Sales plunge: Noni B managing director David Kindl is facing tough times. Photo: Jim Rice
Womenswear retailer Noni B is facing a sharp drop in profit this year after same-store sales plunged 14 per cent in the March quarter.
The 219-store chain, which sells clothing and accessories to mature-age women, tried to protect profit margins by resisting industry-wide discounting pressure.
But the strategy backfired as cost-conscious consumers kept their handbags firmly closed.
Noni B is planning new discount promotions in the fourth quarter to stimulate demand, but it may be too late to save the company from yet another fall in profits.
Underlying net profit fell 43 per cent to $1.5 million in 2013, despite a 1.5 per cent increase in sales, and profits slipped 2.8 per cent to $1.9 million in the first half of 2014.
Wednesday's trading update suggests that conditions have deteriorated significantly since the first half, when same-store sales were down 3.9 per cent.
Noni B joint managing director David Kindl said at the interim results that sales were soft in January but sales of the new autumn/winter range released in February were encouraging.
Noni B shares fell 14 per cent to 48¢ - reducing the company's market value to just $18 million - and are now trading at their lowest level for more than two years.
There has been speculation the Kindl family, which owns 40 per cent, will privatise the company. But Mr Kindl said in February there were no current plans.
Under an agreement struck ahead of Noni B's listing almost 14 years ago, founder Alan Kindl, his wife Betty and sons James and David must offer their shares to each other before selling them to third parties.