RR profits jump, online retail strategy by Christmas

By Chris Nicholls

SYDNEY: Radio Rentals has posted a 67 per cent jump in net profit for FY07 in its annual report on the back of 16 per cent revenue growth.

The profit rise capped a successful year for the company, with a 32 per cent increase in earnings before interest and tax (EBIT) to $16.2 million and 11 per cent rise in gross profit to $71 million. Total revenues came to $116.7 million.

Radio Rentals chief executive John Hughes also pointed to the zero net debt the company had and said the percentage of bad debt had also decreased.

Hughes said the company had seen “major expansion” in metropolitan areas, with a 21 per cent increase in ‘new’ customers and four per cent overall customer growth for the year.

Average payments per customer rose 6.5 per cent, while stable average units came to 2.47 per customer.

As part of its growth strategy, Radio Rentals had increase television advertising by 63 per cent over FY07, Hughes said, and planned a further 60 per cent increase for FY08. Total marketing spend was up 11 per cent to $7 million, he said, with a 50 per cent increase in the second half to increase Christmas spending.

Hughes said the company would also focus on its short term goals of establishing presences in 38 university campuses and on Olympics-related sales opportunities.

Radio Rentals also announced their online retailing strategy at the report presentation, with a “comprehensive product range” supported by the major suppliers and a pre-Christmas launch.

Hughes said the online market was “significantly under-serviced” and that Radio Rentals would use their Narta buying power and existing logistics and administration services to help with a low-cost entry. He said the purchasing model was cash flow positive.

The company’s South Australia strategy with the Rentlo brand was also going well, Hughes said, with customer response “exceeding expectations” and new staff being recruited. He also said new stores could arrive in 2009.

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