FCO’s Australian parent company Super Retail Group has announced that it wants to close its 13 stores in New Zealand at the end of the financial year in June.
This comes just a year after fellow Australian retailers Mountain Design and The Good Guys departed New Zealand.
Mountain Design, also an outdoor retail chain, shut its 12 New Zealand stores in August and axed 70 jobs.
At the time, the company’s brands and marketing director Gavin Flannery said the New Zealand market was saturated, with too much competition servicing such a small population.
The Good Guys agreed that it was too difficult to continue trading in the New Zealand market. FCO seems to be in a similar predicament, judging by its financial report.
The report stated Super Retail Group’s half-year profit was around NZ$35 million.
Super Retail Group CEO and managing director Peter Birtles says the results reflected a strong performance by its auto retailers and a low contribution from its leisure retailers.
Sales decreased in leisure retailing by 1.6 percent to $314.1m while the company’s auto retailing sector, which includes companies such as Super Cheap Auto, continued to increase. It rose 4 percent to $449.5m.
The company attributed leisure retail’s poor financial performance to “internal execution issues” and the sales cannibalisation of new stores.
Birtles says it has been disappointing to close down the stores after just three years of operating.
“Our initial approach of developing a business specifically for the New Zealand market has proven to be flawed and FCO has always battled to get the attention it required while we have been addressing challenges in our BCF and Ray’s Outdoors businesses,” he says.
NZ Fishing World magazine sales executive Callum McKendry says New Zealand customers stayed loyal to smaller stores and other brands because they felt these operators offered a more personal shopping experience.
“It shows a big conglomerate can’t come in and bully around the smaller companies, because with fishing in New Zealand, it’s all about community and loyalty towards each other and certain brands.”
Outdoors companies haven’t been having the best time recently. Kathmandu reported losses of $1-2 million in their half-year profit up to 25 January 2015.
The cost of FCO exiting the New Zealand market and restructuring Ray’s Outdoors is expected to cost Super Retail Group $28 million.