Kirkcaldie & Stains narrows full-year loss, takes charges on retail exit

Kirkcaldie & Stains [NZX: KRK] narrowed its full-year loss while recognising one-time costs and impairments related to exiting its 152-year-old Wellington department store.

The loss was $4.5 million in the 12 months ended August 30, from a loss of about $6.5 million a year earlier, the Wellington-based retailer said in a statement. Sales fell 10% to $31.9 million, while the cost of sales climbed 12% to $19 million.

In late July, Kirkcaldie shareholders voted in favour of Australian department store chain David Jones taking over the lease on its upscale Wellington store and paying $A400,000 for use of the name. David Jones turned down an offer to buy the retail fixed assets for $500,000, which have subsequently been valued at zero. Kirkcaldie's stock wasn't included in the sale, which requires Overseas Investment Office consent. Like many retailers, Kirkcaldie came under pressure as bricks-and-mortar stores were forced to discount stock to compete with online rivals.

Kirkcaldie took an 'onerous contracts' provision of about $1.5 million in the latest year in relation to non-cancellable leases including a Petone warehouse lease that ran until April 2023. It also recognised staff redundancy costs of $1.3 million, an impairment of plant and equipment of $322,00 and inventory adjustments of $398,000.

The retail division of the company recorded a pretax loss of $4.9 million, while the property operations had a pretax profit of $563,000, mostly interest income on the cash proceeds of the Harbour City Centre building sold in October 2014.

The company intends to sell remaining inventory through another Wellington outlet, at which time it will be cashed up, with some $21 million of cash on hand, of which up to $19.4 million is earmarked for a capital return, probably by way of a court-approved scheme of arrangement.

The final wash-up and return of residual value is likely to be by way of a solvent liquidation, Kirkcaldie said today. It expects further losses in the current year, on costs associated with closing the store, the proposed capital distribution and continued listing costs.

Kirkcaldie shares fell 0.4% to $2.24 and have jumped 32% this year, with much of the gain following the announcement of the sale to David Jones.

(BusinessDesk)