‘Delivering strong profit performance’
Making the desirable affordable and the affordable desirable. Good progress on strategy while delivering strong profit performance.
The ‘Red Sheds’ continue to deliver positive same-store sales growth, with an increase of 4.1% for the full year FY16. Continued progress has been made through our key result areas of:
- 1.Strengthen brand and price positioning
- 2.Continue to invest in our People
- 3.Deliver sustainable Sales and Gross Profit Growth
- 4.Build foundations to be a digital retailer
- 5.Operate Better, Simpler, Cheaper
Our customers are telling us that our product design, quality and price are improving relative to our competitors.
We are now being recognised more widely as making the desirable affordable and ‘helping New Zealand families flourish’ through delivering great value for money.
Significant growth in the Leisure category has been a particular standout for the year.
Trading Performance Gathers Momentum
Retail trading conditions were favourable in the first half of the year, but became more challenging into the second half, particularly as a result of changes in currency, increased competitive pricing activity and a later start to the 2016 winter season. Despite this, we finished the 2016 financial year with a 12% increase in EBIT performance for the Red Sheds.
Strong growth in the Leisure, Apparel and Home categories contributed to the overall increase in gross margin percentage over the previous year. The business maintained gross margin percentage versus the prior period, while continuing to invest in favourable prices for our customers, and absorbing the impact of increasing pressure on the imported product as a result of currency movements. Closing inventory is both lower in value and better in quality as compared to the previous year, which has resulted in a reduced negative impact of clearance burn in the current year and establishes an improved starting point for FY17.
Significant growth in the Leisure category has been a particular standout for the year. Like Home and Apparel, the Leisure category performed well as a result of the strong summer season. In addition, a number of sub-categories within the Leisure category have been reset during the period with improved results. These include Hardware, Automotive and Gardening.
Significant focus on cost management and productivity improvements across the business show ongoing positive results, with total costs continuing to reduce as a percentage of sales during the year.