Kirkcaldie sales down as spending slows

Sales at upmarket Wellington department store Kirkcaldie and Stains fell 4.6 per cent in the last few months of 2005, and there is further uncertainty about this year's profit margin.

Chairman Denis Tait said today that the slump was due to "a general trend in the drop in retail sales" and chain stores eating into profits.

"I think its quite obvious from other companies that people are just not spending money," he said, at the listed retailer's annual meeting today.

"Mr Bollard may be very happy but now stores are giving big discounts in a desperate effort to move stock and make sales."

Reserve Bank Governor Alan Bollard hiked the official cash rate to 7.25 per cent in December in an attempt to curb consumer spending. He has raised the key interest rate nine times since January 2004, but stayed his hand and left rates on hold at last month's review.

Mr Tait said sales had dropped by 4.6 per cent compared with last year up to the end of December, and last week's summer sale indicated the same drop.

"It appears that the trend in sales so far for this year will carry on to the end of this year," he added.

In October, Kirkcaldie's reported an 11 per cent rise in its full year profit and said it was reasonably upbeat about avoiding the ill-effects of a retail slow down.

Sales at Kirkcaldie's 142-year-old Lambton Quay store and neighbouring Harbour City Centre rose by 5.2 per cent to a record $39.38 million in the year to August 2005.

Today, Mr Tait said the store was re-doing its profit projection for 2006.

"We haven't had a chance to asses the affect of the savings we can make, but the 4.6 per cent (sales drop) will definitely carry through into our profit."

Mr Tait said the increasing popularity of chain stores and suburban malls was not eating into Kirkcaldie's overall sales but in particular areas they were.

"It's particularly competitive in cosmetics at the moment, which is a very large proportion of our business," he said.

He said the company would make an announcement soon with regard to its search for a new managing director after Richard Holden stepped down in August following a polo injury.

"We have made an appointment, and we are fine-tuning the negotiations and hope to make an announcement within a couple of weeks."

Shares in Kirkcaldie's were steady at $2.65 by midday, against a year high of $2.80 touched last September.

- NZPA