Small Loss by Postie Plus Group

NZX-MEDIA STATEMENT

23 MARCH 2007

Small Loss by Postie Plus Group

PPGL Half Year Results

For Half Year Ended 31 January 2007

/ Current Half Year $'000 / Previous Half Year $'000
Sales / 65,174 / 57,947
Operating (loss) / profit / (306) / 1,572
Operating (loss) / profit to sales % / -0.5% / 2.7%
Net Surplus/Deficit / (488) / 735
Funds employed / 23,600 / 25,504

Postie Plus Group Ltd today confirmed its 22 February guidance in announcing that a bottom-line loss of $488,000 was recorded for the first six months ended 31 January 2007 after discounting for the late start to the summer season.

PPGL sales for the half-year were ahead 12.47% on an all stores basis at $65.18m, and this represented a significant advance on the prior corresponding period when sales rose 4.90% to $57.90m.

“The sales performance is a positive confirmation that customers continue to strongly support the group's three mainstream brands (Postie+ apparel stores, Arbuckles manchester and homeware stores and the Baby City chain) ,” said the chairman Mr Peter van Rij.

"In a challenging summer season, marked by fluctuations in discretionary spending by consumers, the significant sales growth achieved overall was pleasing.”

GROUP STRATEGY

The emphasis on inventory control continues the resulting clean stock position, enabling the group to place fresh autumn-winter season ranges onto the sales floor significantly ahead of the usual timing.

“Early indications in the second half year confirm this strategy is successful with a resulting improvement in performance.

“The group continues its long-term logistics management strategy improving operational efficiencies and reducing inventories.

“Good progress was also made towards the implementation of SAP retail management information technology that from the second half of the year will provide a world-class platform for reporting and managing group-wide performance.”

BRAND COMMENTARY

PPGL has three major retail brands with operations in each separate business supported by centralised group purchasing, distribution, marketing and financial management.

Postie+

"Postie+ expanded sales in a competitive market, whilst electing to trade away some margin to ensure the apparel division would be clean of summer stocks by the end of the season. This has resulted in less clearance of summer stock early in the second half,” said the chief executive Mr Ron Boskell.

“The acquisition of the Classmates brand from Ezibuy and its integration into the Schooltex activity of Postie+ for the new school year has been successful and further promoted the Schooltex brand.

“New stores at Upper Hutt and Kaikoura, opened during the period, take the total number of Postie+ stores to 74 nationwide at the end of the first half.”

Arbuckles

“The Arbuckle chain of 32 manchester and homeware stores continues to benefit from new strategies, with good acceptance by consumers of the Changing Rooms for Less concept.”

Baby City

“The Baby City chain of 14 nursery and children’s apparel/equipment stores maintained and expanded its segment leadership with excellent sales growth.”

DIVIDEND

The directors consider it prudent to declare a dividend of 2 cents per share (fully imputed), payable on 27th April 2007 to shareholders registered on 10 April 2007. This compares with the interim dividend of 3 cents per share paid for the first half last year.

OUTLOOK

“The traditional pattern for the Group is to experience a higher level of sales in the second half-year,” said Mr van Rij. “The strategy of keeping inventories clean at the conclusion of the season will maintain PPGL’s competitive position.

“PPGL has recorded an encouraging level of profitable sales in February and is positioned to target a good recovery in profitability in the second half under normal trading conditions. Given the continued economic uncertainty it is premature to provide specific earnings guidance.

“However, it will be difficult for PPGL to achieve annual results at the level attained in 2006.”

ENDS

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