Profit on horizon as Kirks cuts loss

HAMISH MCNICOL
Last updated 05:00 04/09/2014

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Wellington department store Kirkcaldie & Stains has tapered its losses to $1.1 million this year, saying it is cautiously optimistic after having "struggled along" recently.

But after a trying few winter months, where sales dropped below expectations, chairman Falcon Clouston hopes the "pioneer status" of its new furniture store, as well as other initiatives, will lead to a profit next year.

The listed company's proposed $45.85m sale of the two buildings which make up the Harbour City Centre will be decided by shareholders at a meeting later this month.

Kirkcaldie & Stains said yesterday that its retail business anticipated a pre-tax loss for the year ended August 31 of $1.1m.

Its final revenue figures from the retail business had not been confirmed but the expected loss was an improvement on last year's $1.84m deficit.

But Clouston said Wellington's flagship department store was never happy with making a loss. The company anticipated a $1m pre-tax profit from its Harbour City Centre leasing business for the year, up from a $500,000 loss last year, which "squared off" the retail loss.

"I'm cautiously optimistic about the retail business," Clouston said.

"This year's budget, we're having another hard look at it and we'll make a profit, hopefully, if we can stick to it."

He said cutting jobs, consolidating operations, and moving the head office had helped keep costs down, which should start to show in future financial performance.

A warm winter had hurt second-half sales more than expected; these had previously been strong through to the end of last year.

In June, Kirkcaldie & Stains opened its first new branch in 117 years, called Interiors.

The 800 square metre store on Thorndon Quay sells interior furnishings, including lighting, mirrors, linen and pictures.

Clouston said the new store's sales had exceeded expectations, but it was difficult to tell if this would be maintained.

"You sort of get pioneer status. It's like a new restaurant, everyone goes there for a while, don't they?

"I'm optimistic that it will keep going."

The board would also consider an impairment of the company's total fixed and intangible assets on the retail side, which were worth about $3m, down from $3.7m last year.

Last month the department store said it was a step away from receiving $45.85m for the two Harbour City Centre buildings.

Kirks had entered into a conditional sale agreement with a Wellington-based investor for the Lambton Quay buildings.

The agreement is still conditional on approval from Kirks' shareholders. A meeting is scheduled for September 23.

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Details of who has bought the building will be announced to the market next week.

Clouston said Kirkcaldie & Stains had been "struggling along" but the business was starting to look up.

"We might have been slow adapters, if you like, to some of the new selling methods, but we're certainly getting cracking now, and it's starting to look better."

- The Dominion Post

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