The move marks two significant events: the end of Kirkcaldie department store’s 152-year reign, as well as the first time David Jones has opened up a store outside of Australia.
David Jones CEO Iain Nairn says it’s an exciting new venture for the Australian retailer.
“We are proud to reinvigorate this historic retail space and maintain it as the home of New Zealand’s premium department store when we open in mid-2016,” Nairn says.
Kirkcaldie & Stains chairman Falcon Clouston says Kirkcaldie lacks the buying power and scale to compete with multistore regional and international stores.
“A sure sign of how tough it has been is that our retail operations have sustained trading losses for each of the past seven years,” he says.
“Within our resources, we have tried to develop an online direct channel to compete. But our efforts have not succeeded.”
“We were successful with the sale of the Harbour City Centre and we have received substantial funds.
“However the board’s view is that it could not justify investing a large portion of these proceeds in the retail business when we are faced with these greater competitive pressures from multi-store operators.”
Despite saying it’s a “sad day” for Kirkcaldie, Clouston’s focusing on the positives.
He says it’s great that Wellingtonians will be able to enjoy a David Jones shopping experience in the capital.
“In David Jones we believe we have found an excellent counterparty, which today was approved by shareholders,” Clouston says.
Locals will welcome the store’s arrival, as Auckland has gotten the most love when it comes to international retailers opening up stores.
Topshop, Seed Heritage and FCUK all prioritised Auckland when opening their first stores in New Zealand this year, with stores in Wellington to come later down the pipeline.
Clouston says Kirks’ stock will be sold down from now until the end of January, when the doors will close on the iconic retailer for the final time.
“We will also be working hard with David Jones and with our staff to ensure that as many as possible of our loyal employees will be offered new employment,” Clouston says.
The board considered narrowing Kirkcaldie & Stain’s product offering, but again thought it wouldn’t allow them to compete any better with multi-store operators.
The sale was considered the best way to preserve value for its shareholders.
Clouston says the company plans to distribute a cash equivalent of $19.354 million to shareholders.
Nairn says David Jones is bringing an expanded assortment of Australian, international and private labelled brands to New Zealand.
Those who enjoy the sophisticated Kirkcaldie experience upon entering the shop shouldn’t fear, either - Nairn says the tradition of a doorman will also remain.
The agreement depends on David Jones obtaining Overseas Investment Office consent by 30 November.
According to Clouston, the Kirkcaldie & Stains board think it’s highly likely consent will granted.