The Australian Pharmaceutical Industries Ltd (ASX: API) share price has fallen by 3% this morning after it gave the market updated guidance.
Australian Pharmaceutical Industries is the parent company of Priceline Pharmacy, Soul Pattinson Chemist and Pharmacist Advice. Its services include wholesale product delivery, retail services, marketing programs and business advisory services.
The company announced that it expected its half-year net profit after tax (NPAT) for the period ending 28 February 2018 will be approximately $26.5 million and that full-year NPAT is expected to be slightly above FY17's.
This means that the half-year result will be down by around 9% on the prior corresponding period.
The company explained the fall in profit was due to suppressed retail conditions experienced by Priceline, which persisted until late in the Christmas trading period.
The company said the overall network sales, including dispensary, for the financial year to date were up 2% whilst the like-for-like front-of-store sales in its network had declined 2.4% for the period.
The Australian Pharmaceutical Industries CEO, Richard Vincent, said "In contrast to the strong sales we experienced during 2016, consumer pending remained subdued throughout the 2017 calendar year and we did not see that change during the Christmas period."
"We expect to see benefits flow from the steps we have taken to address the tougher retail environment. Foremost among these are investments to enhance our total customer experience, both in-store and via our digital transformation program."
The company said that expectations for its growth in store numbers remain unchanged. The company confirmed that its balance sheet and cash flow position are strong and that the dividend payment for the first half is expected to remain the same as the prior corresponding period.
Foolish takeaway
Australian Pharmaceutical Industries is currently trading at 14x FY17's earnings. This could be a decent price to pick up some shares if you've been eyeing the business, the share price is almost the lowest it has been over the past three years since early 2015. However, I'm not a buyer at this price and I'm quite bearish on most retail stocks at the moment.
