Baby City is under new ownership, except it's actually the same owner. Photo / Richard Robinson
Baby City is under new ownership, except it's actually the same owner. Photo / Richard Robinson
More than $300,000 worth of gift cards and loyalty points for baby product retailer Baby City are now unable to be used after the company went into liquidation, despite four of the seven stores continuing to trade under a new owner.
The shareholder for Baby City Retail Investments appointed insolvencyspecialists Iain Shephard and Jessica Kellow of BDO Wellington on December 31.
That company was 100% owned by Campbell Gower at the time of liquidation and its sole director was Anzac Dawson.
Gower confirmed to the Herald that he was the sole shareholder for a single day before placing the company into liquidation.
Three former shareholders — Ian Stirling and Lorraine and Trevor Douthett — stood down as shareholders on December 20, according to Companies Office records.
Before liquidation, Baby City Retail Investments owned and operated seven stores across New Zealand. Photo / Doug Sherring
According to the liquidator’s first report, Gower had been providing financial assistance through a related entity to keep the business running.
“We have been advised that the current economic retail climate, together with falling birth rates post Covid-19, led to the company facing financial difficulties,” Shephard and Kellow said.
“The shareholder was not prepared to continue funding the company’s losses and on 31 December 2024 resolved to appoint liquidators.”
Before liquidation, Baby City Retail Investments owned and operated seven stores across New Zealand, in Albany, Botany, Hamilton, Tauranga, Johnsonville, Lower Hutt, and Invercargill.
It also operated an online store and distribution centre, and as of liquidation had 51 employees.
It was agreed before entering liquidation that for the business to keep trading, a new entity called Baby City Limited would purchase certain stores and assets to stay open.
The retail stock across the stores, net of secured creditors, totalled approximately $500,000, including obsolete and display stock.
The new entity, owned by Gower, offered to purchase the unencumbered stock at 50% which was accepted by the liquidators.
The sale was settled on December 31, 2024, the date of liquidation.
As for the retail locations themselves, the liquidators said the new entity was working with landlords and employees to keep four of the seven stores.
The remaining three stores have closed and the stock was relocated, with the company’s website sharing a message to customers that this affected Johnsonville and all Auckland stores.
Unfortunately for customers, it said, “pre-orders, laybys, loyalty point balances and entitlements, and gift cards were all under the control of the former owner of Baby City (now in liquidation); therefore, are unable to be used now.”
This means that $222,600 in gift card liabilities, and $91,300 in reward point liabilities will now be void.
Gower explained that it was customary for all liabilities to expire with the company’s liquidation.
“It’s a new entity, so gift cards and loyalty points are nearly always considered to be unsecured creditors,” Gower said.
“I share their disappointment, it’s losses all around. We are looking at all those arrangements in the future, case by case.”
Gower confirmed that the former loyalty programme would not continue in its old form, but that gift cards could still be a possibility.
He said that many of the gift cards were sold by a third party and branded as Baby City, but was unsure whether the money from the third party was actually passed on to the business.
Consumer NZ spokeswoman Sahar Lone said that those affected need to get in touch with the liquidators.
“If the business is sold, the new owner is not obligated to honour existing vouchers.
“However, if the voucher was purchased from a third party, holders may be able to request a refund under the Consumer Guarantees Act. Alternatively, if the voucher was paid for with a credit card, a chargeback may be possible,” Lone said.
She encouraged shoppers to consider purchasing vouches that can be used at multiples retailers to avoid a similar situation in future.
“It’s also a good idea to use vouchers as soon as possible after receiving them,” Lone added.
As for Baby City Retail Investments’ financial position, it had a shortfall to creditors before liquidation costs with a book value of $6.64 million.
This includes a $1.7m shortfall for preferential creditors, including $35,000 owed to Inland Revenue and $109,500 to employees.
Meanwhile, a further shortfall of $4.94m is owed to unsecured creditors.
Those owed money include ACC, Investore Property, NZRPG Management, Meridian Energy, NZ Post, Ngāi Tahu Property and The Base Te Awa.
Creditors have until February 18 to make a claim.
Looking ahead, Gower said that Baby City had a business plan that made sense, focusing on more outlets and retail store growth but potentially in a different format.
The liquidators shared no estimate for an eventual date of completion.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
