Hellaby writes off $26.9m goodwill on struggling shoe stores
Hellaby Holdings [NZX: HBY], the diversified investment company, will take a $26.9 million impairment against its 2014 earnings to write off goodwill on its shoe stores Hannahs and Number One Shoes, after two years of poor performance.
Footwear has been a laggard for Auckland-based Hellaby, contributing to a 21 percent drop in first-half profit. Today the company said excluding the non-cash impairment, full-year earnings before interest, tax, depreciation and amortisation would be $54 million and net profit would be $25 million, the forecast it gave in May. The final dividend would be calculated on that basis, it said.
The impairment "reflects a change in retail trading conditions which has resulted in two years of below-expectation performance by the two businesses," the company said. "Hellaby's board and management believe this decision will leave the carrying value of each retail company at a level more reflective of market conditions and performance."
Hellaby has broadened its portfolio in the past 12 months, buying truck servicing business New Zealand Trucks South Island and auto electrical, fuel and engine management components firm Dasko Marketing NZ in April. It raised $40 million in a placement to institutions in March. In December it acquired 85 percent of Contract Resources, a specialised engineering maintenance and industrial cleaning company, for $73 million.
Hellaby shares fell 1.8 percent to $2.75 and have declined 14 percent this year.