Retail continues to be Begg’s problem

Press, Volume CX, Issue 32406, 19 September 1970, Page 22

Retail continues to be Begg’s problem

The real problem of Charles Begg and Company, Ltd, continued to be retail, said the chairman (Mr W. H. Masters) in his review with the annual accounts for the year to March 31. Retailing will again be conducted at a loss in the first six months of this year.

He wanted shareholders to be fully aware of the situation, and said that the retail trading loss during the year had been more than $500,000.

(Although the retail shops were a valuable outlet for the group’s manufacturing. Mi Masters said, the retail sector was being restricted, to reduce investment in retailing. But an endeavour was I being made to maintain (retail activity, and to bring an end to losses in this department. | Drastic action had to be taken during the year when the earlier budgets failed to achieve the predicted breakeven results, Mr Masters said, and it became apparent that the number of retail outlets had to be reduced. Mr C. A. Pearson, in his managing director’s report said that during the year under review the company’s investment in Begg-Wise-man, Ltd, was reduced from $2,891,000 to $1,968,000. But since April more drastic action had been taken. Since balance date, five large multi-floor shops in Auckland, Hamilton, Christchurch, Dunedin, and Invercargill had been reduced to (smaller units.. Ten remote branches had been sold to staff, and eleven unprofitable outlets had been closed, Mi

i Pearson said. • The chain now consists of i four Begg’s Specialty Music and Sound Centres, in Invercargill, Dunedin, Christchurch, and Auckland, and 20 Begg-Wiseman’s shops in high density and growth areas of the North Island. Mr Pearson said that it is a paradox of disinvestment that, in the short term, costs increase because of the disposal of premises, non-recur-ring payments, re-location expenses, the reduction of stock, and the collection of debtors. Retailing is still being conducted at a loss, but an improved result for the period from October to March is expected. The company’s manufacturing activities were conducted at a profit. This sector had been broadly divided into two groups: white lines, now centred on Scott Brothers, Ltd, in Christchurch, and brown lines, manufactured by Dominion Radio and Electrical Corporation, Ltd. The report says that Scott Brothers increased its local market share and traded profitably and that exports improved by $250,000, with new markets in the Pacific and Asia.

The report shows that the directors have turned their attention to the question of the liability to public debenture holders, amounting to $1,056,000. To this amount $219,000 has already been deposited with the trustee, and since balance date sales or options already negotiated will bring in another $400,000.

The balance of $437,000 will be exceeded by the planned sale of more retail

properties, Mr Pearson says in his report. As already announced, the group’s trading loss was $418,000, but shareholders’ funds had been maintained by off-setting capital profits, depreciation recovered, the sale of a subsidiary, and the revaluation of' investments against the loss. Referring to future trading, Mr Pearson says that his earlier view that perseverance would eventually restore profitability had remained unchanged, but that the degree of perseverance, and the time required—because of the problems involved—had been underestimated.