Priceline owner Australian Pharmaceutical Industries’ half-year net profit has fallen by 14.4 per cent to $24.9 million on lacklustre retail sales from its retail pharmacy network.
Underlying net profit after tax, excluding $1.8 million of restructuring and strategic growth costs, was down 8 per cent on the prior corresponding period to $26.8 million, slightly ahead of API’s January guidance.
Underlying earnings before interest and tax (EBIT) declined by 8 per cent to $44.6 million in the six months to February 28, constrained by a .3 per cent decline in top line revenue to $2.009 billion.
The company said that a continuation of difficult trading conditions in the health and beauty market hampered its Priceline network, which booked a 1.7 per cent decline in comparable store sales and a .3 per cent decline in retail register sales.
Sales growth in dispensary and OTC health products offset declines in discretionary beauty products, with total network sales, which include dispensary, up 2.1 per cent.
“We have refined our tactical sales activity, which is now more targeted and responsive to changes in the increasingly competitive market,” API chief executive and managing director Richard Vincent said.
“Despite the combination of consumer sentiment being challenging for the foreseeable future and increased competition, the strength of our combined marketing assets, particularly our Sister Club loyalty program, continues to be the primary source of sales growth.”
Vincent said he anticipates a continuation in difficult trading conditions in the second half, but that Priceline will focus on cost out opportunities to improve earnings for the full-year.
API expects its underlying FY18 result to be marginally higher than FY17, providing trading conditions do not deteriorate further.
There were 466 stores trading in the Priceline network at the end of the half-year, an increase of 16 during the half.
Vincent said Priceline’s pipeline of potential pharmacy partners remains “robust” but maintained his view that “unrealistic rental demands” were putting a damper on store expansion.
API’s pharmacy distribution network experienced stronger growth than Priceline, increasing underlying sales by 9.8 per cent on the prior corresponding period.