Smith City Group’s financial statements

Smiths City websiteNZX-listed Smiths City Group’s financial statements for the year ended April 30 revealed a loss of $500,000 from retail revenue of $208 million as a result of a souring in confidence in the provinces and strong competition.

The previous two years the retailing division made a profit of $1 million and $1.5 million.

However, it was its finance company profits of $3.5 million and an $8.5 million insurance payment that enabled the group to book at $8 million profit for the year to April 30.

Smiths City chairman, Craig Boyce, said from time to time the retailing division makes a loss.

Retailing has been very challenging in the second half of the April 2015 financial year because of the downturn in confidence in the provinces and rural towns following bad news coming out of the dairy sector about falling payments to farmers.

Boyce said Christchurch was holding up well.

The fierce competition in appliance retailing has forced Smiths City to close four of its appliance-only stores in the past year, namely two L V Martin stores in Wellington and two Powerstores, one in Riccarton, Christchurch, and the other in Invercargill. It still has four Powerstores operating.

Boyce said it was hard to run a viable business from just selling appliances. Other appliance-only stores were closing and he cited Australian electrical goods retailer, Good Guys, which pulled out of Auckland last year.

When releasing its annual result the company said new CEO, Roy Campbell, had been asked to review the supply chain and the whole wider business, including its several brands.

Boyce said Campbell was looking at all the group’s sources of supply as well as its distribution system of getting products around the country to its stores and then to customers.

Asked about the possibility of staff reduction, Boyce said, “It’s possible but not on the front line”.

The group is examining how to reduce overhead costs like distribution but not customer-facing services.

“Service is still key to staying relevant to the customers,” Boyce said.

Boyce said he expected to update shareholders on the review of the business at the annual meeting in late August.

The company has asked real estate firm Colliers to see how much interest there is in buying and leasing back its flagship Colombo St store.

The store was recently valued at $17.8 million.  Smith City will require shareholder approve to sell the building.

Boyce said there is no intention to move from Colombo St, but it is not necessary for Smith City to own it.

Since the earthquakes patterns of trading in Christchurch have changed. Some business has shifted from the Colombo St store to its stores in the north and west, namely Northwood and at the Bush Inn Centre.

Smiths City sells furniture, furnishings, home appliances, consumer electronics and household items and some sports gear. Besides its chain of 27 Smiths City stores, it also has other store brands, including Powerstore and Furniture Concepts and appliance servicing company Alectra.

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