Despite warnings earlier this calendar year, the scale of the negative bottom line contained in Smiths City's latest year-end result released today was a surprise (a $9.9 million group net loss before tax, down from a net profit of $2 million profit last year).
Chair Alastair Kerr says the company's programme of transformation (now in year three) "has not been sufficiently focussed on delivering on our goal to help our customers to Live Better. Additionally, the pace of change has not been fast enough to meet changing market conditions.
"The financial results we have released today have reinforced this view."
With retail sales falling to $207.9 million from $218.2 million and a trading loss in the retail business of $5.2 million, CEO, Roy Campbell, also makes no bones that more is needed: "challenging trading conditions exposed our weaknesses and show we need to inject new energy into the programme," he says.
Margins were protected, working capital and inventory reduced, but how to overcome a soft market, heavy discounting in the marketplace, interest-free competition and underperformance at the Auckland stores?
New management and localised promos may address the latter.
Closing the stores that don't generate enough top line to pay the rent are also on the to-do list (hence a $4.9 million provision for onerous leases).
As for Smiths City Finance, sales were down to $8 million, from $9.2 million in the prior year, which the company says is consistent with retail sales levels, and trading profits fell to $3.4 million from $3.7 million last year.
A refresh of the financial proposition, including taking applications digital, is in hand.
Still, in terms of an outlook, Roy Campbell admits that the rest of the year "remains challenging".
"Trading in the first two months of the year has been volatile and the housing market, a key driver of demand, remains muted despite rising housing affordability.
"In addition to the intense competition we are seeing spending patterns shift from consumer durables to lower cost purchases.
“Against this however we expect to benefit from the positive sentiment in the rural economy.
"We are hopeful the continued roll out of our Live Better store livery to the flagship Christchurch stores, the ongoing work to build brand awareness in the Auckland market and new initiatives to improve our operations will drive a better result in the current financial year."
The next update on trading will be at the company’s annual meeting in September in this the retailer's centennial year.