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A&R Whitcoulls Group is moving aggressively into the Australian newspaper and magazine retail market.
The transtasman retailer has started a joint venture with the Supanews news agency - Supanews Retail - and plans to expand it from 28 outlets to 100 in the next three years.
Supanews is a minnow in Australia, which has 5000 newsagents. But a former head of distribution for publisher ACP Media in Australia, Heith Mackay Cruise, said it was an efficient operation and Whitcoulls and Supanews were a good fit.
The joint venture's 120 Australian A&R stores, which sell books, and the 28 Supanews stores, which sell newspapers and magazines, will between them have the same offerings as New Zealand's 80 Whitcoulls stores.
It also opens the door wider to growth as group owner Pacific Equity Partners prepares for a likely float in 2008.
PEP bought A&R Whitcoulls from British retailer WH Smith in 2004 and has been clear it does not intend to be a long-term owner.
Results for the year to September 2 showed net profit of $25.54 million, which fell to $3.4 million once extraordinary items and a $5.7 million tax credit were removed. That compared with a loss of $289,000 last year.
The figures will be affected by capital expansion, including improvements to the A&R book chain and technological improvements, such as introduction of the SAP resource planning system to Australia. The latter is credited with improving stock control in New Zealand.
A&R Whitcoulls managing director Ian Draper praised PEP and its stewardship of the company.
"PEP have added a lot of value, a lot more focus," he said. "They are a hands-on management team and that has meant we have access to a lot of skills."
Draper said the most significant factor in the company's improving fortunes was a turnaround at A&R, moving from highly competitive discounts to a "value offer" like Whitcoulls, allowing it to improve margins.
A&R has launched 22 new stores this year.
Draper said the discount market, with retailers similar to New Zealand's Warehouse, held limited prospects for A&R.
Whitcoulls had owned A&R for 11 years but under previous owners the Australian and New Zealand operations had developed separately. That changed under PEP and the makeover of A&R stores has picked up many of Whitcoulls' efficiencies.
A&R and Whitcoulls are heritage brands, established in the 1880s. However, Whitcoulls has a 40 per cent share of the book market compared with A&R's 18 per cent.
Whitcoulls is opening new stores in Papamoa and Te Rapa, and plans to be in Silvia Park and in the new Westfield complex in Albany.
It also sells DVDs and music and has an online presence but says it is not as exposed as music stores to the internet sales revolution.
Draper said Amazon had had an impact on technical and professional books, but the book trade was built around people touching and feeling the products.
