WHIM OF FASHION

Gisborne Times, Volume LIII, Issue 5536, 17 July 1920, Page 5

WHIM OF FASHION

TROUBLE OVER PAIR OP LADIES' SUEDE SHOES. '

WAS THE PRICE UNREASONABLY HIGH ? FIRST PROSECUTION INAUCLAND. AN IMPORTANT TEST CASE.

AUCKLAND, July IC.

Out of many complaints of profiteering in Auckland the first actual prosecution to emerge came before Mr Wilson, S.M., to -day. when a prominent firm of boot and shoe merchants, Dudley’s, Ltd., was charged with having sold on April 1 a pair of ladies' suede shoes at an unreasonably high price. Mr Hunt . (instructed by the Crown Prosecutor) appeared for the informant, the secretary of the Auckland Price Investigation Tribunal, and Mr M’Veagh conducted thet defence. In opening his ease Mr Hunt stated that the case had been brought because the Board of Trade had deemed it expedient that the defendant company should be prosecuted. To show that the Board of Trade had not entered lightly into the . prosecution counsel stated that the Price Investigation Tribunal started operations in Auckland only in March last, and up to June 19 last it had received and had investigated 165 complaints of profiteering.. So : far the Board had < sanctioned a prosej cut-ion in only one case —this one—hut I no doubt others would be authorised, j That indicated that the matter had not been lightly entered into. The complaint that" was made in this case that the defendant company sold a pair of ladies' black suede court shoes (including in the price a pair of buckles) for £3 11s 3d. The company explained that the price was £3 7s Gd for the shoes, and 3s 9d for the buckles. The company stated that the shoes were purchased from the firm of W. A. Grant Ltd., in Sydney, the gross price paid in Sydney being 30s a pair. Off' that price the defendant company received adiscount of 3J per cent., making the cost slightly under 2Ss lid per pair in Sydney. In reply to the tribunal the j defendant company gave the price as 30s in Sydney. Whatever the price in Sydney was there had been added to It 8s 3d, stated by the company to he the recognised cost of landing at the shop in Auckland. A further addition was then made of 50 per cent, on tlie gross cost (the cost in Sydney plus the landing charge). The company then added 19s 2d. which was expressed to be thet provision for overhead charges, in order to provide a price which would return 33 1-3 per. cent, That made £2 17s sd. In this case the company made additions of 4s Gel and f,s 7d, bringing the price to £3 7s Gd. They explained that they added the 4s Gd as a sum intended to cover the extra risk of dealing in a high-grade article that might go out of fashion, and the added 5s 7d the company claimed to he entitled to as. the result of direct buying having given thorn an advantage. Counsel remarked that no doubt it would be urged that, a portion of the extra! profit was intended to meet the possible loss on stock in handling a high-grade fashionable line subject "to the whims of fashion, hut the allowance here provided for the loss of one pair of shoes in every four. The balance-sheet of the defendant company for its last completed year of operations would he put in, and that showed the gross profit on actual sales of 3G.27 per cent., or a net profit on the actual trading for the year on the total money employed in trading, of 14.22 per' cent. The net profit ou the paid-up capital of the defendant company was 15.92 per centt., and the net profit on -the selling prices after providing for everything was 15.G2 per cent., or 3s on every £1 handled. Charles E. Phillips, secretary to the Board of Trade, gave evidence of the complaint that the pair of shoes in question were bought for £3 7s Gd plus 3s 9d for buckles, and that on the shoes alone that showed a profit of 54.9 per cent. The Board of Trade was satisfied that Ss 3d was the fair landing charge, hut considered that the other charges added were unreasonably high. Ephraim Kitchener, manager of the Pearson Company, stated that, in arranging the sale prices his firm had fixed a profit of 33 1-3 per cent, on high-grade shoes -of extreme fashion. That was on the selling price, or aouut 50 per cent, on the cost price. v)n children's boots and other everyday lines the margin of profit was cut to 124 per cent. A higher profit on other liues was justified hv the greater risk of loss. At the moment in his shop lines on which he had added oO per cent or more were suede shoes and extreme fashion court shoes. They were marked at 50 per cent, profit on the landed cost, or 33 1-3 per cent, on the selling price. After further evidence the case lor the prosecution closed. In opening for the defence Mr M’Veagh said the defendants had been carrying on business as a joint stock company for seven years in Queen street hev specialised in boots ami shoes-of a high grade quality. place of business was in one it tua most expensixe parts of thet city, ami their overhead charges were «ansecp. entlv as high, or perhaps 'ngher. than those of any business of a similar kind in Auckland. The article in re-o-arcl to which the charge was laidSo • of a very special and peculiar character. inasmuch as the only persons who made a demand for that class ct shoe were people who were m a portion to indulge their fashion—he would add a very extravagant fashion. was a shoe which came into existence simply and solely because of fashions The shoe had to he considered Loin an entirely different, standpoint from a hoot sold every day and characterised as a "bread and butter line. .It a\as dependent entirely upon the win ins and vagaries of fashion. Ladies wore them not because of their utility but to attract attention. This was the! class of person the Board of Trade was trying to protect. Being subject to the demands of fashion these shoes must lie sold at a loss should the fashion . terminate. As one witness had pointed o,\t it might do this suddenly. Continnin" he said that one final factoi Sas Unit from the time the shoe was bought to the time it was sold there was an increase in the price of the wholesale commodity. . Defendants claimed that they were entitled to take that into consideration as « factor when fixing the retail ..price of that shoe. The miestion.of replacement had to be considered when fixing the price The Magistrate: If that is allowed Jo on on the profits might go up to lflOlf per cent., aval it might not be considered an unreasonable price. . Mr M’Veagh: It is an economic qne»ti c"ontimnns,.he said that th. ffff'Tj--1,1011 o-ht to be eliminated. If, d?; r ir of nr oftt donnsel said the company s balance-sheet showed that itwjs someDillprsl of the proceedings. 'trader letter, he submitted that the ““lti would be justified in asking fm a deal more than 16 per cent- „ a nd were bought/ wholesale rajl was the retailer paid £2 /s M-lo , j added 33 1-3 per cent fm me 1 charges, and this raised the pr w within Bd a nd the profit were sold at i-.i <s *> ll « rt ”; . , ln would be 3s fld. That 'vould ii I cent, profit, and that was nothin'. tike a reasonable profit, having rcganl to I the nature of the shoes. ■ , „ | Evidence was calledm supnoi . < the case was adj u'orned sine die. in • Assn. _____