All Smiths City stores across New Zealand have been placed into voluntary administration, with doors shut this morning while administrators urgently assess the company’s financial position.
Staff were called into a meeting at 9am where they were informed of the decision. At 8.30am all nine Smiths City stores, along with its online shop, were temporarily closed. Administrators say they aim to reopen stores later this week.
Smiths City (2020) Limited has appointed Colin Gower and Diana Matchett of BDO Christchurch as joint administrators. They said the process is designed to achieve the best outcome for all stakeholders, which may include selling the business and assets to interested parties.
The administrators acknowledged the uncertainty facing staff and said customers who have paid deposits will be contacted directly in the coming days.
Smiths City was founded in Christchurch in 1918 and is a long-standing name in New Zealand retail, selling home appliances and furniture.
The company has been under increasing financial pressure, with sales continuing to fall despite store closures and downsizing measures.
Last month Smiths City shut its Hornby branch, with owner Colin Neal warning of tough conditions across the sector.
“It’s very tough market conditions. People are just not spending in big box retail. Our foot traffic is very low, and it’s just the market, that nobody has any money at the moment,” Neal told chrislynchmedia.com at the time.
“It has been like that for the last three to six months. Every store, ours and our opposition, has been dramatically reduced in spending. It could be in the 40 to 45 percent market.”
Neal said the downturn had caught him by surprise.
“To be fair, I thought the market was going to improve February, March of this year, and I don’t see any improvement for another year,” he said.
“When I was in the transport industry, carrying refrigerated frozen goods, it was very recession proof. Spending on whiteware, TVs and furniture is different. People are just holding their money. You don’t need a TV to eat.”
He added that many store leases signed when he purchased the company five years ago were now ending, forcing difficult commercial decisions.
“When I did purchase Smith City, we had leases lined up for five years. A lot of landlords gave you five years or three years, and this is why they’re all coming to the end of the lease. You make decisions, don’t you? It’s commercial.”
The administrators are now calling for urgent expressions of interest in the business.
