Pre-election economic caution hurting clothing sales, says Noni B

Noni B reported a $3.5 million loss for the year to June 30, a swing from the prior year’s $2.7 million profit. The result was affected by a $5 million write-off related to goodwill attached to the brand.

Noni B cited several factors for the loss: a $5 million goodwill write-off, lower margins, increased expenses and a high level of discounting in the local market. Management also pointed to weaker consumer spending driven by pre-election economic uncertainty.

Managing director David Kindl said shoppers became more cautious ahead of the federal election, which battered consumer confidence. That pre-election caution hit sales in July and August and made the women’s fashion market more challenging.

Yes. Revenue rose 1.6% to $125 million, and sales grew 1.5% across the retailer’s 219 stores, even though profitability was squeezed by margin pressure and higher costs.

Noni B kept staffing levels in stores unchanged despite tougher trading conditions. However, management said the company will review up to 30 stores whose leases are due for renewal.

Management said the level of discounting in the local market has had one of the greatest impacts on all retailers, including Noni B. Increased discounting contributed to lower margins and negatively affected earnings.

The company wrote off $5 million in goodwill that was attached to the value of the brand. That accounting adjustment reduced reported profits for the year and was a key factor in the swing to a net loss.

Investors should monitor consumer confidence and any ongoing effects from election-related caution, trends in discounting and margins across the women’s fashion market, lease renewal decisions for up to 30 stores, and future updates on costs and sales performance from Noni B’s management.