NZ Post quits unprofitable Localist experiment to focus on core business, Kiwibank
By Suze Metherell
April 3 (BusinessDesk) – New Zealand Post, the state-owned postal service, has sold its unprofitable online directory Localist at a loss to focus on its ailing mail service and growth aspirations for Kiwibank.
Localist was set up in 2010 as both a print and digital play to tackle Yellow Pages, which was-financially distressed at the time and had been taken over by its lenders.
But the collapse in print market revenues hit Localist, chief financial officer Mark Yeoman told BusinessDesk. While breaking even on a cash-flow basis, Localist had yet to turn a profit, and had “become less of a priority” as NZ Post’s core businesses soaked up resource, he said.
Last year NZ Post said it was cutting staff numbers by as much as 2,000 over the next three years and scaling back physical mail deliveries in a bid to return its traditional business to profitability, while seeking growth by expanding Kiwibank’s wealth and insurance offerings.
“We’ve spent the last three years getting that focus and looking at Localist. While we were encouraged by the potential those digital services offerings they’re not quite in our core zone in terms of priorities for further investment,” Yeoman said. “It wasn’t an ‘invest-to-grow-to-sell’ strategy. It was something we thought was going to be one of the planks for New Zealand Post’s future digital service offering.”
NZ Post sold the business to chief executive Christina Domecq, who joined Localist last year when the directory company abandoned its print editions. Yeoman declined to comment on the value of the deal, citing commercial confidentiality, but said media speculation of an $8 million price-tag “is sort of there, or thereabouts.”
NZ Post recognised a $28 million impairment on its $30.9 million related-party loan to Localist in the 2013 financial year. Yeoman said the net write-off of Localist was less than $20 million, which some media had reported.
“We’ve had the benefit of some tax losses. Obviously when businesses operate at a loss we can offset tax that’s payable in other parts of the group,” he said.
Still, the Localist exit doesn’t mean NZ Post is giving up on other digital services, which it sees as meeting changing consumer demands and to improve its core business.
NZ Post’s iTry, an online try-before-you-buy sample website which connects potential customers with brands, also launched in 2010 and has 70,000 users, though there are no current sample offers available.
“Absolutely it’s still an alive and active site and there are more campaigns planned,” said Richard Trow, spokesperson for NZ Post. “One of the things we are looking to do is integrate it into the wider service offerings in some way.”
Other digital offerings from NZ Post include YouPost for bill payments and document storage online and YouShop, which provides customers with a USA mail address for items bought online to then be forwarded to their New Zealand address.