Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Kirkcaldie to recapitalise retail unit once property sold

Kirkcaldie to recapitalise retail business once Harbour City Centre sold

By Paul McBeth

Feb. 20 (BusinessDesk) - Kirkcaldie & Stain’s, Wellington’s up-market department store, says it will recapitalise the ailing retail business after the sale of its inner-city office tower before returning any surplus to shareholders.

The Wellington-based company plans to overhaul its retail offering to deal with rising inner-city rents and increasing competition from online rivals, and will use a portion of the funds raised from the sale of its Harbour City Centre on Wellington’s Lambton Quay towards building a viable business, chairman Falcon Clouston told shareholders at last night’s annual meeting.

“Before we have any discussion on a surplus distribution to shareholders we must first recapitalise the retail side,” Clouston said. “Some shareholders may not want to take the risk of owning an omni-model retail business and we may need to re-organise the shareholding of the retail business.”

As a result of the decision to sell the Harbour City Building, which was last valued at $50 million, fund manager Chris Swasbrook of Elevation Capital withdrew his nomination seeking a seat on the company’s board.

In a letter read by Clouston at the start of the meeting, Swasbrook said he supported the decision to sell the building and to restore the retail business to profitability.

The $50 million valuation put most of the value in the front building, which counts Contact Energy as an anchor tenant, and included just the bare land value for the back building, which will need to be earthquake strengthened or demolished, Clouston said.

Managing director John Milford said the company won’t sell the building cheaply: “It’s a premium property and we will get the maximum dollars for it.”

Among the initiatives to improve the retail business, Milford said the company plans to expand it online services, introduce a home brand shared with other New Zealand department stores, and is looking at setting up a furniture store on the city fringe.

“We can’t make money out of 150,000 people in Wellington, we need 4.6 million people in New Zealand to make a living,” Milford said.

Milford said online competitors were eating into local retailers due to the government’s limit on charging GST on overseas goods, and that something would need to change to make up the shortfall in excise duty.

He also took a swipe at Wellington City Council for failing to support retailers after last year’s earthquakes closed two car-parking buildings and didn’t try to encourage consumers to come into the city during the Christmas period.

In response to a question form a shareholder, chairman Clouston said Kirkcaldie’s won’t resume dividend payments until the retail business returns to profitability, which might be in the next financial year.

The company’s shares were unchanged to $2.40 yesterday, and have gained 26 percent this year.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

'Irregular Accounting': Voluntary Suspension Of Fuji Xerox Govt Contracting

This suspension gives the Ministry of Business, Innovation, and Employment time to understand the full implications of the report from FUJIFILM Holdings into irregular accounting practices at FXNZ. More>>

ALSO:

MPI: Cow Disease Detected In NZ For First Time

MPI is responding to the detection of the cattle disease Mycoplasma bovis in a dairy herd in South Canterbury... The disease is commonly found in cattle globally, including in Australia, but it’s the first detection of it in New Zealand. More>>

South Island Flooding: Focus Moves To Recovery

As water recedes throughout flood-impacted areas of the South Island, Minister of Civil Defence Nathan Guy has praised the efforts of those who were involved in the response to the flooding... More>>

ALSO:

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fund For PPP Plans: Govt Embraces Targeted Rates To Spur Urban Infrastructure

The government's latest response to the Auckland housing shortage will see central government and private sector firms invest in 'special purpose vehicles' to fund essential roading, water and drains that Auckland Council can't fund without threatening its credit rating. More>>

ALSO: