MELBOURNE: Embattled wholesale group Mercury Brands has posted a $5.2 million half year loss.
Directors said the loss (before tax) was a result of declining sales in the current economic downturn and the depreciation of the Australian dollar, with $1.3 million attributed to the falling exchange rate.
"It is expected losses...will be limited in the future given that future prices will be set at the lower exchange rate and hence our margin will return to previous levels," they said in a statement to shareholders.
The loss also included stock write downs of $1 million and a $900,000 one-off cost related to license agreements.
Directors continued to stress the virtues of the company's restructuring program, launched 12 months ago in partnership with Melbourne consultancy firm 333. The company said despite "unprecedented" global economic uncertainty, gross profit margins had only deteriorated 5 per cent year-on-year and sales across its top 25 customers were down 15 per cent.
"Our cost of doing business was down year-on-year by 30 per cent and reflects the already significant business restructuring and improvement initiatives undertaken."
The listed company expected a cash injection of $3 million from a recently announced rights issue and subsequent shortfall offer. It was also confident of a return to profitability during the 2009/10.
Mercury Brands's portfolio included Rochford, Purr, No Fear, Itsu, Mac & Jac, Contempo and French Kitty.