Rebel Sport Limited advises that its net profit attributable to members of the company for the year ended July 2, 2005 is estimated to be in the range of $13.5 million to $15.5 million. Accordingly, the company anticipates that its Group result will be at least 15% below that achieved in the previous corresponding period.

The key factors contributing to this decline are as follows:

  • Competitive trading conditions and unseasonably warm weather have resulted in
    margin deterioration when compared with the previous corresponding period, which
    included Rugby World Cup;
  • Employee expenses as a percentage of sales have risen when compared to the
    previous corresponding period. This issue is being addressed;
  • After undertaking a review of store performance and reviewing proposed rent
    increases, the company has decided to close three stores. Costs associated with
    these closures have been provided for;
  • The franchise fee agreement with the Sports Authority Limited of New Zealand
    concluded on 1 April 2005. Accordingly, this financial year’s result will have no
    franchise fee income for the three months post 1 April 2005; and
  • The previous corresponding period was for the 53 weeks ended 3 July 2004. The
    current financial period is for the 52 weeks ended 2 July 2005, and hence includes
    one less week of trade when compared to the prior period.

Measures are in place to improve sales growth and margin, and control expenditure. The
company is confident that the strategic decisions made in relation to site retention and store
closures will benefit the company in the future.