Clive Peeters' sales no match for recovered property

Having experienced the humiliation last year of a misappropriation of $19.3 million in cash by a former senior accountant, there appears to be very little light at the end of the tunnel for electronics and whitegoods retailer Clive Peeters.  

The company today announced that it is forecasting a $4.5 million unaudited net operating loss for the three months to March 31, 65% higher than in the same period last year.

In a stock market statement, Clive Peeters said that while April trading figures were not yet available, sales had “deteriorated further” and the April operating loss was “expected to be worse than in preceding months.”

The retailer posted a $0.6 million loss in the March quarter of 2009.

Clive Peeters shares plunged on the news, falling 25.5% to 16 cents. 

Clive Peeters managing director Greg Smith said the company has also sold all but one of 41 properties bought with monies misappropriated from the company by former staffer Sonya Causer during 2008 and 2009. 

Earlier this year, Smith said the company hoped to recover $16.4 million of the stolen funds.

It said most of the proceeds to date had gone towards paying down $13.5 million in debt. 

In August 2009, the company began legal proceedings against Causer and related parties after identifying payroll discrepancies.

Investigations indicated that the total amount of cash misappropriated was $19.3 million, including $818,000 misappropriated in July 2009.

An insurance claim to recover losses during the misappropriation has been lodged and any insurance recourse will be booked in the year of recovery. 

Interest rate increases and the rollback of government stimulus measures were having an impact on consumer spending, particularly on big ticket discretionary items, Smith said.

Smith said the company expects to see growth over next two years and plans to explore options – including a sale or merger - to create a stronger strategic position.

"The combination of very subdued sales and margin pressures will materially impact the trading outlook of the company over H2 2010, despite the company’s successful cost reduction programme which it implemented over FY 2009 and has maintained over FY 2010 to date," Smith said. 

Smith was hopeful retail conditions would improve in May and June, and that the soccer World Cup and progressive release of new home entertainment and technology products would stimulate sales growth.

"The reports of a strengthening housing market, an improving unemployment trend and forecast economic growth all provide some grounds for Clive Peeters’ limited optimism for FY 2011," he said.

“However on balance we still expect big ticket discretionary retail conditions to remain very challenging for some time, with the possibility of even more interest rate rises still on the horizon."


 Smith said Clive Peeters was in negotiations to renew and replace its bank facilities by the end of June, and was looking to extend the short-term overdraft facility announced in February.