Clive Peeters blames economy, not business model, for profit drop

By Patrick Avenell

SYDNEY: Clive Peeters has reported a 23.7 per cent drop in net profit after tax for the financial year 2008. The company made only $10.3 million last year, down from $13.5 million for the 2007 financial year.

Despite this drop in net profit, Clive Peeters’ sales rose 17 per cent, up to $534.8 million, on the back of expansion into new regions and the opening of 12 new stores over the 12-month period.

Clive Peeters managing director, Greg Smith, blamed economic conditions for the profit drop, and not the company’s recent expansion into the crowded Sydney market – an expansion that is set to continue.

“The markets for whitegoods and cooking appliances were soft all year due to…high interest rates and high fuel and food costs, combined with flat housing markets on the eastern states (sic),” said Smith.

In Sydney, Clive Peeters reported a loss of $4.4 million after tax for its five stores. Despite this loss, Smith was satisfied with that performance, saying that, “we felt this was a reasonably good outcome given the deterioration in retail conditions over the June 2008 quarter”.

Smith then made it clear even further that it was the economy and not Clive Peeters’ business model that was to blame for these results, confirming that the retail chain will not halt expansion.

“We are actively looking for more suitable sites in Sydney,” said Smith.

For the future, Clive Peeters is not optimistic, predicting that it is unlikely that the economic conditions it blames for this year’s showing will improve. The announcement that "new store rollout will continue, but at a modest rate," shows that, for Clive Peeters at least, it has not been so e-e-easy.

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