Kirkcaldie’s halts interim dividend for first time since 2006, flags loss

BUSINESSDESK: Kirkcaldie & Stain’s, which rebuffed a bid for its ailing retail business earlier this year, won’t pay an interim dividend for the first time since 2006.

The Wellington boutique department store and commercial property owner made a wafer-thin first-half profit and is flagging a pre-tax loss in the full-year result.

The company’s net profit was $11,000, or 0.11 cents per share, in the six months ended February 28, down from $380,000, or 3.7 cents, a year earlier, it said in a statement.

The retailer’s board decided not to make a return to shareholders, and expects to post a pre-tax annual loss of $900,000.

The company’s retail unit, spearheaded by the flagship department store on Wellington’s Lambton Quay, made a loss of $211,000 on $19.1 million of revenue.

“As well as predicting minimum retail growth for the second-half of the financial year, we are expecting additional non-recurring costs resulting from the implementation of the new merchandise system and staff reorganisation,” the company said.

“Despite the difficult environment, management is focused on bringing the retail business back to profitability in the medium term.”

Retailers have been struggling to attract customers without having to deeply discount their goods since the global financial crisis forced households to more closely manage their mortgage repayments.

Kirkcaldie’s has had to contend with the double whammy of its exposure to Wellington, as the government’s austerity plans have slashed jobs in the public sector, which pads out the city’s consumer base.

The environment will probably get tougher after Finance Minister Bill English signalled a billion dollar deterioration in the government’s books.

“The government’s focus on reducing the state sector has impacted on the Wellington community due to its dependency on the public sector,” the company said.

The company’s bottom line was again propped up by its property interests, which include the Harbour City Centre on Lambton Quay.

The property unit made a profit of $333,000 in the period, down from $510,000 a year earlier.

Kirkcaldie’s completed earthquake strengthening for the Harbour City building last month, and expects it will be able to benefit from “increased rental income” in the coming reporting periods.

The shares, which trade infrequently, were last at $2.75, valuing the company at $28.2m.