By Sarah Falson

BAYSWATER, Vic: Clive Peeters has announced strong profit growth of 51.7 per cent or $9 million for the half year ending 31 December 2006, despite “testing” retail conditions and a $2.9 million loss in NSW.

The result includes a full six-month contribution from the Rick Hart and Michael King stores, which contributed to only three months of the previous period.

“Clive Peeters lifted its net profit after tax result for H1 2007, as a result of increased margin and reduced operating costs,” said Clive Peeters managing director, Greg Smith.

Net operating costs were 19.5 per cent of sales, which is two per cent lower than the forcasted 21 per cent.

“This was achieved despite the high costs of establishing four Sydney stores and a Sydney warehouse during the half, and the high cost of launching the Clive Peeters brand in the Sydney market,” said Smith in a report to the Australian Stock Exchange.

According to the report, sales growth compared with the previous corresponding period was down 1.1 per cent for Clive Peeters’ Victorian stores and up 2.8 per cent for Queensland stores. Rick Hart Western Australian stores were up 19 per cent, and overall comparable sales growth for the entire Clive Peeters Limited group was up 6.2 per cent.

“Retail conditions were testing, and we had to contend with interest rate rises, continuing high fuel costs, the impact of the droughts, a soft air conditioning season and flat housing markets in most states that we operate in,” said Smith.

A $2.9 million loss in New South Wales was attributed to new store costs. According to Smith, the company doesn’t expect its Sydney operation to provide profit until it includes five or six stores which have been operating for a full year.

Even so, Smith said: “Our H1 2007 operating result was all the more meritorious because it was achieved after absorbing a well publicised forecast loss on the Sydney operation.”

Clive Peeters has made seven acquisitions, or 22 stores, in the last 18 months, including the Bunbury Betta Electrical store last week, three Myer Megamart stores in Sydney in Belrose, Auburn and Casula, the Rick Hart Group in Western Australia and the Michael King store in Victoria in September 2005, the Mornington Bulk store in Victoria, and three Betta Electrical stores in Victoria.

A separate media announcement from the company last week called this stream of acquisitions an “aggressive expansion programme,” following a $15 million expansion by the group in Western Australia in September last year.