AUSTRALIAN Pharmaceutical Industries (API) has announced the "rationalisation" of its Priceline company stores, with the move resulting in the overall network reducing by a total of 14 outlets.
The non-pharmacy stores are being shut down "after carefully considering the long-term impacts of COVID-19 on foot traffic in CBDs and shopping centres relative to ongoing rents," the company said in an Australian Securities Exchange update late on Fri afternoon.
"These stores do not benefit from the additional foot traffic that dispensaries provide to Priceline Pharmacies," API noted.
The closures, along with other restructuring costs and the impacts of COVID-19 will result in a $9.4 million reduction in the company's net profit after tax.
Despite the closure of the non-pharmacy Pricelines, "the pipeline for new Priceline Pharmacies remains strong and relatively unimpacted by COVID-19," the company added.
As well as the reduction in Pricelines, API has announced the outcome of a "detailed review of its balance sheet to determine the assets that are key to API in the post-pandemic world," resulting in the 100% write-off of the $37.5 million carrying value of its Soul Pattinson Chemist brand.
Despite valuing the brand at nothing, API said it would continue to support the exiting Soul Pattinson network of pharmacies.
The balance sheet review has also identified "specific inventory that would benefit from pricing support to accelerate clearance," which will see the company's profit further reduced by $5.5 million.
CEO and MD Richard Vincent said despite the write-offs, "the underlying NPAT and our strong balance sheet show that we are successfully executing our strategic priorities to deliver sustained shareholder value".
He said the Victorian lockdown currently meant 22 Priceline company-owned stores were temporarily closed, along with 14 of API's Clear Skincare clinics.
"Where we have re-opened Clear Skincare clinics after mandated shutdowns, pent-up demand has been significant, with comparative sales up 25% on pre-COVID-19 levels, followed by a sustained uplift," Vincent said.
"Priceline company stores and Priceline Pharmacies are also trading strongly compared to the same period last year in those States where COVID-19 restrictions have been lifted," he added, while Priceline's online sales had more than doubled this year.
The company will release its full year results later this week, with the overall underlying net profit after tax set to be "broadly in line with market expectations" of a $30m to $31m result.
Including the writedowns announced on Fri the statutory result is likely to be a loss of $22m.
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