While pre-tax earnings for the year were $27 million, $2 million ahead of a projected figure announced in late July, REDgroup has reported an after-tax loss of $43 million.
In 2008-09, the group reported a loss of $15 million. This year's increased loss is ‘mainly attributable to non-cash inventory provisions as REDgroup completes its integration of Borders and rationalization of old ranges,' according to a company statement.
The directors' comments in the full annual report explain this ‘provision' as being a $30-million stock write-off. There was also a $24 million interest payment on the group's borrowings. The group's operating revenues for the year also fell by 11%.
The group reported ‘promising growth' for its online sales, the Kobo ebook platform and non-book ranges, but also said that its DVD and CD ranges are ‘unprofitable' and will be reduced. ‘Online sales of print books and the new area of ebooks have done really well this year and we are predicting more growth in these areas in the coming year,' said a REDgroup spokesperson.
REDgroup has also announced refinancing deals backed by its long-term bank BOS International and new financier Fortress Investment Group that will ‘refinance REDgroup's senior debt to December 2012' and redeem its NZX listed Retail Notes (valued at NZ$35 million) on 15 December 2010.
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