Good Sales Anticipated This Christmas

Press Release – Noel Leeming

Consumer electronics and appliances retailer Noel Leeming Group is anticipating good sales this Christmas as the company continues to grow market share.
News Release
05 12 2011

Good Sales Anticipated This Christmas by Resurgent Noel Leeming Group

Consumer electronics and appliances retailer Noel Leeming Group is anticipating good sales this Christmas as the company continues to grow market share.

The company, which owns the Noel Leeming and Bond+Bond stores, has today lodged its financial results in respect of the financial year ending 31 March 2011 with the Companies Office, reporting earnings before interest, tax and depreciation (‘EBITDA’) of $13.9 million and net operating profit of $7.3 million, an increase of 15 per cent and 40 per cent respectively on the previous financial year.

The company has seen a continued momentum in its performance, leading to an eight per cent growth in sales in the six months ending 30 September 2011, 1 outstripping the market to grow its market share to an all-time high for the company of over 25 per cent.

Noel Leeming Group Chief Executive John Journee says the company has made major gains in market share in a challenging environment, while at the same time growing the bottom line.

“The first six months of our current financial year have shown that the Noel Leeming Group is match fit for current market conditions,” he says. “We have continued to improve sales and profitability over the last two years through better operational delivery, while our market share has grown by investing in activities that increase our competitiveness and enhance customer service. The first half result is particularly pleasing, given that the corresponding period last year included a significant sales boost ahead of the October 1st GST increase.”

With gift shopping now in full swing and both Noel Leeming and Bond+ Bond chains experiencing higher sales than the same time last year, Journee is expecting a good Christmas trading period for the Company. “Whilst consumers are still relatively cautious about their purchasing decisions, they are responding well to the combination of exciting new products and attractive pricing this Christmas”.

Technology products are hot at the moment, with strong sales of E-readers, tablets, smartphones, and internet enabled TV’s indicating that they are likely to be at the top of Christmas gift lists. As a result of popular lifestyle TV shows and an increased interest in home cooking and entertaining, the company has also seen very strong growth in sales of kitchen appliances and automatic coffee machines and these are likely to be popular gifts this year.

John Journee also noted the impact of the arrival of long heralded digital convergence products and an increasing sophistication in how people are using them. To meet this evolving trend the company has adapted its ranging, training and store environments to more accurately match products with customers’ needs. “We have also introduced a new customer service initiative called “Tech Solutions”, which is an ‘in-home service’ that provides customers with professional and hassle free set up and connection. This ensures that our customers are able to get the most out of the consumer electronics they purchase from us.”

The Tech Solutions service is now available in 68 of the company’s stores around the country, covering around 75% of New Zealand’s population.

The company has also expanded its store network over the last year with the opening of five new Noel Leeming stores (Tokoroa, Cambridge, Morrinsville, Te Awamutu and Gore), as well as a new Lifestyle Appliances “store within a store” concept at Noel Leeming St Lukes.

In Canterbury, while ten stores were affected by earthquakes, all but one were able to return to trading after a minimal period of closure, and have been trading well above budgeted levels. The latest to return to full trade, Noel Leeming at The Palms in Shirley, was enlarged and opened in the repaired mall in September.

Noel Leeming Group Chairman Bruce Cotterill says the company has continued to improve its operating performance and profitability over the past three years, and the business is performing well, despite tough market conditions. “When the severity of the recession became apparent three years ago, we made the decision to invest in our brands and our people and also made a big commitment to improving the customer experience. We are showing strong improvements across the board as a result of those initiatives,” he said.

Supplementary Information

12 Months Ended 31 March 2011
Statutory Financial Statements for Noel Leeming Holdings Limited (Consolidated Group) have been filed with the NZ Companies Office. Financial highlights are;

FY2011 FY2010 ** change %
in NZD ‘000
Sales 564,695 515,751 9.5%
Earnings Before Interest, Tax and Amortisation (EBITDA) 13,958 12,124 15.1%
Net Operating Profit (EBIT) 7,287 5,199 40.2%
Net Profit After Tax (NPAT) (2,977) (3,508)
(As reported)
IFRS Adjustment – non cash /notional interest on Shareholder Loans *** 2,581 2,731
Provision for Earthquake related costs **** 462 0
Normalised NPAT $ 66 ($777)
Cash Flow from Operations $ 9,642 $ 4,466 115.9%

** FY2010 has been restated due to a required Taxation adjustment.
*** IFRS Adjustment relates to a Non-Cash adjustment required for “Notional” Interest on Shareholder Loans. No interest is in fact accruing or paid on these loans.
**** Recognition of costs associated with the Christchurch Earthquake which are the subject of an Insurance Claim. There was not sufficient certainty at the time of preparation of the Financial Statements to include as a Receivable. The insurance claim is currently in progress.

Trading Update for the 6 Months to 30 September 2011
Sales TY up 8% on same period Last Year
EBIT TY up 77% on same period Last Year

Company Profile:

New Zealand’s leading Consumer Electronic and Appliance Retailer
Number of stores – 64 Noel Leeming , 27 Bond and Bond , 1 Noel Leeming Lifestyle Appliances
Number of Employees – 1100
Owners – Gresham Private Equity (Australia) and Direct Capital (NZ)

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