Shoppers are spending less on beauty products as tough economic conditions bite, the owner of the Priceline Pharmacy chain says.
Australian Pharmaceutical Industries, which also owns chemist chain Soul Pattinson, says while growth in beauty spending is slowing, sales of over-the-counter medicines helped the company beat its full-year profit forecast.
API has announced an underlying profit of $54.2 million for the year to August, 31, up 5.4 per cent on the previous year and ahead of its forecast of five per cent growth.
The company also finished its 2016/17 year with no debt, a year ahead of its target.
API shares closed seven cents, or 4.4 per cent, higher at $1.65 on Thursday.
Group revenue increased by six per cent to $4.1 billion.
The company's statutory net profit rose only 1.4 per cent from the previous year to $52.4 million after accounting for $1.9 million in costs related to its withdrawn plan to acquire Laser Clinics Australia.
In the Priceline business, like-for-like sales dropped 0.4 per cent.
Chief executive Richard Vincent said growth in key categories, notably dispensary and over-the-counter medicines, showed increased market share, while sales growth in beauty products eased.
"While the key beauty categories also grew during the year, it slowed on prior years with reduced consumer spending," Mr Vincent said.
"API has retained a strong market position in its core businesses, despite the more challenging market conditions we faced during 2017, and we have further improved our balance sheet position."
Priceline Pharmacy added 20 stores to its network during its 2016/17 year to lift total store count to 462.
More than 20 new Priceline stores are planned for the current financial year.
The company is also rolling out a new store format that includes spaces where customers can try new products.
API expects weak consumer spending to continue in the current financial year, and will focus on the launch of new products in popular categories, and promote its instore services, including its personal beauty advisers.
PRICELINE PARENT BEATS PROFIT FORECAST:
* Annual net profit up 1.4pct to $52.4m
*
* Revenue up 5.8pct to $4.06b
* Fully franked final dividend unchanged at 3.5 cents
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