Smiths City 'price promise' foils rival online offers

Monday, 21 August 2017

Retiring Smiths City director John Dobson, left, with chairman Craig Boyce.

Shoppers are dropping out in the run-up to elections, according to Christchurch-based Smiths City chairman Craig Boyce.

He told shareholders at the company's annual meeting that competition in recent weeks had been intense, partly fueled by online shopping.

The end of the Smiths City annual meeting in Christchurch.

Boyce said the elections always seemed to cause people to delay spending decisions and he suspected the Reserve Bank's tighter loan to value lending criteria for first home buyers was having a effect.

Online retailing was having a big effect in its ability to help buyers compare prices immediately through smartphone applications.

Roy Campbell, chief executive, Smiths City.

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Smiths City had a 'price promise' that it would match any other retailer's advertised prices, Boyce said.

Softer trading conditions across the board have been reported by banks and electronic card transfers.

The competition and soft spending pattern since June was evident in the closure of JB Hi-Fi's appliance store at Westgate and its recent $2.7 million loss for its New Zealand operations, Boyce said.

In Christchurch, the muted spending was probably the result of post-earthquake house rebuilding tailing off to levels that were likely to be permanent, Boyce said.

Smiths was about half way through its rebranding of Furniture City shops it acquired in Whangerei and Auckland more than a year ago to lift its market share in the North Island.

It had also launched its 'live better' brand in Hastings with Whangerei next on the rollout.

Boyce said Smiths' finance division was significant for sales because it allowed people to purchase items for their families they might not otherwise be able to afford.

Chief executive Roy Campbell said the Auckland Furniture City stores in Mt Wellington and the North Shore would soon be rebranded to Smiths City, the range of products sold had been rationalised, and inventories reduced 10 per cent without affecting trading.

Boyce paid tribute to director John Dobson who has decided to retire after 23 years with the company. A replacement is being sought.

Dobson said his mentor had been been the late Bill Revell who oversaw the rehabilitation of Smiths after it went into receivership for several years following the 1987 sharemarket crash. Dobson remains a director on several other boards.

Director Sheena Henderson was re-elected unopposed.

Boyce said an extraordinary meeting would take place in November where a 75 per cent majority of shareholders would be asked to ratify a special $5.7m repayment to shareholders.

The only question was from the Shareholders Association which asked about the stake held by entities associated with Sir Ron Brierley.

Boyce said the two companies involved had the maximum allowable (before requiring a takeover notice) at just under 20 per cent, 'so they won't be buying any more'.

As last year's meeting a Brierley representative voted against the re-election of several directors.

The meeting was well attended by about 50 shareholders with none of them querying company performance.

As previously reported the trading profit was $2m on revenue of $227m for the year ending April 2017, up on the $1.3m profit on turnover of $221m the previous year.