Smiths City - will it be the next 'Dick Smith'?

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#2452242 1-Apr-2020 12:31

I think they're stronger in the South Island than the North. They may close some (or all) of their North Island shops but probably the South Island ones will soldier on, I imagine.

Zeon

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#2452261 1-Apr-2020 13:11

If they have huge debts and a wobbly underlying business who would be injecting capital into them though if not current shareholders trying to not lose their investment? What would they do - go all out so they can wipe all/most debts and restructure? Looking at their annual report doesn't look like interest is that much (pg48):

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SCY/338132/304135.pdf

Getting rid of this would (barely) put them in the black. Another issue here is that it looks like a big chunk of their revenue is from their finance business and with many people losing their jobs I imagine there is going to be bad debts piling up there. Not paying the landlord may get you kicked out but not paying off the couch - at the worst you can still sit on the floor.

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amiga500

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#2452312 1-Apr-2020 14:35

Share price now only 11c. Most of this year they were between 22 cents and 26 cents. Eleven cents is about half of what their shares got down to in the GFC to 2011 period. Even before Covid became a thing, their big shop in Christchurch would regularly have twice as many staff on the floor versus customers.

Dunnersfella

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#2452332 1-Apr-2020 15:02

Effectively they're buying time before the inevitable hits home.

What we don't hear is:

How many suppliers aren't being paid?

How many staff are bailing?

How many stores have been told they're on borrowed time and WILL be closed?

Yet none of their current issues will really cover off their underlying issue of under performing retail stores.

I believe many shareholders will take a bath - but it's the staff I feel sorry for. I'm sure there's still some good ones left?

boosacnoodle

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#2452344 1-Apr-2020 15:34

amiga500:

Share price now only 11c. Most of this year they were between 22 cents and 26 cents. Eleven cents is about half of what their shares got down to in the GFC to 2011 period. Even before Covid became a thing, their big shop in Christchurch would regularly have twice as many staff on the floor versus customers.

I believe the current share price is an all-time low. They we're struggling before. Without significant outside support, which I can't see anyone offering, I don't see how they can come out of this alive.

vexxxboy

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#2452351 1-Apr-2020 15:49

the funny thing is that they have been doing things now that they should have been doing a few years ago. They advertise a lot more with some really good deals and they now price match. I use them all the time because of this and at the store in Rotorua they still have the same staff that have been there for years and years , they know me by name and i get good deals because of that. i will be sad if they shut.

Common sense is not as common as you think.

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snnet

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#2452371 1-Apr-2020 15:56

quickymart:

Who else does it apart from Harvey Norman (and Smiths City), say for example if I wanted to refurnish my entire house?

(speaking of Harvey Norman... https://www.stuff.co.nz/business/120728348/harvey-norman-tells-landlords-it-wont-pay-rent )

Sadly I wouldn't have gone to Smith's City anyway, as what I've seen is their stuff is mostly outdated and overpriced.

I've heard them all pretty much doing it via customers using them - 100%, Magness Benrow, Noel Leeming....

quickymart

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#2452378 1-Apr-2020 16:13

amiga500:

Share price now only 11c. Most of this year they were between 22 cents and 26 cents. Eleven cents is about half of what their shares got down to in the GFC to 2011 period. Even before Covid became a thing, their big shop in Christchurch would regularly have twice as many staff on the floor versus customers.

Surprised to hear this, as I know Chch is their homebase...I thought all their shops there were usually really busy?

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#2452382 1-Apr-2020 16:22

quickymart:Surprised to hear this, as I know Chch is their homebase...I thought all their shops there were usually really busy?

In the years that I did shop there, I can't remember an occasion where I would have needed my toes to count the other customers there at the same time!

(Let alone more fingers than on one hand)

Bush Inn (When it was open) or City branches.

MikeB4

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#2452388 1-Apr-2020 16:33

It will be a very bad thing for NZ consumers if Smith City were to go into receivership/liquidation. It would be a hit on competition in the sector especially given that JB Hi FI are not exactly healthy.

Here is a crazy notion, lets give peace a chance.

antonknee

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#2452391 1-Apr-2020 16:40

snnet:

quickymart:

Who else does it apart from Harvey Norman (and Smiths City), say for example if I wanted to refurnish my entire house?

(speaking of Harvey Norman... https://www.stuff.co.nz/business/120728348/harvey-norman-tells-landlords-it-wont-pay-rent )

Sadly I wouldn't have gone to Smith's City anyway, as what I've seen is their stuff is mostly outdated and overpriced.

I've heard them all pretty much doing it via customers using them - 100%, Magness Benrow, Noel Leeming....

Smiths City's offer is unique though in that they have furniture/beds/whiteware/appliances/tech all in one roof (plus camping and some other random bits). Harvey Norman would be the closest and then i guess maybe Farmers (minus tech) or The Warehouse (totailly different market though).

Others like Noels or 100% are really more in that whiteware/appliances/tech side. Although I think some 100% stores do have a furniture offer, particularly where they might be the only game in town, it's not really a big part of what they do.

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quickymart

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#2452441 1-Apr-2020 16:53

JB are doing okay, aren't they? And there's always Harvey Norman and Noel Leeming, etc.

antonknee

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#2452443 1-Apr-2020 17:00

MikeB4:

It will be a very bad thing for NZ consumers if Smith City were to go into receivership/liquidation. It would be a hit on competition in the sector especially given that JB Hi FI are not exactly healthy.

Yeah agree. JB's sales in NZ are around $250m if I recall correctly and have been flat-ish for a while now. From memory their margins are quite tight too (as are most in that space). You would also have to wonder how they see much of a future in physical media. Granted vinyl has had a major resurgence but surely CDs/DVDs/BluRay is done for, and I can't imagine vinyl being a massive money spinner either now or in the future.

quickymart

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#2452453 1-Apr-2020 17:16

There are still plenty of people that watch DVD's - I bought a box set for my mother the other day.

Dunnersfella

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#2452586 1-Apr-2020 19:55

antonknee:Yeah agree. JB's sales in NZ are around $250m if I recall correctly and have been flat-ish for a while now. From memory their margins are quite tight too (as are most in that space). You would also have to wonder how they see much of a future in physical media. Granted vinyl has had a major resurgence but surely CDs/DVDs/BluRay is done for, and I can't imagine vinyl being a massive money spinner either now or in the future.

JB's aren't making anything in NZ, some years they lose, sometimes they make a bit - but ultimately the only reason they're still here is due to their profitable business in Aussie (and it's a LOT bigger than NZ).

Re: physical media...

Vinyl's revival has been and gone. DVD's may still have a market, but not in physical stores, not any more.

Ultimately if Smiths City does go, then there's plenty of bed stores, plenty of furniture stores, plenty of sporting and outdoor goods stores etc etc.

It's in the electronics game that they have few competitors to take their place - but they are a lot larger and well funded. The thought of anyone buying them is out of the question, the only thing worth purchasing is their list of finance customers...

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