Postie + is winning consumers and improving revenue and earnings...
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1 o p e r a t i o n a l r e v i e w Postie + is winning consumers and improving revenue and earnings... New Leader for Postie+ Team PPGL s senior management team has been joined by David Primus who will lead the apparel business Postie+ as general manager of the chain. David is passionate about retail and has worked in the sector since he was a teenager. He joins PPGL after 16 years with The Warehouse Group where his last position involved national planning for the famous Red Sheds New Zealand division for that highly successful retail group. He believes that there are always new and better ways of merchandising and will help to unlock the opportunities that lie ahead for Postie+. PPGl s agship, the Postie+ chain of 75 apparel stores stood up well to uctuating consumer market conditions and again generated the substantial portion of group turnover. The nationwide spread of stores operating under this core brand is an integral element in PPGl group strategy. Regions may have varying economic strength and this may become more evident as costs of living impact discretionary spending in the major cities. Highlights of the year included: Postie+ improved revenue and earnings performance, with the focus on more fashionable womenswear leading to higher gross prot margins in a demanding retail climate. Postie+ achieved a 10% increase in annual sales on an all-stores basis with progress made on the value of the average sale in apparel categories. The success of the Who s Henri? brand in the womenswear fashion category. The positive consumer reaction to improved store formats, with enhanced presentation of product range. Expansion of Schooltex s strong market position in classroom and sports uniforms for new Zealand schools with the acquisition of Classmates. The opening half-year was quite challenging for retail generally during the summer of , marked by uctuating spending patterns, and Postie+ focused on achieving a clean stock position allowing fresh autumn-winter season ranges to be introduced early to the sales oor. Postie+ expanded half-year sales by 12.47% in a competitive market. However that resulted in some margin being traded away.
2 The second half brought a late start to the winter season with some bulking up of inventory.yet a very strong performance was achieved with Postie+ cementing in margin initiatives and continuing to grow market share. Postie+ is winning consumers attracted by a combination of the following factors: Our value-for-money range of quality apparel suitable for the entire family. Style conscious and more fashionable womenswear under brand labels. Attractive new store layouts and improved visual representation of apparel that make it easier for customers to go shopping. These are being progressively introduced when new stores are opened or existing stores are refurbished. Postie+ received positive feedback on the chain s Looking Good Every Day television and brochure based marketing campaigns featuring womenswear, lingerie, sleepwear, menswear and childrenswear. Our marketing strategy will be assisted by the group s new SAP retail management system providing data on store stock volumes and pricing, stock turns, and price point analysis. Objectives: We are taking steps to improve supply chain handling of product from supplier through to the stores, including a change to third party logistics in respect to initial distribution of stock traditionally internally sourced from the longestablished Westport distribution facilities. The change was considered over several months recognising that Westport employees are loyal and committed to the company, and have been so for several decades. PPGL is in consultation with the community in respect to the future of the replenishment operations that remain based in the town. We are working ahead on refinements to our core apparel range and the related roll-out of our label-based strategy. A new proposal for menswear will be introduced for summer with strong instore visual representation. We will build on our proven strengths in boyswear and girlswear with increased in-store focus on these categories. We see good potential for our health and beauty products and for improved cosmetics ranging. Innovative new retail concepts are under investigation as part of the group s retail research and development programme. An intensified focus on inventory management and store profiling is a priority.
3 add a touch of elegance with t o p e r a t i o n a l r e v i e w Label Development Postie+ has completed the rst full year of our development of the Who s Henri? label created by a PPGl design team as a showcase for the latest contemporary women s brands. The label is available throughout all Postie+ stores nationwide, providing the modern new Zealand woman with an exciting range of afiordable fashionable apparel. Featured is the Who s Henri? new range Summer Romance of tie front shrugs, crushed lace singlets, Anglaise short sleeve tops, crop jeans, crop pants, satin tops, crop cargo pants, clip dot blouses and eyelet button crops - part of this eyecatching range from increasingly popular label.
4 is flattering range
5 10 o p e r a t i o n a l r e v i e w Another superb trading year was achieved by Schooltex, assisted by the purchase of The Classmates range. The Schooltex business unit contributed strongly to Postie+ during the year, with our value-for-money product range very popular with parents, Parent Teacher Associations and school management. By ofiering a full range of apparel and accessories required for the school year (shorts, skirts, shirts, blouses, hats, socks, jackets, ties and sports uniforms), Schooltex ofiers a complete solution through the nationwide Postie+ chain and on an interactive transaction-based website Highlights of the Year: A solid nancial performance from the business unit. Acquisition of the Classmates brand of schoolwear from Ezibuy, with resultant increase in national presence and market share. Attaining the milestone of $3m in total rebates made to schools. For several years, as a socially responsible business committed to being part of our local communities, Postie+ has rebated to nominated schools part of the value of Schooltex product purchases. In an era when operational grants are tightly constrained, Schooltex is making a tangible contribution. The 2007 payout of $846,840 is the biggest yet and resulted in cash payments to 1,052 schools. Market acceptance of the Schooltex product range remained high, with the mix of functionality, durability and attractiveness of styles generating sales growth. Objectives: Our aim is to improve product availability to customers through faster logistics. Post-balance date we have relocated Schooltex operations from Westport and Auckland to Kennedy Place, Christchurch, where all stock is now in one location managed by Contract logistics. With embroidery and screen-printing also out-sourced in Christchurch, time lines through stores to customers should signicantly improve.
6 PPGL has a policy of making a rebate to schools for all purchases of Schooltex products by the school s community. In 2007 the largest rebate payment was presented by Schooltex manager Garth Sutherland (centre) to Rangiora High School, by principal Peggy Burrows and students (from left): Franka van Ginkel, Trubie-Dylan Smith, Jessica Kierney and Nicholas Chinnery. 11
7 12 o p e r a t i o n a l r e v i e w Baby City enjoyed another year of strong growth. The division is an innovative force in the nursery sector and has established clear market leadership with product ranging and exciting fresh retail layouts. Highlights of the Year: Investment in product development paid ofi with ongoing positive market acceptance of the Baby City brand. Strong performances from the agship large format stores located at Botany Town Centre, Auckland, and Addington, Christchurch, which is encouraging for further larger scale development. An underlying resilience that smoothed trading uctuations associated with economic impacts on household spending. An all stores sales increase of 23%. Increased gross prot margin across both hardware and apparel. Overall growth in market share. We have increased and improved the quality of our product ofier with our buyers selectively meeting the aspirations of our target customer. The typical Baby City customer is a parent or grandparent on a shopping mission for specic products. Baby City stores located in standalone, or within PPGl combination stores in bulk retail centres, continued to attract such destination shoppers in the face of ardent competition from national department store and discount chains. Baby City opened stores at Pukekohe and lynmall, Auckland, and at nelson, our rst store in the top half of the South Island. Our association with the FlyBuys promotional programme has proved popular. Baby City has continued to benet from the prevailing strength of the employment market despite the much higher proportion of take-home pay being required for repayment of mortgages. Baby City is enjoying its status as market leader in the nursery sector. We believe that the consumer is seeking better quality products at family-friendly prices. The chain is well placed through its geographic spread to gain its share of sales generated as a consequence of the surge in new Zealand s birth rate. Having bottomed in 2002, the national birth rate has steadily increased and in the year to July 2007 there were 62,000 births. Baby City s hardware ofier again enjoyed strong demand. We are strongly aware of the importance of safety standards where nursery equipment is concerned and we are sourcing cots, high chairs, prams, strollers and car-seats from reputable leading British, Australian, American and Asian manufacturers. A feature of the past year is the almost zero rates of equipment returns under warranty. Objectives: Establishment of a new agship large format 1,100 sqm store at Albany, Auckland. This is the largest specialist nursery store in new Zealand, and our rst store within a Westeld shopping centre. Department categories feature a wider range of products on ofier, including furniture and bedding, and extended apparel ranges to include 3 to 7 years in boys and girlswear. Development of one-on-one appointments with experienced customer consultants as a customer service. Relaunch of a refreshed online presence for
8 13
9 14 o p e r a t i o n a l r e v i e w DESPERATE HOUSES Changing Rooms for Less
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