Fur­ni­ture chain hit by tough trad­ing

The Southland Times - - BUSINESS - CHRIS HUTCHING

Fur­ni­ture and ap­pli­ance chain Smith City’s re­cent warn­ings have proved true and it will post a loss that may be as high as $8 mil­lion.

The bad news comes as chair­man Craig Boyce steps down af­ter 30 years with the com­pany.

Chief ex­ec­u­tive Roy Camp­bell blamed tough trad­ing con­di­tions in sev­eral per­sis­tently un­der­per­form­ing stores.

‘‘We have to look at a cou­ple of lo­ca­tions that have been chal­leng­ing us. It’s not news any­one wants to hear but we don’t want to sur­prise the mar­ket more than have.

‘‘Al­though we saw some im­prove­ments in Fe­bru­ary and March, soft de­mand led to heavy dis­count­ing, of­ten to un­sus­tain­able lev­els, and the ex­pan­sion of in­ter­est-free credit terms to pe­ri­ods rarely seen in the in­dus­try.’’

The loss is a ma­jor blow for Smiths, which has had to shelve a planned spe­cial div­i­dend to share­hold­ers.

Next month’s an­nual re­port will re­veal how af­ford­able the pol­icy is and whether Smiths will be a takeover tar­get.

‘‘Trad­ing in Novem­ber and Jan­uary was very tough. It also re­flects our re­brand­ing of our Auck­land stores which has taken us longer than we thought.’’

The fi­nal fig­ures are yet to be re­vealed but sales were down to be­tween $209m and $213m, com­pared with the $227.4m posted in 2017.

Trad­ing losses will be be­tween $1.25m and $1.75m, com­pared with $2m last year but the im­pair­ment (writ­ing down in value) of leases of $4.8m will take the fi­nal loss to be­tween $7m to $8m for the year end­ing April 2018.

Last year the com­pany posted a fi­nal $2m profit.

The $4.8m lease write-down was due to chang­ing trad­ing pat­terns, a shift in lo­cal con­di­tions due to the open­ing of new re­tail hubs, and ‘‘oner­ous leases’’.

The re­sult is still sub­ject to April trad­ing and the nor­mal end-of-year re­view of the bal­ance sheet.

Smiths had more re­cently ra­tio­nalised stock, made mer­chan­dis­ing im­prove­ments and staff changes, and re­fur­bished shops.

Camp­bell said the changes de­liv­ered pos­i­tive re­sults for many stores, but in a small num­ber of lo­ca­tions they made lit­tle dif­fer­ence.

PHOTO: SUP­PLIED

Smiths City will post a big loss af­ter ‘‘un­sus­tain­able’’ price cut­ting by its ri­vals.

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