Smiths City axes budget brands

Smith cityElectrical goods retailer Smiths City has axed the LV Martin and Powerhouse brands as its sheds its low-margin business.

LV Martin & Son was something of an icon in Wellington back when the then family-owned business coined the phrase “It’s the putting right that counts” in an era when electronics were notoriously unreliable.

Based on the decision to rebrand or close the Powerstore and LV Martin stores, it appears inevitable the company will also rebrand the Auckland and Whangarei Furniture City stores it announced last week it was buying.

The company launched a review of its business six months ago leading to the rebranding and the new focus on the parent brand.

CEO Roy Campbell told BusinessDesk his company had decided to leave the “commodity end” of appliance retailing to others.

“If you observe the Dick Smith demise, it’s increasingly more challenging to survive as a singly-branded retailer in appliances – it’s a challenging sector and margins are very small,” Campbell said.

“Because we trade across multi segments of the retail spectrum, we present a broader offer to consumers, we have a little bit better margin generation and it’s much more sustainable.

“We don’t do the commodity end – the best example would be the flat-screen TV – we’re not in that market. We tend to present really good brands at a fair margin.”

Christchurch-headquartered Smiths City reported a first half profit slump of 40 per cent to $2.6 million on Monday, largely due to restructuring costs and the absence of an insurance payout which boosted the period’s result in the previous year. Sales for the half year were down 2.8 per cent to $2.4 million.

Campbell said the company does not foresee growth in the furniture and appliances sector in which it currently operates and will focus on expanding its footprint into new cities to boost sales and profit.

After the Furniture City acquisition is settled, Smiths City will operate 36 retail stores as well as an online offer. But north of Tauranga, which accounts for nearly half the country’s population, the company only has the three Furniture City stores, suggesting significant opportunity for expansion.

You have 7 articles remaining. Unlock 15 free articles a month, it’s free.