McKENZIES SETBACK

Press, Volume CVI, Issue 31098, 29 June 1966, Page 21

McKENZIES SETBACK

Expenses Cut Profit (N.Z. Press Association) WELLINGTON, June 28. Directors of McKenzies, N.Z., Wellington-based chain stores, advise that profits for the year ended March 31 are £154,700 compared with £190,163 last year. Profit figures are still subject to audit but it is not expected there will be any great variation. As earlier announced, final dividend is 5 per cent making a steady 10 per cent for the year. The dividend requirement is not covered by this year's profit. Profit Margins The reductian in the profit is largely because of a very substantial increase in operating expenses. Turn-over increased by 14 per cent for the year, but profit margins were reduced because of increased competition.

During the fast year one new store has been opened and the year before four stores were opened. These stores take some time to reach the stage where they are making a full contribution towards the profits. During the last year considerable capital has been expended in the building of supermarkets in Hastings and Rotorua both of which are to be opened shortly. This expenditure, has cost additional interest payment and at balance date had not contributed in any way to the profits. Improvement Directors feel that an improvement can be expected next "year as positive steps have been taken to control all operating expenses and profit margins over the last three months have been slightly improved. It is fair to point out to shareholders, however, that although an improved result is anticipated it may be that the profit will not allow the maintenance of the present 10 per cent dividend level, they say. They feel that long-term it is essential to the company’s stability that a reasonable percentage of profits be retained and carried to reserves each year.