BBQ Factory stores to be shut

Industrial and retail conglomerate Hellaby Holdings is shutting a third of its BBQ Factory stores as it seeks to stem a stream of losses at the outdoor lifestyle chain.

BBQ Factory stores at New Plymouth, Invercargill, Hastings and Palmerston North have recently closed, while stores in Nelson, Taupo and Timaru will close soon.

The restructure will leave 13 stores, mostly in the upper North Island, but also in Wellington, Christchurch and Dunedin.

"The rationale for that is simply that we believe the business model will be more profitable with a smaller number of stores," Hellaby chief executive John Williamson said.

He said BBQ Factory, bought for $25.6 million in 2004 had not been a good investment.

BBQ Factory has been making pre-tax and interest charge losses of about $2 million a year.

"This restructuring will leave the business in much better shape," Mr Williamson said.

Hellaby, which reported an after-tax loss of $9.8 million last year after taking an $18.9 million writedown on the BBQ Factory business, has a variety of investments.

These include the No1 Shoes and Hannahs stores, plus automotive parts, industrial equipment and packaging operations.

For the six months to December Hellaby's profits jumped 81 per cent to $5 million and the company said it was making progress toward restoring its financial performance to previous levels, with annual earnings before interest, tax, depreciation and amortisation of about $45 million.

However, the performance of BBQ Factory remained a concern.

"I've always said it is our intention to exit [BBQ Factory] at some point, and most logically when we get to break even, but we are not there yet," Mr Williamson said.

In June, Hellaby heads to the High Court in Auckland seeking $11.5 million from various parties in relation to the purchase of BBQ Factory. Hellaby bought BBQ Factory from ASB Bank after the bank had ended up majority-owning the business following an unsuccessful sharemarket offer.

Apart from the BBQ Factory business, Mr Williamson said Hellaby was performing well.

"Our other retail interests are going reasonably well. Retail conditions have flattened, but we have a positive outlook on our two retail footwear businesses.

"I'm very pleased with the performance in our automotive, industrial and packaging businesses and that's certainly a trend we would see continuing."

Hellaby shares were up 7 cents to $1.83 yesterday.

The share price has dropped about 25 per cent this year, compared with an overall market fall of about 10 per cent.

- © Fairfax NZ News