Womenswear retailer Noni B is set to slash its store network, following lacklustre sales for December and reduced foot traffic.
The company, which currently operates 218 stores across Australia, closed two underperforming stores during the first half of 2014, but has now confirmed further closures ahead.
Commenting on the decision, Noni B joint managing director David Kindl said seven stores in total are to be closed in the second half as the company consolidates to battle rocky trading conditions.
“The difficult trading conditions we reported at the annual general meeting in November continued during the remainder of the period, although sales improved slightly in December helped by additional promotions.
“Our average spend per customer was similar to the previous year, but shopping centre traffic into our stores was down.The women's fashion market remains challenging, with many customers expecting discounted prices.
“Approximately 30 per cent of store leases have expired or are due to expire before the end of December 2014 and further rent reductions, in addition to those already negotiated, are expected. Where satisfactory terms cannot be negotiated, the store will be closed. We expect to further consolidate our store network, closing seven underperforming stores in the second half.”
Kindl added that demand was weak in all states and territories, and especially Victoria, South Australia and Tasmania, but there were signs of improving sentiment in New South Wales.
The announcement follows the release of the company's first half 2014 financial results, which saw revenue drop three per cent to $62.4 million, compared to $64.3 million last year.
After-tax profit was $1.9 million for the first half of fiscal 2014, 2.8 per cent below the previous year. On a comparable store basis, sales were 3.9 per cent below the previous year.
Gross margin was 61.4 per cent, compared with 60.8 per cent for the first half of fiscal 2013.
Total expenses, including store wages, occupancy and administration costs, also fell by 1.7 per cent in the half.
“Despite this challenging environment, we achieved two of the key operational objectives listed in our 2013 annual report by increasing margins and controlling costs, and we are targeting further improvements,” Kindl said.
He said webshop sales had also continued to grow with Noni B also having introduced an international currency converter at the end of 2013.
Looking ahead, Kindl said Noni B will continue to work on improvements to stand out in an increasingly competitive market.
“A new CRM (customer relationship management) system, that became operational towards the end of 2013, should enable us to target customers with special offers based on their previous purchases. Meanwhile, we continue to differentiate Noni B through high standards of personal service in our stores and the quality, style, fit and value of our products.”
Noni B Limited was founded in 1977 and includes the Noni B and Liz Jordan designer collections.