Seek, Flight Centre and Clive Peeters watch profit fall sharply

Corporate profits have taken a hit today with employment group Seek, travel agency Flight Centre and retailer Clive Peeters all recording declines or downgrades in profit.

But beer and wine group Foster’s has managed to record a 4% increase in annual profit, despite a weaker wine business, with Athlete’s Foot also recording profit growth and unveiling aggressive new expansion plans.

Seek recorded a full-year net profit of just $55.3 million, a decline of 28% from last year’s net profit result of $76.3 million.

But while the company’s profits have declined, chief executive Paul Bassat said in a statement the site has reached a record 3.27 million unique browsers in July. The company’s shares have jumped 4.52% to $4.85 after the announcement.

“In a challenging employment environment, the business fundamentals of Seek remain strong,” Bassat said.

“With the downturn, we continue to see a sustained migration from print to online, with online now capturing approximately 79% of all job ads.”

Flight Centre

Meanwhile, travel agency Flight Center has recorded a 72% decline in annual net profit due to an airline industry slowdown and lower than normal yields. But the company maintains next year’s results are on target.

The company recorded $38.16 million in net profit for the year ending 30 June, a decline from the $134.71 million from 2007-08. One-off asset impairment and writedowns came to $59.4 million, with another $38 million hit due to trading related losses.

Pre-tax profit came to $40.4 million for 2008-09, a decline from $201 million during last year. The company said in a statement that 2010 results should provide pre-tax profit between $125-135 million.

Clive Peeters

In retailing, Clive Peeters has made a cut to its 2009 guidance figures ahead of legal action against a former staff member who allegedly stole $19.4 million from the company to invest in a property portfolio.

The company announced that it expects to take an operating loss of $11.4 million before tax, taking into account legal costs and losses on the sale of the properties, which will total $4.8 million. But it also said it expects to make money from the sales.

“This will depend on the prices at which the properties are sold, although present estimates indicate that the net amount recovered from the sale of assets will be in excess of $16.4 million, after allowing for discharges of mortgages and transaction costs,” the company said.

The company also announced it will recognise gross receivable for the cash of $18.6 million, while it will also increase trade creditors and payroll accrual accounts by $18.6 million.

“Clive Peeters’ cash resources will be improved by the proceeds of sale of properties and other assets and the recovery of money from bank accounts, offset by the associated recovery related costs, and the payroll accrual amounts currently due and payable of $4.1 million,” the company said in a statement.

It also said it will correct its accounts for the 2007 and 2008 financial years, with the alleged transactions occurred during those periods.

“The operating result of Clive Peeter’s for 2007-08 of $14.7 million (before tax), is unchanged,” the company said. “CPR has initiated steps to prevent any repetition of these events, as part of a broad-based revision of its controls and systems”.

Foster’s

Meanwhile, Foster’s Group has managed to record a 4% jump in net profit, and announced it expects to deliver $100 million in benefits during 2011.

The company recorded net profit of $741.5 million, up from $715 million recorded during 2007-08. While the figure was slightly below analysts’ forecasts, net sales revenue has also increased by 2.7% to $4.5 billion.

“Trading conditions in key wine markets will remain challenging in 2010 due to the ongoing impact from recessionary economic conditions,” Foster’s said in a statement.

“However, initiatives in 2009 toward improving Foster’s route to market capability, the reduction of customer inventories, and portfolio reshaping will translate to compounding improvement and leave Foster’s well placed for when economic conditions improve.”

RCG Corporation

RCG Corporation, which owns the Athlete’s Foot chain, is hoping for higher sales figures after recording a 7.4% increase in net profit to $5.3 million for the year ending 28 June and acquiring two new brands.

While revenue declined by 7.1% to $21.997 million from $23.666 million last year, the company says profit grew due to “exceptional sales performance”.

Additionally, the company expects its new deal to distribute the “Merrell” brand of outdoor apparel to contribute to earnings during 2010-11.

“We anticipate that the Merrell business will turn over in excess of $12 million in its first year of operation and, based on the profiles of similar distribution businesses, it is expected to deliver an EBIT (earnings, before, interest and tax) contribution in excess of 20%,” the company said in a statement.

The company also said its acquisition of Shoe Superstore, a three-store chain, will also contribute to future earnings but not for at least two to three years.

Chairman Ivan Hammerschlag said the downturn has helped the business, with like-for-like sales up by 6.5% for the first seven weeks of the new financial year.

“When times are tough consumers go to brands that they trust,” he told AAP. “We are a very high-service model, you come in to our store, we put you on to a computer to find what you require and then we take you through a selling process…while at our competitor’s, you can’t even find sales people.”