Julian Tertini, the managing director of furniture retailer Fantastic Holdings, says the government’s $10.4 billion stimulus package has helped retailers, but will ultimately be short-lived.
Tertini says Fantastic Holdings received a boost from the package and the company now expects pre-tax profits for 2008-09 to be 10% higher than the previous year, as opposed to its original forecast of a 20% fall in profit this financial year.
“I think every retailer in the country enjoyed some sort of spin-off from the injection of that Government money into the economy,” he says.
“But it’s going to be short lived, I think. It creates this sort of false buoyancy. We’ll have to wait and see what happens and February and March will show us. The next question is: what now?”
Fantastic Holdings is expecting at a pre-tax profit of $10-$11 million for the six months to 31 December, 2008, down from $17.1 million a year ago. But Tertini expects a better result in the next six months, due to the impact of the stimulus package.
“Usually what happens in December is that you don’t sell a lot, but you deliver a lot, and we don’t close deals until furniture is delivered. But the opposite has happened – so many sales have been pushed forward into the first couple of months of this year. We have a lot of cash coming in.”
Despite the downturn, Tertini says the businesses is expanding and not focusing on major discounts and sales.
“We’ve got a very strong expansion plan that was set in place before and during the trouble. We’re sticking to it because we figure it will pay off when things will rebound.”
“In the end, you look at it and say you could stop opening new stores and you could slow down initiatives and defer them to save money, but we’ve decided to persevere”
“I’m of the belief economic cycles come and go. We judge the situation month by month and go from there.”
And while Tertini is hesitant to predict when the economy will recover, he says his business is performing, “as well as can be expected.”
“You can always improve your business. We’re very inward focused and can see all the things we do wrong and things we can improve whether there’s a good economy or a bad economy. As much as is sensible, we ignore the negativity and say how we can improve our business. That’s what we’re focused on.”