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Postie+ shareholders approve the sale of Artbuckle business
29
Jul '08
Shareholder approval for the sale of the Arbuckles assets will allow the Postie Plus Group to focus on its core activities, the chairman Mr Peter van Rij told the company's special general meeting at Christchurch.

The sale of the assets of the Artbuckle business to interests associated with retailer Jan Cameron for approximately $4m will end a period of losses on the Arbuckles operation.

Mr van Rij said market conditions in the retail of Manchester and homeware had become "highly competitive" since Arbuckles was acquired in September 2003 as part of the group's IPO that year.

"Arbuckles staple Manchester product lines have been aggressively discounted by most if not all Manchester retailers as lost leaders for the past 3-4 years. This segment has become tougher with large competitors increasing their presence."

Mr van Rij said PPGL had addressed this increase in discounting by increasing market share and expanding the retail footprint for Arbuckles from 20 to 30 stores. A new look offer gained traction but could not compensate for more recent aggressive discounting.
A strategic review of Arbuckles led to approaches by interested parties and the offer for the fixed assets of 13 leased stores and around $4m of stock.

Mr van Rij said there will be a significant but non-recurring, non-trading, loss on the transaction in the range of $2.4m to $2.6m, comprising of write-downs on goodwill and stock. This will be included in the result for the year ending 31 July 2008.

However, the significant reduction in stock will strengthen the group's financial position. A year ago stock carried by the group overall was around $38m; this "excessive level" has been heavily reduced to around $28m and with the sale of Arbuckles' stock the total will be down to around $24m. This will lead to reduced interest and warehousing costs.

The exit from Arbuckles will also result in a positive NPAT contribution in excess of $1m a year toward the Postie Plus Group Limited NPAT in normal trading conditions.

The transaction will see the Postie Plus Group retain 13 of the Arbuckles stores for conversion into new selling space. Another 13 stores will transfer to the Cameron interests.

It is important to appreciate that the divestment of Arbuckles enables the group to increase the foot print for successful Postie+, Baby City and Schooltex brands.

Leases on a further three stores will not be renewed and one other has been assigned.

Postie Plus expects to be able to provide earnings guidance later this week on the 2008 result.

Postie Plus Group Limited (PPGL)


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