Reserve Bank Governor Glenn Stevens might be warning of a new conservative mentality among consumers, but online travel booking site Wotif.com and women’s clothing retailer Noni B both impressed the market yesterday with profit upgrades.
Noni B has announced its after-tax profit for this financial year is likely to be between $3.4 million and $3.8 million, up from $2.3 million last year.
The company has had a tough two years with decreasing profits in 2008 and being forced to close their La Voca stores for younger women.
David Kindl, joint managing director of Noni B, says it’s been tough since the government pulled the fiscal stimulus packages but the retailer has been focusing on avoiding the aggressive discounting we’ve seen in the sector and tightening control of costs.
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“Without the stimulus packages sales have been hard to come by,” says Kindl.
“Smart retailers have been focused on improving margin and keeping costs under control. The old retail business adage is control what you can and what you can’t control, let it go.
“We’ve worked on what you can control and that’s margin and expense. We offered less discounting this year than the previous year but we still had to meet the market with some discounting,” he says.
Kindl says having the right product for their target market of women aged 40 and over, was the key to their recent success.
“We have the right fit, the right cut and the right fabrics for our target customers. We work on this every season.”
Online travel leader Wotif announced they expect their full-year profit to rise by a huge 29% as occupancy levels in Australia remain strong and the outlook for room rates was strengthening.
The company says they expect profits to be between $52 million and $56 million.
Wotif made a record $27.6 million for the first half of this financial year and has come a long way since its launch in 2000 and $5 million profit in 2002/3.
These results are positive considering that over the last two months consumer sentiment has dropped the furthest since the height of the global financial crisis in 2008, which is worrying for the retail sector.
“Consumer sentiment remains very low and until we see sentiment improve, it’s going to remain tough for retailing conditions,” says Kindl.
“But I think the next five or five months are always stronger in the lead up to Christmas and the lead in to summer. The only nervousness for retailers is the upcoming election,” he says.