Postie Plus brand gets second chance as well-funded Pepkor buys stores, sheds debt
The Postie Plus brand is getting a new lease of life after South Africa's Pepkor bought the failed retailer's assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins.
Pepkor acquired Postie Plus's 64 stores, intellectual property, staff, head office and stock from the administrators for an undisclosed sum after the clothing retailer's lenders withdrew support in the face of ongoing losses. The shares had slumped to 7.3 cents, valuing Postie Plus at about $2.9 million, before being suspended from trading in early June, having debuted on the NZX in 2003 at $1 apiece. Debt stood at $12.1 million at the end of February.
Pepkor won't use the 'Plus' part of the name but will otherwise keep the brand unchanged, Jason Murray, managing director of Pepkor South East Asia told BusinessDesk. The South African company will use its scale to reduce stock costs and fatten margins, while ensuring Postie isn't starved of capital, he said.
"You can't stabilise and then grow a business that doesn't have capital," Murray said. Pepkor will ensure Postie has "the right stock, in the right store, on the right day. We'll make sure there is plenty of capital for that and then the rest the business trades its way to keep being able to reinvest."
Postie is the first New Zealand investment for Pepkor, which has been trading since 1965, and joins over 3,000 clothing, textile and footwear outlets across Australia, Africa and Eastern Europe with more than $4 billion in annual sales. In Australia it owns the Harris Scarfe and the Best & Less discount clothing chains. It is entering a New Zealand market where clothing retailers are suffering from intense rivalry and inroads made by international online shops such as ASOS and Boohoo.
Murray said Pepkor's first step would be to assess where the retailer stood. "We're not in this to spend a lot of money quickly," he said.
The failure of Postie Plus means its shares are probably worthless.
PwC administrator David Bridgman said it was "unlikely" the 1,603 shareholders would get anything as remaining funds and assets will satisfy creditors' debt first. Substantial shareholders included Kathmandu founder Jan Cameron and Postie Plus's founding Dellaca family.
Administrators will hold a "watershed meeting" in the coming months to tie up the affairs of Retva Ltd, as Postie Plus Group is now known. Pepkor's Murray said he understands the Retva shell would soon de-list and expected administrators would eventually reveal the price paid for the assets.
During its voluntary administration, the PwC administrators closed 12 of the companies original 82 stores, leaving 70 remaining stores. During the Pepkor sale a further four were removed from the agreement, while one was a wholesale unit and two which had first been counted as separate stores were merged into one, leaving Pepkor with 64 stores.