Noni B forecasts growth despite low profit

Noni B is confident of an earnings turnaround and will continue to open new stores, despite a drop in first half profit and aggressive discounting in the retail sector.

The women's retail fashion group on Wednesday reported a net profit of $1.9 million for the first half of its financial year to December 30, down from $2.4 million in the previous corresponding first half.

Noni B opened a new store each in Sydney, Melbourne, Brisbane, and Perth in December and closed one unprofitable store.

Joint managing director David Kindl said greater revenues would be recorded as the stores notched up sales.

"While the costs were in the first quarter, the majority of the contribution will be in the second quarter and we're looking forward to those stores trading well," he said.

"We're also focusing on the profitability of each store ... We keep closing those that aren't performing, and we keep looking for new opportunities in areas where we're not represented, at rental terms that work for us."

A new store opened in Dapto in NSW on Tuesday, and two more were planned for Baulkham Hills in Sydney and regional Victoria.

Mr Kindl said there were signs that demand was recovering, which would return the company to growth in the next period.

He attributed part of the lower earnings to aggressive discounting across the retail sector.

"We need to have smart promotions every year that give value to the customer while at the same time preserving the margin we've built in," he said.

"If you keep your inventory and expenses under control, then your reliance on discounting falls, and we still believe that great service and a great product will beat discounting in the long run."

A new label, NONI +, was launched online for fuller-figured customers and would be introduced in bricks and mortar stores in 2013.

Mr Kindl said Noni B's online shop had grown strongly in the 12 months since it was launched.

"For the December quarter we doubled what we did the previous year.

"That's excellent growth in line with what we're expecting, and we're increasing the resources behind that web shop," he said.

Overall sales revenue was flat at $64.3 million compared to $64.1 million in the previous corresponding period.

At 1335 AEDT its shares were three cents higher at 80.5 cents.

The company has declared a fully franked interim dividend of 2.5 cents per share, unchanged from last year.

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