LOSSES ON FOOTWEAR

Taranaki Daily News, 24 September 1930, Page 5

LOSSES ON FOOTWEAR

SKELTON, FROSTICK AND CO. WRITING OFF DIVIDEND ARREARS. The reduction of / ordinary. share capital and the writing-off of accumulated preference .dividends are recommended by the directors of Skelton, Frostick and Company, Limited, Christchurch. The balance-sheet and profit and loss account of the company for the year ended July 31 has been issued. The profit and loss account shows an adverse balance of ,1; £9477 16s lid, which includes the loss of £3877 5s 6d brought forward from the previous year. Against this there remains an amount of £3343 5s stand- ■ ing to the credit of stock depreciation and bad debts contingencies account. “The volume of business was less than in the previous year, due to the depression existing,” states the report. “The conditions have been the worst known to the company as, in addition to the general financial stringency, the importation of fotwear has continued unabat- - . ed and price cutting has been excessive-' ly indulged in by some manufacturers in a frantic effort to secure business. It is felt that the additional duty recently placed upon footwear, although ■; small, will, taken in conjunction with • the high rate .of bank exchange ruling __ at present, tend to reduce materially the importation and stimulate the demand . for Dominion-made footwear, and that the ensuing year’s trade will show an improvement. . . . 1 ' ' 1 “But, notwithstanding this, view, the . ; directors realise that extensive reorgan-' . isation is'‘necessary. . The company’s freehold is undoubtedly a very, fine hold- | ing, which is. increasing in value. When the present depression passes it should be possible to dispose of the property at a considerable advance upon the fig" , ure at which it appears in the balancesheet and to secure less valuable prem- : ises further removed from the centre of the city. After very .careful considera-< tion the following reorganisation has been decided upon:— , i ‘‘The Wellington branch will be closed. This would result in a considerable saving and a rearrangement of travellers’ itineraries would ensure fio loss, of ■business and the disposal of. the stock > would relieve the financial position. Indent department as a separate unit, to be discontinued; ; the’'Ordinary salesmen, to carry the samples of imported goods ; which do not conflict with our own productions such as rubbers, felt slippers and. children’s goods. These ai-rangements will also effect a substantial reduction ', of expenses, ■ with little, if any, diminu- , ‘ tion of business. During the year the stocks were reduced by between £4OOO j V and £5OOO and a more extensive reduction would have been achieved had it, not been for the unusually dry winter. A determined effort is being made, and it is confidently expected that the current year will see the. stock down to a ■ sal isfactory. - figure’. ■ /“In addition .to the’, debit of £9477 16s . g lid standing ,-to the-profit and'loss account, there is an accumulation of divifiends due to preference shareholders of ./c, over £5OOO. The directors feel that ,in y-'; view of the adverse state of the * footwear manufacturing industry it is sential that these formidable items bejA removed in order to enhance the bility pf \he resumption of successful ' trading, and it is therefore recommended .U. that the ordinary capital of the companv of £30,362 10s, representing 12,145 fully paid shares of £2 10s each, be written down by £1- 10s a share, there- : by reducing these shares to £1 each. “The directors, also recommended that the preference shareholders be asked to forgo dividends to March;3l,' 1931. The latter projidsar originated from some of -, the larger preference shareholders and others approached have signified their approval, and stated their willingness to g forgo the interest in order to place the company in a more hopeful position. A simple deed is being prepared for signa-. tore, arid will .be'circulated 1 to the preference shareholders in due course; The directors feel that both ordinary and preference shareholders will realise that it is in' their best interests to agief to the proposals.” .