The company said the Covid-19 pandemic and the temporary closure of its stores since late March continue to have a significant impact on its business.
Chairman Alastair Kerr said the final outcome of the restructure would depend on how the process unfolds.
''We expect this consultation process to be concluded in just over two weeks with the board then to make a decision on adopting a final restructuring plan.''
''Through the lockdown this has also included a reduction in pay.
"We are grateful for the sacrifices the whole team has made and we regret having to take further action to ensure the future for the business.''
Kerr said restructuring was necessary to secure investment and have a sustainable post-pandemic retail business.
At the end of March, Smiths City reached an agreement with ASB Bank to delay a $1.5m repayment of a loan, which was due.
It also said it was talking with potential investors to support the business.
In March, the company anticipated its net loss in its financial result for the year to April 30 would be greater than the $1.9m net loss recorded the previous financial year. At that time the company said it had been focused on transforming its business over the past two years and the work had been progressing well.
Given the new uncertainties, management was now revisiting its transformation plan and looking for more gains and efficiencies.
The company told the stock exchange on Wednesday it was continuing discussions with potential strategic investors as foreshadowed in its announcement in March.
It said the company continued to retain the support of ASB Bank to see these discussions through to conclusion.
Smiths City was founded in Christchurch in 1918 and was floated on the stock exchange in 1972.