Kirkcaldie posts $6.5m annual loss on write-downs

Kirkcaldie & Stains [NZX: KRK], the upmarket Wellington department store, sank back into the red after a series of write-downs, including the loss on the sale of its Harbour City Centre building, wiped out an operating profit in the year.

The Wellington-based company reported a net loss of $6.5 million, or 63.45 cents per share, in the 12 months ended Aug. 31, from a profit of $168,000, or 1.64 cents, a year earlier, it said in a statement. While it turned an operating profit of $375,000 in the year, it took a $4.3 million loss on the sale of the prime Wellington real estate, a $1.1 million impairment charge on property, plant and equipment, and $406,000 charge on intangible assets. Revenue fell 2.5 percent to $35.6 million.

This month the retailer sold the inner city building to Wellington property investor, Chao Zheng, for $45.85 million. Those funds fully repaid $23.5 million owed to Westpac Banking Corp, which had waived a breach of its lending covenants in August when earnings before interest, tax, depreciation and amortisation fell below the two times interest expense limit.

"The focus for 2015 continues to bring the retail operations into a positive result," chairman Falcon Clouston said. "A plan about the retail operations will be communicated to shareholders at the next annual meeting."

Last month, the company said the retail business still holds "considerable uncertainty" and that the board and management are reviewing other actions to lift its performance, while signalling it would probably face impairment charges in the annual result. It had previously said it would use funds from the asset sale to recapitalise the retail business before making any distributions to shareholders.

The company said sales revenue is tracking 5 percent ahead of the same time a year earlier.

The board didn't declare a dividend.

Kirkcaldie's retail unit reported a 3.8 percent fall in revenue to $32.6 million in the year, widening its pre-tax loss to $3.1 million from $1.8 million in 2013. The property operation reported a pre-tax loss of $3.3 million, compared to a loss of $527,000 in 2013.

The shares fell 5.8 percent to $1.79.

(BusinessDesk)