Smiths City posts revenue jump, switches lender

Monday 14th November 2016

Smiths City Group, the Christchurch-based appliance and furniture retailer, says revenue increased by 18 percent in the six months to the end of October, partly due to its purchase of Furniture City.

Sales revenue on a same-store basis rose 7.7 percent compared with the same period a year earlier, while delivered gross margin rose by 1 percent, according to a statement published to the NZX.

Smiths City's trading arm, Smiths City (Southern) bought Furniture City and its logistics operation for $5.85 million in January. The purchase meant Smiths City gained two stores in Auckland and one in Whangarei, helping it build a presence in New Zealand's largest city. It has also been in the process of ditching unprofitable stores under new chief executive Roy Campbell.

The company also announced it will open a new store in Hastings in February next year, featuring an overhaul of the retail layout in line with market research carried out this year. This new layout will then be rolled out across the store network.

Smiths City is also to switch lender having agreed to a terms sheet to refinance its existing debts. The company's annual report shows that it has a facility of $65 million, of which it had used $54.5 million, a secured bank loan of $8.8 million and a $2 million overdraft facility. The annual report notes that this was due to be reviewed in May 2017. The debt facility of $65 million had been lowered from $75 million a year earlier.

No details of the new lender were provided. In its statement, Smiths City said it "believes that the new debt facilities will result in material savings in interest costs to the group."

Smiths City shares is up by 4.5 percent to 70 cents per share.

BusinessDesk.co.nz

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