The ailing retail sector has claimed another victim after women's fashion chain Noni B warned it would slide to a full-year loss of between $3.5 million and $4 million after a review of its goodwill triggered a substantial non-cash write-down.
Shares in the small fashion group fell to 18-month lows on the profit warning before closing steady at 60¢.
Noni B told the stock exchange that as a result of a review the board expected an impairment charge to goodwill in the current year. The write-down of roughly $5 million represented the carrying value of goodwill, the company said.
The impairment will be a non-cash charge to its accounts, but the decision to wipe away a significant chunk of goodwill will push the company into a full-year loss for 2013.
Noni B confirmed it was still on track to record a trading profit - before goodwill - for 2012-13 of between $1 million and $1.5 million, against $2.7 million in the previous year.
The retail sector is facing testing conditions with operators hit by poor consumer confidence and shrinking profit margins.
On Monday Andrew Reitzer, the outgoing chief executive of grocery, hardware and liquor wholesaler Metcash, said shoppers were refusing to purchase items unless they were discounted. He said he hoped the mood would change after the federal election in September, but there were no guarantees a new government would shake consumers out of their depressed state.
Last month Wesfarmers chief executive Richard Goyder shocked investors when he warned full-year earnings before interest and tax at Target would drop to between $140 million and $160 million against EBIT of $148 million in the first half. Wesfarmers warned Target could see its second-half earnings sink to an $8 million loss or, at the upper end, a $12 million profit.