New McPherson's chief executive Laurie McAllister has cleared the decks, slashing the value of appliances and nail care brands by $20 million and sending the consumer products group to a bottom-line loss of $11.8 million.
McPherson's net profit before asset impairments and goodwill writedowns fell 10.8 per cent to $7.9 million as sales slumped 11.4 per cent to $149.1 million, dragged down by the closure of an unprofitable impulse merchandising division and weaker sales of private label and agency brands.
Revenues also took a hit from the closure of Woolworths' Masters chain, which dented sales of McPherson's appliances brands, Euromaid and Baumatic.
However, its core health, wellness and beauty brands, which include Manicare, Lady Jayne, Dr. LeWinn's, A'kin, Swisspers, Moosehead and Maseur performed well.
"The deliberate strategy to reduce sales of low margin agency and private label products led to a material improvement in margins across all key brands and a decrease in revenue of 7 per cent," said Mr McAllister, who took the helm in November from long-serving CEO Paul Maguire.
Despite the bottom line loss, McPherson's shares rose 4 per cent to $1.165, the highest level since August 2016, as Mr McAllister unveiled plans to relaunch Dr LeWinns and A'Kin and expand distribution of Manicare and Lady Jayne in supermarkets.
Underlying earnings before interest and tax fell 6.6 per cent to $13.5 million as currency related price rises offset savings in selling and distribution from eliminating about 32 per cent of non-core stock keeping units.
McPherson's wrote down the value of its appliances brands by $12 million after Master's demise and its Revitanail brand by $7.8 million following range rationalisation.
McPherson's used proceeds from the sale of its 49 per cent stake in the Housewares venture to reduce debt, which fell from $93 million to $41 million, reducing gearing from 46 per cent to 30 per cent.
McPherson's maintained its interim dividend at 6¢ a share, payable March 23.
