Slow trading across the Priceline Pharmacy network over Christmas has tempered parent Australian Pharmaceutical Industries’ (API) half-year profit guidance, which is now expected to be 9 per cent lower than the prior corresponding period.
In a trading update on Monday morning, API said it expected net profit after tax (NPAT) for the half-year ended 28 February to be around $26.5 million, and full-year 18 NPAT only marginally above the $54.2 million it booked for FY17.
It comes amid what API called “suppressed retail trading conditions” within the Priceline Pharmacy network in the first months of fiscal 18 trading, including over the key Christmas period.
Year-to-date network sales, including dispensary, are up two per cent, while like-for-like retail sales within the network have declined 2.4 per cent in the first-half.
“In contrast to the strong sales we experienced during 2016, consumer spending remained subdued throughout the 2017 calendar year and we did not see that change during the Christmas period,” API CEO and managing director Richard Vincent said.
Vincent first warned of expected trading difficulty at the company’s FY17 result last August, at which time he reported a 5 per cent increase in total retail sales over FY16, but a 0.4 per cent decline in like-for-like sales.
“We expect to see benefits flow from the steps we have taken to address the tougher retail environment. Foremost among these are investments to enhance our total customer experience, both in-store and via our digital transformation program that is designed to enrich our Sister Club loyalty program and our online capability into the future,” Vincent said.
“We have adjusted the business cost base while we’ve strengthened and streamlined our retail leadership team to drive a more responsive business in the changing consumer environment.”
API said its network growth expectations remain unchanged, amid negotiations with landlords flagged in August over rental costs, which Vincent has previously said are “out of step” with current trading conditions.