Mitre 10 makes a loss despite big cost-cutting

ONLY a day after Woolworths officially broke into the nation's $36 billion hardware industry with regulatory approval for its takeover of Danks, rival hardware chain and wholesaler Mitre 10 has detailed to its shareholders its lurch into the red with a loss of $11.7 million for the latest year.

By InvestSMART · 13 Nov 2009

By InvestSMART ·
13 Nov 2009

The weaker number three player could boost Woolworths' chances of grabbing a big share of the hardware and garden sector as it prepares to roll out 150 "big box" shops during the next five years.

Writing to investors in the 2008-09 annual report, Mitre 10 chief executive Mark Burrowes said sales for the year fell to $995 million from $1.04 billion the year before. The closure of underperforming stores forced Mitre 10 to book a $12.1 million pre-tax loss on discontinued operations and left the hardware group with a weak balance sheet, Mr Burrowes said.

Despite a resurgence in the second half following restructure, store closures and cost-cutting, Mitre 10 made a loss for the 2008-09 year after making a $1.3 million profit for 2007-08.

"Better-than-forecast sales, actions taken to control advertising expense as a percentage of sales, a tight rein on support-office costs, freight recovery and improved efficiency of distributions operations have all impacted positively in the second half," Mr Burrowes said.