BUSINESSDESK: Kirkcaldie & Stains' shares sank 9.2% after the Wellington department store operator made a bigger annual loss on a deteriorating performance from its unprofitable retail unit.
The company made a loss of $773,000, or 7.57 cents per share, in the 12 months ended August 31, widening the loss of $56,000, or 0.55 cents, a year earlier, it says in a statement.
The red ink stemmed from Kirkcaldie's ailing retail business, which had a loss of $1.2 million compared to one of $465,000 in 2011. Retail sales fell to $34.6 million from $35.4 million.
"The gross margin percentage decreased by 1.6% due to increased competitive pressures and the impact of the rollout of the new merchandise system," the company says. "Despite the difficult retail trading environment, the focus remains in bringing the retail business back to profitability."
The shares dropped 30 cents to $2.95, eroding almost all of yesterday's gain when Kirkcaldie signalled it had found a buyer for its most valuable asset, the Harbour City Centre in Wellington.
The board resolved not to pay a final dividend, meaning shareholders will not get a return this year after the interim dividend was also cancelled.
The building it sold, across the road from the iconic Kirks store and housing some of its departments, was valued at $46.6 million in August of this year, up from $46.5 million a year ago. That is more than the $30.2 million value Kirkcaldie has by market capitalisation. The company has $17.7 million in bank borrowings held over the Harbour City Centre.
Kirkcaldie's property unit made a profit of $655,000 in the period, up from $435,000 a year earlier, with an 8.1% gain in rental revenue to $4.7 million.
That income was held back by a significant increase in insurance premiums and higher funding costs, the company says.
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