AUTOMOTIVE accessories retailer Marlows has gone back to basics, largely shelving a technology strategy that has cost the firm more than $3 million.
AUTOMOTIVE accessories retailer Marlows has gone back to basics, largely shelving a technology strategy that has cost the firm more than $3 million.
Write-downs of more than $1.5 million and operating losses amounting to almost $1.7 million took a big amount of the gloss off Marlows’ performance during the 2000-01 financial year.
Executive chairman Ray Della-Polina said the company remained confident that a public listing was possible but was willing to be patient following the stock market difficulties and disappointment in consumer take-up of newly developed technology.
Mr Della-Polina said Marlows would press on with its traditional retail business, maintaining expansion at about two stores a year.
Despite the tough retailing environment, Marlows sales grew 7.4 per cent to $73.9 million for the year ending June 30, from $68.8 million (excluding sales tax) the year before.
Turnover rose 3.5 per cent for the year in WA and South Australia, where store numbers represent the bulk of the operation and remained static for the period. Marlows has 11 stores in WA and four Rocca Bros outlets in South Australia.
The group recorded a net loss of $610,860 for the year, compared with a net profit of $1.7 million in 1999-2000.
“Our foray into the dot.com business certainly set us back with big write-offs,” Mr Della-Polina said.
“But we believe the technology we have developed is probably under-valued and at least very conservatively valued.”
Marlows’ dot.com business, theride Limited, remained on the books at about $600,000.
The technology is being used to some extent on the Marlows website but the company found it difficult to track the impact of the site on physical sales because few customers purchased on-line.
However, Mr Della-Polina said the technology remained world class and could be fully operational within weeks if needed.
Another strategy the company has turned its back on was efforts to create a property trust, which owned the Marlows retail sites, much like a mini-Bunnings Property Trust. Without the scale required by the market it was decided to divest properties held in this way.
The competitive auto accessories market faced its fair share of nervous consumers after September 11 but December business was strong and, to date, January has proved better than expected.
“The market is much more competitive if you look over the past year,” Mr Della-Polina said.
“There is heavy discounting in all areas of retail, with people clearly running sales programs to generate cash.”
The Marlows chief said the company was looking at various ways of raising capital to fund growth opportunities, including the stockmarket plan that was shelved 18 months ago.
Marlows has employed corporate advisory firm Johnson Taylor Potter to help examine its options in this regard.
“We are not rushing into any-thing,” he said.
“We don’t think it is the right environment to list yet.”
Marlows is in the throes of adding two more stores to its four Victorian outlets and possibly another in South Australia.
