Coles plans Kmart NZ expansion

Australian retailer Coles Myer is gearing up to expand its 13-store Kmart chain in New Zealand.

Just four years ago Coles tried to sell the troublesome business, which has struggled amidst fierce competition from The Warehouse and Farmers.

But company secretary Tim Hammon said in a letter to New Zealand-based shareholders, obtained by the Australian Financial Review, that the company was planning more store openings.

Coles Myer delisted its shares from the New Zealand Stock Exchange on November 25 because of the tiny trading volumes in the stock.

The 2005 Coles Myer annual report shows that the group's total sales in New Zealand reached A$169 million ($182.01 million) in 2004-05, compared with A$153.4 million a year earlier.

In late 2001, Coles Myer made a A$50 million provision for Kmart NZ in its accounts, relating to leases and associated costs.

It had been in talks for about 12 months before then as it pursued a sale of the operations.

But the logical buyer, The Warehouse, pulled out of the negotiations saying the price was too high.

Kmart NZ is overseen by the managing director of Kmart in Australia, Larry Davis. Mr Davis was behind the highly successful resurrection of the Target chain in the past three years. He took up the task of running Kmart on February 14 this year.

The entire Kmart business across Australasia produced a 6 per cent rise in sales to A$4.03 billion in the 12 months ended July 31, 2005, from a total of 180 stores.

Earnings before interest and tax rose 8.3 per cent in 2004-05 to A$92.5 million.

- NZPA