Betts battles through pandemic

Shoe retailer Betts Group has posted a profit as it worked to rein in costs, but its annual report reveals negative net assets and falling cash reserves.

The Perth-headquartered business has been owned by the Breckler family and has operated since 1892.

Revenue was down 10 per cent in the 2021 financial year, to $45.3 million, while profits improved from a $5.3 million loss in 2020 to be an $800,000 profit.

The report said the company was hit substantially by the pandemic.

“The group’s FY2021 result was adversely impacted by temporary store closures associated with COVID-19 isolation measures implemented by state and federal governments, as well as distribution to wholesale markets,“ the report  said.

“During the year, the group received government assistance, implemented cost reduction strategies and received rental assistance subsidies from key landlords which partially mitigated losses arising from the group’s disrupted activities.”

Under the going concern section of the annual report, audited by BDO, the company details a net asset deficiency of $8.5 million.

It said Betts had undertaken a restructure, closing underperforming stores, renegotiating leases and achieving rent reductions, and lowering overheads.

Since June 30, Betts had extended its banking facilities until at least October 2022 and borrowed a further $1 million from its main lender, the Commonwealth Bank.

The company has ongoing loans totalling $1.1 million from shareholders Andrew Breckler and Daniel Breckler which were drawn in July 2017, with the maturity recently extended.

Betts said restrictions easing gradually as the country reopens from COVID-19 lockdowns would help get sales back to previously forecast levels.

Further steps to manage working capital are being undertaken, including deferral of rental obligations and tax liabilities, and extending payment terms with shoe manufacturers.