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South Island based retailer Smiths City is looking to fill a void in the Wellington furniture store market as it seeks a return to higher profit levels through new stores.
The big ticket retailer – which has 17 stores in the South Island and eight in the North – has specifically targeted the Wellington region for growth, according to its half-yearly report released today.
In the report, chairman Craig Boyce said there were two main factors that made Wellington the best area for immediate growth.
“Firstly, there has in the last few years been a reduction of furniture stores in the region. Secondly, by making use of the logistics already in place in L V Martin’s Wellington operations, expansion in the region can be achieved without increasing the group warehousing and delivery costs.”
Smith’s City acquired full ownership of the L V Martin chain in 2007.
The company opened a store in Porirua last month, making it the first Smiths City store in the city since the last store closed in 1991.
Mr Boyce said the new store had traded strongly and the company was now “actively seeking” other opportunities in Wellington, with plans to open a second store by the end of the financial year.
Last month the big-ticker retailer reported a 24.2% increase in its operating surplus to $1.018 million for the six months to October, although operating revenues were down 6.2% to $107.1 million and same store sales were down by 4.5%.
Mr Boyce said the level of profit would not have been satisfactory under normal circumstances, but that the board believed the company was doing a good job of riding out the worst bib-ticket retail environment in 20 years.
He said improvements in trading conditions were likely to be “gradual but sustainable” and the company should benefit from deferred customer purchasing, especially in the furnishings market.