The business, which revealed in February that Radio Rental’s installation volumes had declined by 27 per cent in the first-half, has today said that it will only be able to make the lower end of its $17 – 20 million profit after tax guidance for fiscal 18.
“The performance of Radio Rentals continues to deteriorate, and trading conditions are likely to be difficult in the medium term,” the company said in a trading update on Thursday.
“The results have been further impacted by the adverse publicity from Thorn’s settlement with ASIC and the ongoing class action.”
Thorn Group’s former chairman Joycelyn Morton announced that she would step down in February after the company reached a $6.1 million settlement with the corporate watchdog over consumer lease breaches.
There is also a pending class action filed by Maurice Blackburne on behalf of customers of its ‘Rent Try $1 Buy’ lease.
Today’s trading update signals further woes for the business, which less than six months ago booked a $20.7 million write off on goodwill related to Radio Rentals and its Trade & Debtor finance arm.
Thorn’s new CEO Tim Luce said the company is responding to its challenges and developing a “refreshed and extended” retail offering in Radio Rentals, driven by “further promotional activities.”
Thorn has also kicked off a strategic review of Radio Rentals with an eye on improving its performance.
Thorn will report its full-year result in May but warned that stronger performance in its business finance division would not offset weakness in the consumer lending division.
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