By Keri Algar
SYDNEY, NSW: While the Radio Rentals and Rentlo business is booming, parent company the Thorn Group has announced it will exit the online venture BigBrownBox.com.au next year.
Difficult trading conditions and the poor state of the retail market have been given as reasons for the decision to exit the online enterprise, effective March next year.
The Group expects minimal impact on profitability for FY11 and said that there is potential for far better returns from an alternative investment, according to a statement on the Australian Securities Exchange.
Notwithstanding the announcement, Thorn has also revealed a 38 per cent rise in net profit after tax and revenue up 10 per cent to $80 million for the 6 months to 30 September. Underpinning the success is the strong customer growth of the Group’s bricks and mortar operation, Radio Rentals and Rentlo.
As a result, the Group has raised its profit guidance from $19 million to between $21 million and $22 million for the full year ending 31 March 2010. Managing director John Hughes said, “This pleasing profit outlook is the result of a consistent performance across the business, particularly Radio Rentals/Rentlo which continues to deliver good gains in new customers along with consistently low levels of customer arrears and bad debts.”
According to the Group the “Rent, Try and $1 Buy” has been an attractive offering in an otherwise soft retail environment, with the whitegoods category performing particularly well, up 11 per cent.
Harvey Norman also reported strong growth in the whitegoods category in October, while Myer exited the category entirely in September.