Australian Pharmaceutical Industries chief executive Stephen Roche says the Lindt cafe siege in Sydney in December hurt consumer confidence and decreased the amount shoppers spent over Christmas, which might worry retail investors leading in to results season.
"Christmas was soft, particularly in Sydney after the incident at the Lindt cafe," Mr Roche said. "There was a very distinct change in consumer sentiment, appropriately. Consumers were more subdued with regards to how much they were prepared to spend."
However, despite the soft seasonal trading, Mr Roche said API's network of Priceline stores and chemists were still outperforming retailers who had reported results recently.
Strong sales growth in the 400-store network, as well as disciplined cost management would underpin a rise in first-half net profit of up to 25 per cent, he said after the pharmaceutical wholesaler's annual meeting on Thursday.
On a same-store basis across the Priceline network, sales rose 2.4 per cent in the period between September 1 and January 24, Mr Roche said. In comparison, retailers like Oroton, The Reject Shop and Kathmandu have all released trading updates in the past two months that revealed falling sales.
API shares soared 5.8 per cent to close at 91.5¢, not far off a 12-month high of 97¢ hit in December. The stock has gained 57 per cent in the past year.
Including new stores, Priceline sales were up 7.5 per cent in the same period.
Mr Roche told shareholders in Sydney that excluding any one-off items, first-half net profit after tax, which relates to the six months ended February 28, would rise 20 to 25 per cent. API will reveal its results in April.
In the same period last year API reported an underlying NPAT of $16.2 million. However, massive writedowns on the value of assets led to a paper loss of $108 million.
Mr Roche said he was pleased that in addition to boosting sales, API had maintained its margins. The Priceline network did not rely solely on discounting to drive sales, and had a disciplined approach to staffing over Christmas, he said.
The pharmacy distribution part of API's, which refers to the wholesaling of prescription medicines to Priceline and chemist brands like Soul Pattinson and Pharmacist Advice, would continue a "steady" performance, he said.
Although it generates the bulk of API's $3 billion in revenue, distribution is a much lower-margin business than the Priceline franchise network.
Mr Roche said he was confident in the retail outlook for the year ahead, despite consumer sentiment not being "at record highs".
