Freedom Furniture New Zealand has released its latest results, and, despite operating at a loss, says it has plans for continued growth.
Steinhoff Asia Pacific Group Holdings (SAPGH), the owners of Freedom Furniture New Zealand Ltd (FFNZL), called out previous media reports that said the company was not in a strong position to trade.
CEO Michael Ford said in a release: “The company is in a very strong position from both a financial and operational perspective.”
Media reports were apparently based on comparisons of the financial results to the full year ending October 2017. The audit was done by PWC whose “audit opinion was unqualified”.
Stuff Business reported a loss of $393,000 in FY2016, with claims that the store needed financial assistance from its parent company.
The financial year in which the chain operated at a loss was reported against a longer 15-month financial period in FY2105. The results show revenue from continuing operations for the recent period sit at $57.8 million, compared to $73 million the 15-month period before. According to the report, sales in New Zealand dropped by nearly $24 million in the last financial year.
PWC said in the financial report that: “In our opinion, the financial statements of Freedom Furniture New Zealand Limited present fairly, in all material respects, the financial position of the Company as at 1 October 2017, its financial performance and its cash flows for the year ended in accordance with New Zealand Equivalents to International Financial Reporting Standards Reduced Disclosure Regime.”
PWC also drew attention to the financial report, saying that the company has net current liabilities of $33,335,000 at 1 October 2017, which includes current borrowings of $36,969,000 provided by a commonly controlled subsidiary of Steinhoff Asia Pacific Group Holdings. Meaning as a result Freedom Furniture is still relying on its parent company’s support to continue trading.
Freedom’s Parent company, Steinhoff Asia Pacific Group Holdings, has given them a year to pay back its loan. Latest accounts highlight the challenges facing the company which is attempting to refinance almost A$500m (NZ$536m) of debt, while reportedly seeking funding for a A$1.3 billion buy out.
Stuff Business reported that Steinhoff International is considered close to collapse after a 90 per cent fall in its shares, and the discovery of accounting irregularities forced the global clothing and homewares retailer to restate its accounts and sell non-core assets. The company declined to comment on the results.
The brand’s assets still sit closer together for total revenue, with a jump for the recent period to $17.4 million compared to $17 million, which could be attributed to the brand plans to expand its ranges.
FFNZL employs more than 250 people in New Zealand, it operates 15 stores including 4 franchised stores, and has its own support and distribution centres in Auckland that serve the whole country.
Despite the claims, FFNZL said it was comfortable with the nature of its performance and has endorsed plans to continue to expand Freedom’s strong retail position in New Zealand.
The company employs more than 250 people and has opened two new stores in the last three years and it planning to continue its expansion. The flagship store at Newmarket in Auckland is about to be completely refurbished.
The homewares sector in New Zealand has continued to climb slowly. According to Stats NZ’s Retail Trade Survey, furniture and homewares were up 3.5 percent ($696 million) compared to 2.8 percent ($613 million) the year before for the quarter ending December 2017.