Failed stores profitable - receiver

Mitre 10 Group says its three Wellington stores in receivership were trading profitably, but the owner's investments outside of his Mitre 10 interests were behind the collapses.

The Crofton Downs, Rongotai and Tory St stores continue to trade, and the receiver is marketing them for sale individually or as a group. All Mitre 10 stores are owner-operated.

The group's head office said it had been assisting the receiver with stocktaking at the affected stores.

Mitre 10 and the bank have been working with the owner for about 15 months to try to reduce the business' debt levels but it had reached the point where neither party can sustain the situation any longer, spokesman Peter Stewart said. No other Mitre 10 stores were affected.

Stewart said the Mitre 10 Group financial results, as recently reported, did not incorporate the individual results of the owner-operated stores.

"Retail store profits are reflected in the individual owner-operators' business accounts rather than in the Mitre 10 Group result. The Mitre 10 Group recorded a loss of $1.66 million in June 2009 - however, that includes $1.2 million of dividends paid to members.

"Our policy as a co-operative is to distribute profits to group shareholders on an annual basis."

Last month the home improvement retailer said it would open 15 more of its mega stores by the end of next year.

It said the expansion plans involved investment of $150 million and would create 1000 new jobs.