2000/08/10
STATEMENT TO THE AUSTRALIAN STOCK EXCHANGE [JSE Securities Exchange - SENS]
 
10/08/2000 - 20:06:36

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
PRODUCED BY: ANUSHA MOTHILALL 10-08-2000 11:19 SENS

PUBLISHER : JSE SENS Feed
Source: JSE Securities Exchange - SENS
 
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