Wellington retailer Kirkcaldie&Stains believes it will be more than a year before the retail market recovers from the economic recession as it weathers losses from its CBD store.
"Kirks," as it is known to shoppers and which has traded since 1863, last year reported a "satisfactory" profit of $1.024 million for the financial year ending August 31, 2009, which was an increase of 31.6% in consolidated tax paid profit over the previous year.
However, the profit was largely as a result of the performance of the property company rather than the retail side.
Kirkcaldie & Stains Properties made an after tax profit of $1.389 million for the year while the retail operation posted an after-tax loss of $365,000.
"Retail sales have declined by $2.034 million in the current year. We do not expect that the retail environment will recover for some 12-18 months," chairman Denis Thom told the company's AGM today.
The company maintained a profit margin of 42%, the same as the previous year, but inventory levels were reduced 18%.
Managing director John Milford said the retail environment for the whole year was difficult, with the first half being worse than the second.
Retail sales from September 2009 to January 2010, after adjusting for a one-off clearance sale that was held in the same period last year, were 2.3% below last year.
"We finished the year with a 5 percent decrease in sales compared to the previous year," he said. "We foresee a subdued trading year for the retail company ahead."
Kirkcaldies forecasted a half year pretax result close to $1 million, which would be an improvement on the prior year half year result of $731,000.
"We expect the full year result to be close to that achieved in the prior year which was a profit of $1.53 million," Mr Milford said.
An independent valuation of Kirkcaldies' Harbour City Centre saw its value reduced by $7.1 million from $49.3 million to $42.2 million after many years of sometimes considerable increases. However, the reduction was not believed to be permanent.
Shares in Kirkcaldies were worth $2.85 today.