Postie Plus shareholders approve sale of Babycity
Postie Plus Group (PPGL) shareholders have given their overwhelming approval to go ahead with the sale of the Babycity chain so the family friendly retailer can focus on expanding its flagship Postie brand nationwide and provide funds for acquisitions of complementary brands.
“This is a significant milestone and with our shareholders' approval we can now get on with realising PPGL's potential,” Chairman Richard Punter said following the Special Meeting of Shareholders in Christchurch. The Board expects that the remaining conditions will be settled within the next few days.
“We are in a strong position. Customers have just voted Postie their Clothing Store of the Year in the inaugural Roy Morgan Customer Satisfaction Awards. We have a solid structural, operational, and financial platform for managed growth with ongoing improvements in efficiencies and the cost of doing business.
“And we are continuing the transformation of Postie as a modern, exciting retailer, with an attractively priced range of apparel, health and beauty products for all the family. We are ready to expand our offering and the sale allows us to reconcile our retail operations,” he said.
The deal which is likely to be concluded later this month involves the sale of 11 of the 18 Babycity stores, stock and forward orders worth some $5.6 million to Baby City Retail Investments, a company operated by former LV Martin manager Trevor Douthett. Baby City Retail will also take on specific liabilities, resulting in a net amount payable estimated at just over $4.0 million.
“Postie Plus will continue to supply apparel to the Babycity chain under a wholesale agreement, and has signed up to a five-year restraint of trade in infant hardware retailing. Two of the stores were of no interest to Baby City Retail. PPGL Chief Executive, Ron Boskell said the cluster store in Queenstown would be sub-leased and the Postie stand-alone store in Wanganui reduced in size.
Baby City Retail is taking over 11 stores, either by assignment of the lease or by sub-leasing, and has confirmed the take up of two of five optional tenancies in Dunedin and Nelson.
Mr Boskell said PPGL's plans for the remaining three stores were to open a clearance outlet for Auckland in the Lynnmall space, extend the Postie offering in Invercargill to include a full range of health and beauty products and close the Hastings store when the tenancy lease expires in late June.
Mr Boskell said the retail climate was tough with third quarter sales for the period to the end of April down 5 per cent compared with the same time last year.
“Expenses are continuing to be well managed to offsetting the current sales downturn and we are confident that momentum will pick up and we will end the fourth quarter strongly,” he said.
“The retail climate with value conscious shoppers, our position as New Zealand's favourite clothing store and the opportunity to buy identified brands that will extend our appeal and nationwide presence means we must act swiftly and decisively.”
Postie Group Limited (PPGL) is a New Zealand retail success story with a nationwide chain of 82 apparel stores found in major cities and in heartland towns. The flagship Postie brand offers families a wide range of products including apparel for women, men and children, sleepwear, thermals, lingerie, accessories, cosmetics and school wear.
Postie Plus Group (PPGL)