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WOOLWORTHS HOLDINGS LTD - COUNTRY ROAD YEAR END RESULTS

Release Date: 10/08/2000 11:19
Code(s): WHL
Wrap Text
WOOLWORTHS HOLDINGS LIMITED
STATEMENT TO THE AUSTRALIAN STOCK EXCHANGE
10 AUGUST 2000

THE DIRECTORS OF COUNTRY ROAD LIMITED TODAY ANNOUNCED RESULTS FOR THE YEAR ENDING 30 JUNE 2000 THAT SAW THE COMPANY RETURN TO PROFIT FOR THE FIRST TIME IN THREE YEARS.
PROFIT BEFORE TAX FOR THE YEAR WAS $3.3M. PROFIT IN THE SECOND HALF WAS $2.3M, AFTER THE $1.0M DECLARED IN THE FIRST HALF. THE RESULT REPRESENTS A TURNAROUND OF $5.9M ON THE PREVIOUS YEAR WHEN A LOSS OF $2.6M WAS DECLARED. A PROFIT WAS ACHIEVED IN EACH OF THE MARKETS IN WHICH COUNTRY ROAD OPERATES (AUSTRALIA, NEW ZEALAND AND THE USA). SALES
SALES FOR THE GROUP WERE FLAT ON THE PREVIOUS YEAR ($273.5M V $273.6M). THE ANTICIPATED UPLIFT FROM THE GST INTRODUCTION IN AUSTRALIA DID NOT MATERIALISE UNTIL VERY LATE IN JUNE. SALES IN THE USA GREW BY SOME 3.5% ON LAST YEAR. THE SALES PERFORMANCE MUST BE SEEN IN CONTEXT OF STOCK LEVELS, WHICH AT $40.7M WERE 13% LOWER THAN THE PREVIOUS YEAR (AND 23.4% LOWER THAN TWO YEARS AGO) WHERE IN BOTH YEARS SUBSTANTIAL MARKDOWNS WERE NECESSARY TO CLEAR EXCESS STOCKS BALANCE SHEET STOCK
TOTAL INVENTORY AT 30 JUNE WAS $40.7M COMPARED TO $46.6M AT THE PREVIOUS YEAR END. THIS IMPROVEMENT HAS BEEN DRIVEN BY A CHANGE IN SOURCING POLICY WHICH HAS SEEN A MOVE AWAY FROM BUYING ON A CUT, MAKE AND TRIM BASIS TO THE BUYING OF FINISHED GOODS. THIS MOVE HAS NOT ONLY REDUCED RAW MATERIAL INVENTORIES DRAMATICALLY, BUT HAS ALSO RESULTED IN ENHANCED QUALITY, FASTER RESPONSE AND BETTER VALUE PRODUCTS FOR OUR CUSTOMERS. CASH
A NET CASH POSITION OF $2.7M WAS RECORDED AT 30 JUNE 2000 THIS YEAR COMPARED TO A NET DEBT POSITION OF $3.9M LAST YEAR - A TURNAROUND OF $6.6M. CAPITAL EXPENDITURE STORES
CAPITAL EXPENDITURE OF $9.9M WAS PRINCIPALLY INVESTED IN STORE REFURBISHMENTS. STORES REFURBISHED IN AUSTRALIA INCLUDE THE FLAGSHIP SOUTH YARRA STORE, HOBART, INDOOROOPILLY AND NORTHLAND WHILST IN THE US THE STORES IN CONNECTICUT AND MASSACHUSETTS AND SOHO, NEW YORK WERE REFURBISHED. THE FINANCIAL RESULTS ARE SUMMARISED AS FOLLOWS:
SALES ($ MILLIONS) 1999/00 1998/99 % AUSTRALIA 187.2 187.7 (0.3) NZ 21.7 23.2 (6.5) USA (A$) 64.6 62.7 3.0 TOTAL CONSOLIDATED 273.5 273.6 - PROFIT/(LOSS) BEFORE TAX ($000'S)
AUSTRALIA 1,444 (338)
NEW ZEALAND 415 (964)
USA 1,757 (704)
TOTAL 3,616 (2,006)
NET INTEREST EXPENSE (328) (587)
TAX BENEFIT 58 146
NET PROFIT / (LOSS) 3,346 (2,447) CURRENT SALES RETAIL
IN AUSTRALIA TOTAL SALES POST GST HAVE BEEN IN LINE WITH EXPECTATION BUT WITH CLOTHING SALES SHOWING GROWTH ON LAST YEAR. WHOLESALE
SALES TO WHOLESALE CUSTOMERS HAVE BEEN POSITIVE WITH FORWARD RANGES TO THE END OF DECEMBER 2000 BEING SOLD AT ABOVE BUDGETED LEVEL, REFLECTING A STRONG AND POSITIVE REACTION TO OUR RANGES. DESPITE THE POST GST ENVIRONMENT, ORDERS EXCEEDED LAST YEAR'S LEVEL. COMMENT MAC DRYSDALE, THE CHAIRMAN OF COUNTRY ROAD, SAID:
"THE COMPANY HAS NOW COMPLETED THE SECOND YEAR OF THE THREE YEAR TURNAROUND STRATEGY WHICH COMMENCED IN JULY 1998. IT IS PLEASING TO NOTE THAT THE OBJECTIVES SET THEN HAVE BEEN ACHIEVED AND COUNTRY ROAD IS NOW PROFITABLE AND WELL PLACED TO SHOW FURTHER PROGRESS IN THE YEAR AHEAD.
THE IMPORTANT PHASE OF RESTRUCTURING THE COMPANY HAS NOW BEEN COMPLETED AND WHILST SIGNIFICANT WORK REMAINS TO BE DONE ON IT SYSTEMS, THE FUNDAMENTALS ARE IN PLACE IN THE FOLLOWING AREAS: RANGE DEVELOPMENT
WE HAVE COMPETENT PEOPLE IN PLACE IN RANGE DESIGN, AND THIS IS DELIVERING BETTER RANGES TO OUR STORES, AND IS RESULTING IN EXCELLENT SALES OF FORWARD RANGES TO WHOLESALE CUSTOMERS. MARGIN IMPROVEMENT
BETTER SOURCING OF PRODUCT HAS RESULTED IN IMPROVED QUALITY, REDUCED
STOCKHOLDINGS AND MORE COMPETITIVE PRICING FOR OUR CUSTOMERS. COST MANAGEMENT
OPERATING COSTS HAVE BEEN WELL CONTROLLED, WHILST REDUCED INVENTORY LEVELS HAVE RESULTED IN BETTER STOCKTURN AND A REDUCED REQUIREMENT FOR FUNDING WHICH SAW THE COMPANY END THE YEAR WITH A STRONGLY POSITIVE CASH FLOW.
IT IS PARTICULARLY PLEASING TO NOTE THAT THE IMPROVEMENT IN PROFITABILITY WAS ACHIEVED IN A YEAR WHEN AN ENORMOUS AMOUNT OF MANAGEMENT TIME AND CONSIDERABLE COST WERE EXPENDED IN ENSURING THAT OUR SYSTEMS AND PROCESSES WERE YEAR 2000 COMPLIANT, AND THAT THE GST WAS IMPLEMENTED SMOOTHLY. THE DIRECTORS WISH TO SPECIFICALLY RECORD THEIR THANKS AND APPRECIATION TO ALL MEMBERS OF THE COUNTRY ROAD TEAM WHO PARTICIPATED IN THESE MAJOR PROJECTS.
WHILST THE LAST TWO YEARS HAVE SEEN A CONSIDERABLE TURNAROUND AT COUNTRY ROAD, IT IS RECOGNISED THAT THE COMPANY STILL HAS MUCH WORK TO DO IN ORDER TO RETURN TO SATISFACTORY LEVELS OF PROFITABILITY. THE DIRECTORS BELIEVE HOWEVER THAT THE STRATEGY IN PLACE IS SOUND, AND WILL RESULT IN COUNTRY ROAD BEING ABLE TO REPORT FURTHER PROGRESS IN THE YEAR AHEAD.
IN CONCLUSION, I WOULD LIKE TO EXPRESS THE BOARD'S APPRECIATION AND THANKS TO OUR PEOPLE FOR THEIR EFFORTS IN TURNING THE BUSINESS AROUND."
CONTACT: IAN THOMSON, CHIEF EXECUTIVE OFFICER - 03 9267 1433

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