In an update prior to releasing its preliminary unaudited results for the year to 30 April 2017 (due on 20 June), Smiths City warned that trading conditions had weakened in the second half of its 2017 financial year (H2).
At the same time as announcing a planned return of $5.7 million to shareholders via a share buy-back, Smiths City forecast preliminary unaudited operating earnings for the year of $1.9-2.1 million.
The company says in a statement: "Tougher" second half trading conditions "have slowed the strong rise on the prior year’s $1.3 million operating result" (which excluded $1.8 million from the sale of the company’s Colombo Street store).
"A weakening in sales and earnings momentum, particularly in the fourth quarter, has followed on from a softening in consumer sentiment in line with weakness in the housing market."
In addition, it said: "performance at the Furniture City stores ... have fallen short of expectations."
Although these negatives have been somewhat mitigated by lower than expected costs, Smiths City is forecasting operating earnings for H2 to be lower than the $1.5 million achieved in H1.
With further operational improvements in hand and ongoing plans to extend its store network, Smiths City still expects to pay a final dividend as it has in previous years.