Growing pains for Palmers, Racing industry at crossroads, Election year balancing acts

In today's National Business Review print edition: 

Nearly two decades after it was saved from receivership, the Palmers gardening chain has once again been hit with growing pains, Karen Scherer reveals. An NBR investigation has revealed some suppliers are losing faith in the franchise, as a result of the failure of at least seven stores in the past four years. The chain, which once had more than 30 garden centres in New Zealand and Australia, is now down to 16 stores. Despite all this, it insists its finances are healthy, and sales are up.

Major change is coming to the horse-racing industry after a crisis meeting last weekend but industry insiders remain concerned about wider issues plaguing the New Zealand Racing Board, Duncan Bridgeman reports. Chief among them are the board’s bloated cost structure and whether it has the right business plan to lead the industry out of a funding hole – as well as questions about governance. However, chief executive John Allen is adamant the organisation that 50,000 industry participants rely on is on the right track.

Rob Hosking Finds leadership is, as ever, the overriding election issue this year. He writes that Bill English and Andrew Little will vie to prove they’re worthy of the prime ministership by performing some awkward balancing acts between now and polling day. “He who is best able to combine the qualities of gameshow host, lay preacher and gang leader, along with the prerequisite mix of wiliness, principle, hucksterism, vision and bamboozlement, is likely to win through on September 23”.

In Hunters Corner, Tim Hunter says wood products company Tenon is poised to wind itself up as it negotiates the sale of its remaining asset Taupo Clearwood but its coy comments to the market are less than enticing about its value. Since announcing exclusive talks with a buyer, Tenon has twice warned investors the business could be worth less than estimates in an independent October report.

As Auckland’s residential property sector struggles with tightening funding, a new joint venture between property financier Pearlfisher Capital and investment bank First NZ Capital will release more capital for developments, Sally Lindsay writes.The partnership is the investment bank’s first foray into direct property asset investment and, says Pearlfisher principal Tony Abraham, “gives us a better chance to fund good-quality deals irrespective of size.” 

Small caps are outperforming their larger counterparts on the New Zealand stock exchange. But while they offer attractive value for risk and growth at a reasonable price, they are usually illiquid and provide more variable returns, Calida Smylie writes. “So what’s the ideal ratio of small cap to large cap in a portfolio?”

All this and more in today's NBR – out now.