Noni B expects profit to fall up to 29%
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Shares in women's fashion retailer Noni B dived 14 per cent after it warned its first half profit would drop by nearly a third.
Noni B shocked investors with its latest earnings update, saying it expected its interim net profit would fall to between $1.7 million and $1.9 million from $2.4 million in the previous corresponding period.
The retailer did not provide detail about what had prompted it to downgrade its forecast, but said sales were in line with the previous year despite one week less of trading.
Noni B has been busy expanding its chain of fashion stores in 2012, which is expected to have pushed up costs.
It opened four new stores last December alone.
Joint managing director David Kindl said despite the expected drop in earnings, no job cuts were planned.
"We plan to maintain staffing levels and investment in training so we can continue to improve the personalised service we offer," he said.
"We believe retailers who are committed to the development of their people will be best placed for long-term growth, both in-store and online."
Shares in the company closed 12 cents, or 13.8 per cent, lower at 75 cents.
City Index chief analyst Peter Esho said the fall in Noni B's share price was unsurprising given it was a thinly traded stock that had risen from 30 cents to $1 during 2012.
However, he said the $2.4 million profit in the first half of 2012 was a big turnaround from the prior year and the current result was still good considering the tough retail climate.
"It's still a respectable number relative to their market cap," he said.
"It's tough out there."
The retailer is due to report its first half results on February 13.
When Mr Kindl unveiled Noni B's interim results last February, he attributed a 58 per cent rise in net profit to higher margins, cost cuts and lower retail rental charges.
He also flagged that Noni B would move away from heavy discounting to focus on better customer service and quality preservation.