Renaissance distribution continues to shrink

In an Annual Meeting Chairman's Report, Renaissance Chairman, Colin Giffney has said that the first four months have produced a mixed trading result.

"Our strategy has been to develop our own intellectual property and to 'own' the customer," Giffney said in relation to the YooBee brand. "At the same time we sought to shift our earnings away from distribution. While the results may not seem to show that, we are succeeding. I do believe we are going in the right direction.

In the report the chairman says that Renaissance has been conscious for many years of being over-reliant on the distribution of Apple and other IT.

"Our contribution from distribution has continued to shrink not only relative to the rest of our business (which is what we want to achieve) but in absolute terms (which we had hoped to avoid).

"In the latest year Apple introduced the iPad but further cut its margins. It introduced another distributor to New Zealand. It tightened its credit limits on all distributors. Relentlessly Apple asks its distributors to sell more for less," said Giffney.

Renaissance says that after a period of abject performance the MagnumMac/Yoobee retail stores are now back on track.

"In the six months to December 2010 we achieved same store revenue growth of 32.8% in our retail stores. Many retailers have struggled in this period; JB Hi Fi's same store revenue in New Zealand declined 3.9% in the same period. Our retail operation contributed positively in the year to September 2010 and the improvement has continued in the current year."

In the four months to January 31st revenue was down 6% on the same period last year but margins have improved.

"Our gross margin has improved from 13.7% to 16.3%. At the EBITDA level we have made a small loss of $170,000 to compare with the loss in the same period last year of $2.4m both inclusive of one-off costs. While this is an improvement it is not where we aimed to be.

You can read the full report on the website, in which Giffney pays tribute to major shareholder and director Murray Wood, who was in the CTV building during the Christchurch earthquake.