Kirkcaldie & Stains’ loss was $4.5 million in the 12 months ended August 30 2015, up from a loss of around $6.5 million a year earlier.
Sales also fell 10 percent to $31.9 million. The company’s retail operations reported a pretax loss of $4.9 million, while property operations reported a pretax profit of $563,000.
This profit mostly came from interest earned from the sale of the Harbour City Centre building in 2014.
The loss was mostly a result of the impact of leasing the Lambton Quay store to David Jones.
Though David Jones paid A$400,000 to use the company’s name and the leasing allows Kirkcaldie to exit bricks and mortar retail, the sale has consequently racked up a few costs that are reflected in the loss.
These include non-cancellable leases that are worth $1.47 million, like the Petone warehouse that is leased until 2023, staff redundancy costs of $1.27 million and inventory adjustments of $398,000.
Further losses are also expected in the 2016 financial year with closures of the store, capital distribution and ongoing administrative costs due to being a listed company.
The company’s retail stock isn’t included in its sale to David Jones, so it has been negotiating with suppliers for ‘sale or return’ arrangements.
So far, its inventory holding has been reduced to $5,650,000 against the prior year of $8,178,000.
It says it has since reduced it further, with help from an end-of-season sale for the interiors store in Thorndon Quay before the shop closed down.
Kirkcaldie & Stains will sell its remaining stock through another Wellington outlet.
It expects a returning surplus capital of up to $19.3 million to be returned to shareholders, following the David Jones transaction.
The final return of residual value is likely to be by solvent liquidation, the company said.
“A formal solvent liquidation process appears, at this stage, the most likely method of returning value to shareholders in a tax effective manner but this is sometime away and will be the subject of shareholder approval,” chairman Falcon Clouston said in its market announcement.
The funds available will be dependent on what the final inventory count stands at, the timing of the assignment of the remaining non-cancellable leases and how long it takes Kirkcaldie & Stains to wind down.
Clouston thanked Kirks’ loyal customers and shareholders for their support over the years and said he looked forward to seeing everyone in store before the shop’s final closure in January.
Kirkcaldie shares decreased 0.4 percent to reach $2.24. Shares have grown 32 percent this year, with a large portion of the gain attributed to its sale to David Jones.