Kirks blasts 'paralysed' council

HAMISH MCNICOL AND TESSA JOHNSTONE
Last updated 05:00 20/02/2014

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Kirkcaldie & Stains has lashed out at Wellington's "paralysed" city council as the flagship department store continues to struggle in a challenging local retail market.

The company celebrated its 150th anniversary last year but was aghast at the council's reluctance to even celebrate Christmas.

Managing director John Milford told the company's annual meeting last night that the council's inability to make decisions and take actions had not helped the store.

Kirkcaldie & Stains' retail arm reported a pre-tax loss of $1.84 million for the year ended August 31, 2013, as revenue fell 5.8 per cent to $32.2m.

Chairman Falcon Clouston said the financial year had been "very tough", in which the Kirkcaldie & Stains Group posted a pre-tax loss of $2.38m, more than double the previous year's loss.

But Milford, who is also the Wellington Employers' Chamber of Commerce president, said the council needed to "think wisely, plan boldly and act swiftly".

Statistics showed retail spending in Wellington, for the categories relevant to the company, had fallen 6.8 per cent year- on-year for the period ended September 2013.

Kirkcaldie & Stains had dropped 4.8 per cent over the same period and the retail climate in the region continued to be challenging, Milford said.

"A paralysed council, unable to make decisions or take actions, didn't help."

Last year's earthquakes shook consumer confidence and resulted in two multi-storey parking buildings' closure, which Milford said suited the council's "anti-car agenda for the city".

"To cap the year off the council decided not to celebrate Christmas - retailers' most important time of year - with no decorations and no atmosphere, even though retail businesses pay a significant amount of business rates, Milford said.

"The council needs to think wisely, plan boldly and act swiftly."

Wellington City councillor Jo Coughlan, who chairs the economic growth and arts committee, said she personally thought there should have been Christmas decorations - and stressed that decision was made by council officers, not councillors.

"It's critical that we have a vibrant CBD, that is accessible to people to do their shopping and absolutely the city needs to do everything they can to support the health and vibrancy of the city."

Coughlan would not respond to Milford's criticism that the council was unable to make decisions: "I'm not sure what he is referring to with that particular comment".

Meanwhile, Clouston said internet shopping, facilitated by the high kiwi dollar and the current GST legislation, had further impacted on domestic consumer behaviour.

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"The economic indicators across New Zealand for 2014 look to be improving, although I will caution that the Wellington region is slow to fire."

But Milford said it was not all bad, as the company's retail business had begun to show some improvements.

Its gross margin had increased slightly, by 1 per cent, and operating expenses had decreased by 4.4 per cent.

He said online shopping last year was worth $2.7 billion, of which $1b went to overseas providers. Kirkcaldie & Stains had launched its own online retail store, offering more than 10,000 products, but the trend continued to hurt New Zealand-based retailers.

Milford said it would aim to triple its online offering this year.

It would also look at opening a new furniture store on the city fringe which would help to free up space at its current retail store in Lambton Quay.

"We still believe that the domestic economy will be challenging," he said.

"However, with us looking to grow the top line revenue, continue to source the right products and controlling expenses, we believe the retail business' performance should improve."

Former managing director Phillip Shewell, who has worked with the company for more than 20 years, retired from the board.

- BusinessDay

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