Winter range sales downturn prospect for R. W. Saunders

Press, 31 October 1984, Page 37

Winter range sales downturn prospect for R. W. Saunders

This, year’s mild winter could lead to a downturn in retailer demand for the next autumn-winter ranges of the Christchurch-based clothing manufacturer, R, W. Saunders, Ltd, shareholders were told yesterday. The chairman, Mr W. A. Hadlee, said a large number of retailers did not sell the stock expected in MarchJuly this year and the resultant carry-over of stock could cut R. W. Saunders second half sales, although it was too early to be specific in this. “If there is any downturn in this area, I can say that as an offset some of our new styles in lingerie and corsetry have been particularly well received,” Mr Hadlee told the annual meeting. . He said the company was very close to its planned sales for the summer season for which indent deliveries were due to be completed. Retail sales in the current spring-summer season had opened strongly but tapered off considerably in recent weeks “This looks after the first

half of our next financial year to June 30, 1985,” Mr Hadlee said.

The company has not disclosed its sales for the last financial year and the relevance of this to the share price and the “true and fair” definition of the accounts were raised by a shareholder. Mr J. A. Orr, for the auditors, said while he had some sympathy with the decision not to disclose, it was required by the Society of Accountants for the company’s accounts to qualify as “true and fair.” On a legal view, the auditors had been obliged to qualify their comment in the annual report with reference to the nondisclosure of sales. Mr Orr said it was hard to assess what affect this would have on the R. W. Saunders share price. “We do not see that the nondisclosure of sales affects what is a true and fair view of the profit,” Mr Hadlee told the meeting. The society’s policy was not logical in the director’s view, he said.

In his address to the meeting, Mr Hadlee said the company’s after tax profit' for toe year to last June 30 had been affected by the income tax legislation limiting toe deductibility of development costs on horticultural ventures to $lO,OOO a year. This had cost the group almost $50,000 in extra tax. “One can only hope that the new Government will recognise that the further development of horticultural enterprises is in toe country’s best interests and will either repeal or amend this legislation to encourage further investment,” Mr Hadlee said.

The company looked forward to increasing crops from its horticultural partnership at Matakana, north of Auckland, to contribute towards recovery of much of that investment.

Mr Hadlee' said the 1984 harvest of kiwifruit for export would mean a gross return of about $50,000, and other crops had complemented this. The board had deferred a decision on disposal of part

of the land at Matakana until a decision on water rights by toe Auckland Regional Authority. R. W. Saunders also looked forward to a useful long-term profit contribution from toe Auckland bra, swimwear and corsetry business, V. Mayes and Company, acquired without any payment for goodwill. Mr Hadlee said toe board had made a conditional purchase from Endeavour Services, Ltd, of a property in St Asaph Street, formerly occupied by Deanes Industries, Ltd. If the company was successful in finding tenants to take over its premises in Lichfield and Tuam Streets, it would occupy toe St Asaph site late next year. “The centralising of our Christchurch manufacturing function together with the warehouse and office space would make for greater efficiencies,” Mr Hadlee said.

The company was limited in its exports to Australia because of the quota system there and talks between clothing manufacturers on both sides of the Tasman

under C.E.R. had stopped at the Australians’ request until after a review of their industry next year. In response to a shareholder’s question, a board member, Sir Laurence Stevens said toe Labour Government would take a sympathetic attitude to the New Zealand clothing industry on questions of protection. A review of toe industry plan is expected to be released soon. The Government had a tough approach to opening toe economy to competition but he felt an "efficientlyrun company like R. W. Saunders” would get a sufficient amount of protection.

The meeting approved the directors’ recommendation for a 10 per cent final dividend to be paid on November 7.

Messrs J. H. Gemmell and P. G. Mander were reelected to toe board and Mr T. G. Iggo, was also appointed a director. Mr Iggo is a representative of Brierley Investments, Ltd, which has a shareholding of 20.4 per cent in R. W. Saunders.