Smiths City in major retailing merger

Press, 12 September 1987, Page 28

Smiths City in major retailing merger

In a major retail merger Smiths City Group, Ltd, of Christchurch, has purchased the Smith and Brown New Zealandwide chain of retail stores.

Smiths City was already the largest New Zealand retailer of furniture, flooring, and appliances with a total turnover of $2OO million through 69 stores during its re-cently-completed financial year ended April 30. The Smith and Brown chain is expected to add a further $l5O million of furniture, floorcoverings, and appliance sales annually from its 49 retail stores.

“This is a merger between two major retail chains and not another retail take-over by a property or investment group,” said Mr Kevin Smith, the Smiths City Group’s executive chairman of directors. “This is an important feature, because our motivation is to improve our retail activities rather than any other short-term objectives, and this merger will enable the combined group to offer the widest and most competitively-priced range of consumer durables anywhere in New

Zealand,” he added. Early last year Smiths announced a similar merger with the Aucklandbased retailer Irvin and Stem which enabled both of them to achieve relatively nationwide coverage in one stage. This latest merger will provide them with much greater depth of coverage as well as representation, for the first time, in quite a number of North Island cities, including Wellington. Smiths City Group also has, since 1983, had an 80 per cent shareholding in the Noel Leeming Specialist Home Appliance chain of now 33 stores, of which nine have been opened in Wellington and Auckland in the last 12 months alone. This chain will continue to be managed, quite separately, and will not be affected by Smith’s latest merger. Smiths recently announced plans for a major New Zealand-wide expansion of its Do-it-Yourself Building Supplies and Hardware chain which already has seven South Island outlets with an eighth about to open in Napier. It is expected that some of the overlapping furniture and appliance stores in the now ex-

panded group may be refurbished in order to handle other Smiths Group retail products. This would enable a rapid acceleration of its DIY expansion programme to be achieved. “As an established retailer we don’t see our joining with Smith and Brown as simply achieving an increase in the size and competitive strength of our furniture and appliance activities. The really exciting aspect of it is that it gives us the resources, in terms of experienced retail people and large area retail premises, to be able to expand fairly quickly our involvement and competitiveness with other products as well,” says Mr Peter Leeming, Smiths Group general manager, in the joint statement

“Although we are ultimately likely to adopt a single trading name for our combined furniture, floorcoverings and appliance stores, at the same time we don’t Intend to depart from our established, very decentralised management philosophy and structures. Our various specialist store chains operate relatively independently of each other

and we hope that sometime in the future our group will also include specialist chains involved with clothing and footwear as well.

“The long term retail potential of this merger for us is certainly quite enormous; however, it will be quite some time before the real benefits materialise. It’s no secret in the industry at present that furniture and floorcoverings sales have been slow since GST was introduced late last year and there has been a very reduced profit in this sector for some months now. Another positive feature is the fact that we have negotiated with Feltex a phased transfer back to Smith and Brown of its consumer finance activities which will take the next three years to complete. Our own group’s Smith City Finance, Ltd, will progressively take up the funding role for Smith and Brown and this represents a very significant proportion of the retailing profit. It will take us a little time to bring it all on stream but everyone on our newly combined management team is very excited by the challenge,” Mr Smith added.