Diminishing profits for Gowings and Colorado
In a statement made to the Australian Stock Exchange earlier this month, G Retail chairman Andrew Brown said the company is expecting to record a pre-tax loss of approximately $3 million. Brown attributed the expected loss to a $720,000 operating loss for the first half, slowing retail conditions and a 20 per cent jump in office costs during the second half.
"Retail conditions in the third quarter of the financial year were patchy but have proved more difficult in the past two months," said Brown.
"This has been exacerbated by heavy discounting by major retailers in the Sydney CBD."
Last year Gowings reported a net loss after tax of $13 million and a pretax loss of $3 million.
The Gowings warning comes just weeks after the Colorado Group trashed hopes of a 10 per cent rise in net profit, saying it expects a five per cent fall in profits to approximately $60 million for the year ending July 30, 2005.
"This year the retail environment continued to tighten as the winter season progressed and without the budgetary stimulus and strong consumer sentiment of the prior year, profitable sales growth was difficult to achieve," said managing director Rowan Web.
"Comparable stores sales growth has declined in the low single digit range and overall sales have been flat relative to the prior half year."
In May the company advised that first half results would be negatively impacted by IFRS accounting policy changes, the change from retail to cost accounting inventory and one off costs including legal and due diligence costs.