AVI hobbled by weak shoe sales


AVI hobbled by weak shoe sales

Published Date: 2019-03-12 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

AVI hobbled by weak shoe sales

The consumer goods group's first-half results were impacted by poor sales at Spits and restructuring at Green Cross.

AVI Limited says the consumer environment has remained difficult with continued pressure on spending. That's resulted in weak sales growth at many of its businesses. December's sales volumes were lower than last year, particularly at upmarket shoe chain Spitz, which was unable to repeat the record sales volumes of December 2017. It kept its prices unchanged for the most part, except for where there was a need to offset cost pressures.

Although the consumer goods group tried to keep costs in check, operating profit fell over the period due to lower sales volumes, provisions for the significant restructuring of its Green Cross shoe chain, and an unfavourable movement in the mark-to-market adjustment on I&J's fuel hedges as a result of the low oil price in December.

I&J reported an 18% decline in operating profit for the period due to the fuel hedges and lower fish trading and by-catch sales. The Personal Care and Footwear & Apparel divisions also reported declines. Entyce Beverages, which includes its tea, coffee and creamer brands such as Five Roses and Freshpak, grew operating profit by 10.1%, but Snackworks reported a decline due to poor yields at its Isando factory and the ramp-up to normal production at its Westmead factory where it's adding new chocolate lines.

Revenue rose 0.2% on a like-for-like basis while operating profit declined by 6.4%. Headline earnings per share fell 6.2% to 305.5c and it's declared an interim dividend of 165c per share.

AVI said there was a reasonable prospect of a stronger second half if it can sustain current sales volumes and I&J's catch rates improve as forecast.

Its shares rose 1.4% to R91.99 yesterday.

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