Joint Managing Director's Review

We are expanding awareness of, and demand for, our Noni B and Liz Jordan labels among a wider and growing group of customers.

With challenging trading conditions throughout 2009-10, our focus was both on carefully managing the shop floor and on progressing our three year plan to make NONI B the favourite fashion store for more and more customers. This includes increasing our share of the fashion market through broadening our customer base, and positioning the company to take advantage of opportunities ahead.

Overall sales were flat compared with 2008-9, when we benefited from the government stimulus packages, although average spend per customer increased. Sales during the post-Christmas period were down slightly and a warmer-than-usual autumn delayed purchases of our winter ranges. Given these factors, we are pleased that sales were steady and our customers continued to see value in our fashion.

We focused on margin rather than volume and our EBITDA margin increased to 8.1 per cent from 6.5 per cent of sales, helped by tight inventory control that enabled us to avoid the more aggressive discounting that took place across the retail sector. Operating costs were lower following the previous year’s restructuring and through increases in efficiency throughout the business; these many small improvements, added together, made a significant impact on our result. Importantly, operating cash flow increased to $9 million from $6 million in 2008-9.

Investing in our people, our brand and our stores

NONI B’s 213 stores, covering all states and territories, are one of our company’s core strengths. For the vast majority of Australia’s population, a NONI B shopping experience is within convenient reach.

During the year we opened five new stores and closed six, including three clearance stores that were no longer required. New stores were opened in Devonport, Tasmania; Hallett Cove, South Australia; Wollongong, NSW; and Townsville and Victoria Point, Queensland; and we also relocated our store in Hobart’s central business district.

We are highly selective in choosing sites and negotiating lease renewals, and we have already confirmed four new stores to be opened before Christmas, with one each in the Sydney and Perth central business districts. Our target remains at least 250 stores.

We continued to invest in maintaining the loyalty of our existing customers through personal service and stylish fashion, while winning new customers by broadening awareness of our Liz Jordan designer label, exclusively available at NONI B. New in-store visual merchandising emphasised Liz Jordan garments and was aimed at attracting customer traffic with smart promotions, such as partnering with cruise operator P&O, rather than with discounts. There are signs already that new customers are visiting our stores.

Our store managers and staff are critical in building strong relationships with our customers. We provide them with regular training, and their feedback on our fashion, merchandising and systems enables us to maintain NONI B’s reputation for high standards of quality, value and service. This has helped us to retain and expand our customer base at a time when consumers have been particularly selective.

Well positioned for the future

In 2010-11, we will aim to strengthen even more our relationships with our customers and to keep winning new ones, providing stylish fashion that they desire. We will also continue to expand awareness of, and demand for, our NONI B and Liz Jordan labels among a wider and growing demographic.

While we expect consumer confidence to improve, we remain cautious and will continue to review every aspect of our business to ensure it is operating as efficiently as possible and NONI B is positioned to make the most of emerging opportunities. Our summer ranges were launched recently and we have already received positive feedback.

We thank the 1,048 members of our NONI B family for their hard work and dedication in a difficult year. Their talent and passion for the business are a great inspiration for us and, as a result of their efforts, NONI B is a significantly stronger company than a year ago.

James Kindl
Joint Managing Director

David Kindl
Joint Managing Director