Camera House sales dip slightly

Raleru Ltd (Camera House) sales for the 2011/12 financial year slipped by 2.3 percent from the previous year to $65.3 million, according to a copy of the annual report lodged with ASIC, while net profit (after tax) slipped around $100,000 to $734,000.

 In one of the most difficult trading periods ever experienced by Australian  retailers of discretionary goods, this is a solid result. It’s also solid proof of the ongoing viability of specialist photo retailing in Australia. (Dave, are you still there?)

Sales at Camera House over the last four years have been maintained at a fairly steady level following a dramatic increase of over 50 percent between 2008 and 2009. Profit has been trending down slightly since that bumper year in 2009, but the 2012 result still bettered the profit made in 2008.

While $734,000 profit after tax from $65 million in sales may seem fairly meagre, Raleru’s profit results can’t be assessed by conventional company measures, as its shareholders are also its retail customers – Camera House members – and so ‘shareholder value’ is delivered primarily by warehousing and offering a broad range of product with decent margin, promotional support, etc, to the shareholder/retailer.

So long as Camera House head office makes enough to cover its costs, invest in the future and after that deliver a sweetener in the form of a dividend cheque to its shareholder/retailers, it’s doing alright.

It’s what Camera House stores are able to turn that $65 million into at retail which really counts, and that’s not a figure contained in the annual report.

So the overall level of sales is a far better measure of the health of the broader Camera House organisation than Ralerus’ profit, and here it compares well to larger and better-resourced competitors: Harvey Norman sales in Australia slipped 8 percent over the same period (and profits plummeted by over 30 percent) while JB was rewarded by the share market with a big boost in the share price for a sales result which was little better than break-even on 2011 – up from $2.96 billion to 3.13 billion, and with 11 new stores added to the group in that time.)

Given that reaction, if Camera House was a publicly-listed company, it’s hard to see its  2012 sales result bringing about any kind of dip in the share price.

If there is any cause for concern, it’s the inability to nudge that top line sales figure upwards appreciably over the past four years. But as anyone close to specialist photo retailing knows, it’s been a pretty grim four years, with the global downturn, the price-slashing tactics of larger competitors, then offshore-online sales all conspiring against growth. New specialist entrants like DCW also set a business like Camera House new challenges.

Camera House,Ted’s Cameras and the other independent specialist retailers still standing have (touch wood), weathered the storm, and with a clear change in the market for photography towards the enthusiast sector – compact camera sales way down, interchangeables way up – the future looks brighter than the immediate past.

The profit result would have been more impressive but for a provision of over $800,000 for doubtful debt – another indicator that retailing has been through tough times.

‘However,’ general manager, Paul Shearer writes in his accompanying report, ‘in the future if these provisions are not needed in 2012/13 then they will be returned to both Members and Shareholders’ funds of the company.’

This decrease in profit levels reflects the retailing reality of falling margins in key photo product categories, which all photo and CE wholesalers and retailers are experiencing.

Paul Shearer notes that 2011/12 was particularly challenging, ‘competitors closing stores [eg, WOW, Dick Smith] and large inventory being held by our competitors…brought about some abnormal price offerings in the retail market.’ These factors were also referred to in JB’s annual report.

A dividend of $1.75 was paid to shareholders, with no ‘Super Warehouse Rebate’ paid. Mr Shearer attributed this and the lack of increase in dividend from 2011 to the need to make the bad debt provision.

There is a total of 162,000 shares held in Raleru, with most member stores holding between 1000 and 3000 shares though their store companies.

There are currently 78 Camera House stores around Australia, according to the Camera House website, with the leading states being NSW (25 stores), Queensland (20 stores) and Western Australia (13 stores). In addition there is a group of ‘alliance’ stores which don’t carry Camera House branding.

Notable recruits to this alliance group in 2011/12, according to the Camera House annual report, are Paxtons with seven stores in Sydney, another three DigiDirect outlets in Sydney, and Camera Electronic in WA. In all, there were 20 new alliance members listed in the annual report.

…But whither ProMaster?

One of the initiatives announced by Camera House management at the AGM last October, and which Photo Counter has been attempting to report on, is the Australian distributorship of US ProMaster-branded products. Camera House has not responded to questions about the roll-out of ProMaster products into the Australian market, and particularly whether Raleru intends to distribute ProMaster beyond the Camera House group.

However, it is of some comfort to understand we are not Robinson Crusoe when it comes to having scant knowledge of the ProMaster initiative! But news, like nature, abhors a vacuum: According to industry sources, one of the challenges Raleru will have in introducing ProMaster is that at present, product is shipped from wherever it is manufacturerd in Asia to ProMaster in the US, and then on to Raleru’s warehouse in Sydney, and then to the retailer, adding to costs. Another is that Raleru’s warehouse space is limited.

An indication that it’s still early days in the ProMaster initiative is that there is no reference to the brand at all on the Camera House website. Another is that there is no reference to Raleru, Camera House or Australia on the ProMaster website.

But who knows what tomorrow brings!

It is believed (see above!) that Michaels CVD in Melbourne holds the most extensive range of ProMaster gear in Australia, imported outside of the ProMaster-Raleru arrangements.