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

Forums › Off topic › Smiths City - will it be the next 'Dick Smith'?

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#2452588 1-Apr-2020 20:06

Yep JB around $1m a year in EBIT. Not that much really, and as you say basically a rounding error on their accounts.

They released to the ASX notification that their NZ stores would not trade for a month because of lockdown, and followed it up with a comment that their NZ operations weren’t material (albeit this has a specific meaning, but the point still stands).

KrazyKid

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#2477675 6-May-2020 11:31

I've just seen Smith City is announcing a restructure and store closures.

quickymart

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#2477871 6-May-2020 14:44

Not surprising really, I think the writing has been on the wall for some of their shops for some time.

quickymart

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#2485470 18-May-2020 10:10

And there it goes!

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12332631

Wakrak

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#2485483 18-May-2020 10:24

Man. I think my last North Island Smith City related purchase would've been through Whakatane Meikles Limited. That's going back a bit. & only because my nan worked there.

Definitely had a stronger presence in the South in towns like Alexandra.

MikeB4

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#2485486 18-May-2020 10:43

Polar who own Big Chill logistics and transport bring some asset backing and new management. This could well strengthen the chain and bring stability. It remains open and New Zealand owned which is good for NZ and good for the consumer. Big Chill has shown good growth over the last few years and this also bodes well for Smith City.

Dunnersfella

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#2485502 18-May-2020 11:16

They'd have to be keen to get into large format retail stores at this point...

The question is - do they know much about retail?

Or, does knowing less than the current management mean that it will only improve!!??

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wellygary

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#2485522 18-May-2020 11:53

MikeB4:

Polar who own Big Chill logistics and transport bring some asset backing and new management. This could well strengthen the chain and bring stability. It remains open and New Zealand owned which is good for NZ and good for the consumer. Big Chill has shown good growth over the last few years and this also bodes well for Smith City.

Big Chill was sold to Freightways for $120+ million in October last year.

So Polar has a bunch of cash burning a hole in its pocket, but I'm not sure bricks and mortar retailing would be at the top of my list of things to spend on...

Andib

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#2485523 18-May-2020 11:59

wellygary:

So Polar has a bunch of cash burning a hole in its pocket, but I'm not sure bricks and mortar retailing would be at the top of my list of things to spend on...

I imagine the key item they're buying is Smith City finance. The retail stores are just a way to sell finance.

Dunnersfella

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#2485574 18-May-2020 13:43

I would say that's spot on - the database is where the real value sits.

antonknee

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#2487600 21-May-2020 10:40

Dunnersfella:

I would say that's spot on - the database is where the real value sits.

I tend to agree... but what value does a database of retail and finance customers, from a poor-performing retailer, have for someone who used to own a chilled logistics company? It seems an odd fit. At the same time though, people don't just flush millions of dollars down the toilet for fun so he must have a plan and some confidence.

Dunnersfella

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#2487606 21-May-2020 10:46

Buy it for less than the value of the stock.

Sell the stock for what it's worth and close down the stores as the leases expire...

If you buy cheap enough you exit with the profit from doing that, but with a finance company that can be extrapolated into an on-line retail business etc.

antonknee

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#2488629 21-May-2020 11:27

Dunnersfella:

Buy it for less than the value of the stock.

Sell the stock for what it's worth and close down the stores as the leases expire...

If you buy cheap enough you exit with the profit from doing that, but with a finance company that can be extrapolated into an on-line retail business etc.

Seems that way, a liquidation of sorts without saying the word. Existing management seem keen to exit.

This deal is subject to the purchaser getting finance, shareholder approval, and SCY's financier approving. Looks like shareholders will get zero from this - so will they approve?

antonknee

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#2488642 21-May-2020 11:42

SCY updated the market this morning to say the only outstanding condition now is shareholder approval:

21/5/2020, 8:43 am TRANSACT

NZX AND MEDIA RELEASE 21 May 2020
Smiths City sale – Condition update

Smiths City confirms that it has made progress against the conditions for the sale of its business to Polar Capital. The sole outstanding condition is now Smiths City shareholder approval.

Smiths City anticipates being in a position to update the market more fully tomorrow.

CruciasNZ

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#2488705 21-May-2020 13:33

I tried to buy a few things from the Bush Inn Smith City a couple of years back, perhaps 2015 ish? I found them to have an amazing range that was more expensive than their competitors, though their specials were alright. I seem to recall having to walk away from a number of furniture sales because they couldn't combine sales with finance, or price matching with finance - something along those lines. Their staff were nice and helpful, but the policies driving the issue just felt very money grabby. I guess I could round off my impression of dealing with them as out of date? Like they haven't quite grasped how their competition works in this (well last) decade.

I'd rather see them reassess and reposition than fold though. There's not a lot of stores that sell the same range as them, and their wares tend to be of a very high quality.

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