Ron Brierley rides again, builds 7.2% stake in Smiths City

Friday 28th August 2015

Veteran corporate investor Ron Brierley is sniffing out opportunities in Christchurch-based retail chain Smiths City, which has started closing down unprofitable stores to eke out a lift in earnings.

Brierley’s Mercantile Investment Co and Sandon Capital, whose principal Gabriel Radzyminski also sits on the board of Mercantile, have built up a combined 7.2 percent stake in the retail chain, and will “act in concert in relation to their conduct as shareholders” of Smiths City, according to a substantial shareholder notice filed to the ASX and NZX.

Each fund has built up a 3.6 percent stake, collectively buying 1.89 million shares between Aug. 11 and Aug. 27 at an average price of 52 cents per share, the filings show.

That makes them the third biggest shareholder in the retail chain behind California-based Guaranty Finance Investors with 18 percent, and the Duncan Saville-managed UK fund, Utilico Investors, with about 14 percent.

Sydney-based Radzyminski told BusinessDesk the funds would make a comment on their investment in the coming weeks.

Smiths City this week told shareholders at the annual meeting that sales were down 2 percent in the first four months of the financial year and that plans to keep closing unprofitable stores will continue in what’s become an increasingly competitive environment for traditional bricks-and-mortar retailers.

This year, Smiths City appointed ‘turnaround specialist’ Roy Campbell as chief executive, tasked to improve returns from the retail operation.

Brierley’s interest in Smiths City comes after he beefed up exposure to Wellington’s flagship department store, Kirkcaldie & Stains, which is set to transform into the country’s first David Jones outlet.

Mercantile joined the NZX last month, after Brierley took control of the ASX-listed fund in 2012. He owns about 46 percent of the firm.

Smiths City shares rose 5.6 percent to 55 cents, a two-month high, having declined 3.7 percent since the start of the year.

Mercantile’s shares last traded at 17 cents on the NZX, and 13 Australian cents on the ASX. Sandon’s ASX-listed stock last traded at 89 Australian cents.

BusinessDesk.co.nz

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