What Caused Greencross Share Price to Collapse by 20.52%?

Greencross Limited [ASX:GXL] share price is currently trading at $4.25, down from $5.36 yesterday.

This morning the company issued a warning to shareholders of a multimillion dollar hit from impairments.

The warning came after a review in its annual operating expenses. Further reviews will be completed towards July this year.

Greencross Limited is a veterinary service provider and pet care retailer with over 400 stores and clinics located across Australia and New Zealand.

Downgrades affect share value

20% of Greencross’ value has been shed, after downgrading their full year earnings forecast.

They have been facing various tax and amortisation impairments throughout the year.as

After failing to deliver an improved second half result, the company has fallen behind on weaker times.

Their struggle comes from disappointing visitor numbers across its standalone stores and clinics.

Overall service rates have dropped due to low customer turnout, resulting in poor sales figures and small profit.

 

CEO Simon Hickey believes that structural changes across the petting sector have negatively impacted the business, as Greencross have struggled to adapt with its change.

As a result, they will review the organisations capital-intensive model, while renewing the layout of its stores and clinics.

Thecapitalclub.com reported that Simon Hickey stated,

Since our last update to the market at our half yearly results in February, our retail division has continued to perform well, delivering 4.3% LFL sales growth and stable gross margin despite an increasingly competitive consumer environment. However, our veterinary business has failed to deliver the previously budgeted uplift in second half activity primarily due to disappointing visit numbers in both our standalone GP clinics and instore clinics. LFL sales in our standalone GP clinics have decreased by 2.8% as a result of a 4.0% decline in visit numbers.

Mr Hickey is confident that Greencross still remains well placed, despite the consistent struggle they face.

They will execute a new pet care strategy which will help investment growth and extend further opportunities within the business.

Regards,

Ryan Clarkson-Ledward,
For Markets & Money

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Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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