Glenn Dyer writes:


Does Brazin – the middling underwear, music, DVD and homewares group – have things under control? The company has had a rough time lately, closing down its Ghetto shoe chain and Insane fashion stores and writing off up to $20 million in costs and losses, including around $6 million paid to founder and 62% shareholder Brett Blundy back in 2003.

According to management, a “year of consolidation,” falling cash flows and operational issues have masked an otherwise good performance from its bedrock chain, lingerie retailer Bras N Things.

But does the company understand what sort of result it has just declared? In its press statement, Brazin attempted to downplay the millions in write-offs and losses by highlighting the fact that earnings before unusual and discontinued items rose 27% to $21.33 million. But no amount of spin can hide the reality that earnings after the Insane and Ghetto closures and other unusual items were taken into account actually dropped 12.3%.

And net profit after unusual items of $10.527 million gave earnings per share of 9 cents, not enough to cover the total dividend payout for the year of 10.5 cents. That payout will total more than $12.3 million, and the biggest beneficiary will be Brett Blundy, with dividend payments during the year totalling more than $7.5 million.

The company has restarted its dividend reinvestment program to try and encourage shareholders to take shares and not the much-needed cash – always a sign of a company under pressure. So will Brett Blundy take shares worth $1.8 million instead of cash from the final dividend payment to help the company he founded in its hour of need?