Thorn Group joins retail carnage with profit downgrade as Amazon launches
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Thorn Group is the latest ASX-listed small cap retailer to announce a profit downgrade as US giant Amazon goes live in Australia.
Thorn Group shares fell hard today after its Radio Rentals consumer leasing business posted a half year loss on a weak retail environment.
The shares were down 14 per cent to 57c in Thursday lunchtime trade.
In October, Thorn shares lost a third of their value when after initially forecasting a 30 per cent drop in year-on-year performance.
Thorn reported a loss of $9.7 million for the half year to September, compared to a profit of $15.2 million last year, with revenue sliding 12.5 per cent to $132.4 million over the six months.
Pental (ASX:PTL), which makes household products such as White King and Pears, fell 22 per cent on Tuesday after announcing a halving of profits for the half-year to December.
Beauty and healthcare retailer McPherson’s (ASX:MCP) dropped 18 per cent after the maker of Dr LeWinn’s skincare and Multix cling wrap announced a profit downgrade of 10 to 15 per cent compared to last year.
Baby Bunting (ASX:BBN) shares fell 9 per cent on Monday due to “challenging conditions” that saw its earnings fall to $23 million from expectations of $25.3 to $27 million.
The Radio Rentals brand was facing “a number of challenges including general weak retail market conditions, a delay in returning customers due to the launch of the four- year contract 3 years ago, adverse publicity from the class action launched by Maurice Blackburn, and significant operational changes arising from the roll out of the new online origination and credit assessment platform.”
The loss included a $20.7 million write-off of goodwill related to Radio Rentals and Trade & Debtor Finance.
Amazon Australia open for business
Amazon Australia soft-launched to “a small number” of customers at 2pm AEDT Thursday, with a full public launch next week expected to shake up the local retail industry, Business Insider Australia reports.
Based on its operations in other countries, Amazon will cop losses early on to establish its market presence, according to research firm IBISWorld, which says the web giant will significantly undercut local retailers.
“The company intends to challenge domestic retail prices by offering items for 30 per cent less than domestic retailers.
“This is expected to appeal to price-conscious Australian consumers, and is likely to affect local retailers that have found it difficult to adjust to a shift in consumer spending behaviour over the past five years,” said IBISWorld senior industry analyst Kim Do.