Katies gives in to rival chain

By KARYN SCHERER

More than 10 years after setting up shop in New Zealand, Australian fashion chain Katies is about to all but disappear.

But the news for its diminishing number of loyal customers is not all bad - it will be replaced by another Australian chain.

One of its main rivals, Millers, revealed yesterday that it had agreed to pay the struggling chain's owner, retail giant Coles Myer, $A20.4 million ($26.6 million) for the business on both sides of the Tasman.

Millers, which is aimed at older women and already has hundreds of stores in Australia, plans to convert most of Katies' 26 New Zealand stores into Millers stores, and is promising lower prices and a "far more appropriate" range.

The move comes after years of speculation about Katies' future, and follows the collapse of another Australian clothing chain, Sportsgirl, in New Zealand this year.

Millers' managing director, Ian Miller, said the company did not intend to close any New Zealand stores or lay off any staff.

Instead, it hoped to expand the chain.

Mr Miller is a former managing director of Katies and helped establish the chain in New Zealand in the late 1980s and early '90s.

He said he had a "pretty good understanding" of the New Zealand market, and was confident he would able to expand the stores "with a far more appropriate offer."

While most would be rebranded, some larger Katies stores may be split into two and carry both brands.