Smiths City shares jump 10 percent as FY profit climbs by more than a fifth

Smiths City, the Christchurch-based retailer, boosted annual profit by 22.7 percent as a strong rural sector underpinned gains in the South Island. The shares climbed 10 percent to a three month high 65 cents.

Net profit climbed to $5.4 million, or 10.21 cents per share, in the 12 months ended April 30, from $4.4 million, or 8.28 cents, a year earlier, the Christchurch-based company said in a statement. Sales were flat at $222.5 million, with the South Island outperforming a particularly weak trading in Wellington.

“The smaller footprint in the Colombo St, Christchurch store has traded above expectations and the opportunity to now get the retail floor back to pre-earthquake size is hugely positive,” the company said. “This, together with an expanded Christchurch-based commercial division, means the company is well placed to take advantage of opportunities the Christchurch rebuild will offer.”

Retailers have struggled in recent years as households have shied away from consumer spending and stores have been forced to compete more aggressively on price.

Smiths City said it doesn’t expect trading conditions to change much, and will have to match “promotional offers in the market.”

The board declared a dividend of 2.5 cents per share, unchanged from a year earlier, and taking the annual payout to 3.5 cents.

The retailer switched its credit lines to Australia & New Zealand Banking Group from a three-decade relationship with Fisher & Paykel Finance earlier this year.

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