Similarly, NZX-listed Renaissance Corporation has been shackled with ongoing operating lease commitments after selling its Yoobee Apple computer retailing operation.īriscoe and Pumpkin Patch are two large listed retailers at the opposite extremes of the debt and lease commitment obligations spectrum.Īt the end of January Briscoe had no debt, cash of $84.4 million, operating lease commitments of $106.4 million and earnings before interest and tax (ebit) of $45.2 million for the previous 12-month period. They also reduce the price a retailer will receive when it sells a chain of stores, as experienced by Postie Plus when it sold Arbuckles and Babycity. These large lease commitments can be a huge drain on retailers because they curtail their ability to restructure or close poorly performing stores. There is a strong argument that retailers should have little debt if they have large operating lease commitments yet Postie Plus had bank debt of $16.8 million and lease commitments of $26.4 million at the end of its 2013 year. Long-term operating lease commitments, which are usually included at the end of the notes to the financial statements, are non-cancellable lease obligations to external property owners. The transfer of the the head office from Christchurch to Auckland in recent years has also been problematic.ĭebt and long-term operating lease commitments are two of the biggest issues facing all retailers. These include: bad weather, good weather, high petrol prices, the low NZ dollar, stock management problems, logistic issues, Christchurch earthquakes, the global financial crisis, a low exposure to Auckland, Rendells, Arbuckles and Babycity. Postie Plus’ poor performance over the years has been due to a plethora of negative external influences and poor decisions. Babycity was a major contributor to the group’s 2012-year loss.
The Babycity expansion was short-lived as the baby care chain continued to perform poorly and was sold in May 2012. The following year Postie Plus expanded again by increasing the number of Postie Plus stores from 75 to 79 and Babycity from 19 to 24.
Postie Plus reported a loss of $10.85 million for the July 2008 year, $5.1 million of which was attributable to Arbuckles’ trading losses and realisation costs. In 2007 Jan Cameron, the founder of Kathmandu, started accumulating Postie Plus shares and the following year shareholders approved the sale of Arbuckles to Cameron. This started the slow but steady selldown of Postie Plus shares by Dellaca family members. The Dellaca-controlled company, which owned 50 per cent of Postie Plus, was liquidated and shares in the listed company distributed to Dellaca family members. The listed company’s first rationalisation occurred in the 2005 year when most of the large Rendells stores were converted to Postie Plus outlets and the smaller Rendells outlets were closed. The company’s share price was trading at around $1 12 months after listing as net earnings for the year ended Jwere below the prospectus forecast, after taking into account restructuring costs. Unfortunately that was its all-time high. Postie Plus attracted no significant institutional shareholders but its share price finished its first trading day at $1.25 on relatively high turnover of 2.46 million shares. Richard Dellaca and John Dellaca, grandsons of the original Postie Plus founder Thomas Dellaca, were executive directors. There were 40 million shares on offer after the issue, with a Dellaca family-controlled company holding 20 million shares or 50 per cent of the newly-listed company. The IPO involved the sale of 20 million shares – 15 million new shares and five million existing shares – at $1 each. Arbuckles operated a national manchester chain and Babycity focused on baby care.Ĭhairman Peter van Rij admitted that the Postie Plus chain was “a relatively mature business with limited opportunity for geographic expansion” but the directors believed that growth could be achieved by “acquiring other retail chains that will benefit from the application of the Postie Plus business model”. The prospectus described Postie Plus as a national casual family clothing chain and Rendells as an Auckland-only specialty department store chain. It was acquired by Postie Plus for $9.5 million from proceeds raised from the IPO. Arbuckles, established by John and Vickie Arbuckle in the 1980s, had 20 stores.Rendells, also with seven outlets, had been owned and operated by the Rendells since 1882.Babycity, with seven stores, which was established by the Nuttall family in 1986.Postie Plus, which had 59 stores, was established on the West Coast in 1909 and had been owned and operated by the Dellaca family since then.
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