API to push ahead with Priceline expansion despite first half profit warning

API to push ahead with Priceline expansion despite first half profit warning
Australian Pharmaceutical Industries (ASX: API) will push ahead with the expansion of its Priceline pharmacy network despite flagging a fall in first-half profit.

API says net profit for the six months to 28 February will be about $26.5 million, down nine per cent on the prior corresponding period, while full-year net profit is expected to be marginally above the $52.4 million reported for the 2017 financial year.

The company says weak retail sales at its Priceline pharmacies before and during the Christmas trading season had driven the result. Overall network sales for the year to date were up two per cent while like-for-like front-of-store sales had fallen 2.4 per cent for the period.

"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," chief executive Richard Vincent says.

API says it still expects to increase Priceline and Priceline Pharmacy store numbers and that its pharmacy distribution business had continued to perform to expectations.

"We expect to see benefits flow from the steps we have taken to address the tougher retail environment," Vincent says.

"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, particularly in the important beauty segment."

The dividend payment for the first half is expected to remain in line with the prior corresponding period's 2.5 cents per share, fully franked.

Shares in API were trading down by 7 per cent to $1.37 at around 11am (AEDT).


Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How communications technology can raise the bar on customer service, employee experience
Partner Content
From capturing feedback early to providing messages with a higher rate of cut-through, ...
Advertisement

Related Stories

Apollo to divest large share of motorhome fleet to get Tourism Holdings merger over the line

Apollo to divest large share of motorhome fleet to get Tourism Holdings merger over the line

In an effort to appease Australian and New Zealand regulator concer...

Dexus awards John Holland building contract in $2.1b Waterfront Brisbane project

Dexus awards John Holland building contract in $2.1b Waterfront Brisbane project

After securing an $830 million contract from Dexus (ASX: DXS), Melb...

Atturra looks to become an IT powerhouse after acquiring MOQ for $15.5 million

Atturra looks to become an IT powerhouse after acquiring MOQ for $15.5 million

Atturra (ASX: ATA) is looking to become one of the nation&rsqu...

Body Fit Training questions latest trademark move from competitor F45

Body Fit Training questions latest trademark move from competitor F45

After claiming victory in a four-year legal stoush with fitness fra...