit downgrade which it blamed mainly on the New South Wales market, where it faces intense competition from retailers including fellow Narta members, Bing Lee and JB Hi-Fi.

Shares opened at $3.10, but nose-dived to $2.50 on the news that the company was experiencing difficulties in the key retail market of NSW.

“Clive Peeters informs the market that its earnings outlook for the full year 2007 will be flat, with its net profit after tax for the year ending 30 June 2007 expected to be in the range of $12.1 million to $13.1 million.

“Our business is performing well in all states except New South Wales,” said Clive Peeters managing director, Greg Smith.

“Victoria, Queensland, Western Australia and Tasmania [are] all trading at or above expectations,” Smith said.

“With our entry into New South Wales, our brand is taking longer to gain traction than we had hoped for and expected. However there are good grounds for optimism, as floor traffic into Sydney stores is on the increase, and our staff are gaining more experience by the day.

“This will translate to improved sales performance going forward. Historically, our new stores typically continue to mature at the rate of about 10 per cent per annum for up to five years after we open them, so we have growth in existing stores to look forward to, plus the impact of new stores in the years ahead.”

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