Archive | Retailers

Mitre 10 NZ takes over brand names, appoints new chief executive, Blenheim mega store on market, group expansion under way

Published 26 March 2010

Mitre 10 (NZ) Ltd has acquired full ownership of its brand names, appointed a new chief executive and produced aggressive plans for growth.

 

The organisation said yesterday it had acquired full ownership of the Mitre 10 brands for New Zealand following the sale of 50.1% of Mitre 10 Australia to Metcash Trading Ltd. Metcash has an option to acquire the remaining 49.9% by 2013.

 

Mitre 10 NZ previously used the name under a registered-user agreement from brand owner Mitre 10 Ltd which, following the Australian deal, no longer exists.

 

Mitre 10 NZ, launched in 1974, is a completely separate company from Mitre 10 Australia and, as a co-operative, is wholly owned & operated by local families. It has 110 stores, 3500 staff and sales approaching $1 billion/year.

 

The chairman of the Mitre 10 NZ board, Martin Dippie, said the change would ensure Mitre 10 NZ remained in control of its own destiny. He also announced the appointment of John Hartmann as the co-op’s new chief executive: “John is a former chief operating officer of HD Supply, a leading American wholesale distribution company, and before that worked for Home Depot – the world’s largest home improvement retailer.

 

“His expertise will be invaluable in leading Mitre 10 NZ as we enter our next major growth phase.”

 

Mr Dippie said the co-op’s expansion plans included rolling out new Mitre 10 Mega stores around the country: “Mitre 10 Mega was launched in New Zealand in 2004 and has been phenomenally successful. Our 23rd Mega will open before Christmas in Mt Wellington and we expect to have at least another 10 open by the end of 2011.”

 

Blenheim Mitre 10 Mega for sale

 

Meanwhile, the 10,000m² Mitre 10 Mega store in Blenheim has been put on the market by father-&-son building trade entrepreneurs Graeme & David Hawtin, who built it on the south-eastern outskirts of the town 3 years ago. Dedicated DIY builder & businessman Graeme Hawtin has been involved with the Mitre 10 brand since it was first brought to New Zealand, moving the franchise operation around Blenheim 5 times as the business steadily grew.

 

The property is leased to Mitre 10 NZ Ltd for 15 years from 2007, – with 3 further 5-year rights of renewal. It’s generating $1.08 million net rent plus gst/year. The Hawtins will continue to operate the business as sub-tenants of Mitre 10 NZ. Registrations of interest close with Bayleys Marlborough on Friday 16 April.

 

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Attribution: Company & agency releases, story written by Bob Dey for the Bob Dey Property Report.

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Borders takes hedge-fund shareholder Pershing Square’s money to stay afloat – cut-price sale could follow

Published 24 March 2008

Borders Group Inc said on Thursday it had accepted a finance deal from its major shareholder to stay afloat, which could involve selling its profitable international business to that shareholder, Pershing Square Capital Management LP, at a cut rate.

 

The company also announced slightly more positive earnings for the fourth quarter.

 

The financing arrangement means a Whitcoulls deal could still be on, though not the one Borders was trying to negotiate for the past year.

 

A&R Whitcoulls Group Holdings Pty Ltd said a fortnight ago its negotiations to buy Borders’ 5 New Zealand & 23 Australian stores had ceased.

The companies had been working towards a part-cash part-scrip merger that would have seen Borders take a substantial stake in A&R Whitcoulls and retain exposure to the local book market & the Borders assets here. However, the parties were unable to agree terms on a basis that would have been acceptable to A&R Whitcoulls shareholders.

Pacific Equity Partners Pty Ltd acquired the A&R Whitcoulls Group from the UK retailer WH Smith plc in May 2004.

 

Borders chief executive George Jones said on Thursday Borders had retained JP Morgan Securities Inc & Merrill Lynch & Co as advisors on a strategic alternative review process. Meanwhile the Pershing Square financing will be put together over the next fortnight – Borders has only until Friday 4 April to source more favourable financing arrangements.

 

Mr Jones said: “The review process will include the investigation of a wide range of alternatives, including the sale of the company &/or certain divisions for the purpose of maximising shareholder value. The company can give no assurances that a transaction of any kind will occur.”

 

Pershing Square gave Borders a commitment on behalf of certain of its affiliated investment funds to lend it $US42.5 million, and an offer to purchase, at Borders’ discretion, certain of its international businesses pursuant to a $US125 million backstop purchase commitment, in each case subject to the satisfaction of customary closing conditions.

 

Pershing Square’s offer has 3 main components:

 

a $US42.5 million senior secured term loan maturing 15 January 2009, with an interest rate of 12.5%/yeara backstop purchase offer that will give Borders the right but not the obligation, until 15 January 2009, to require Pershing Square to buy its Paperchase, Australia, New Zealand & Singapore subsidiaries, as well as its 17% interest in Bookshop Acquisitions Inc (Borders UK) after the company has pursued a sale process to maximise the value of those assets. Pershing Square’s $US125 million purchase obligation is less any debt attributable to those assets. Mr Jones said: “Although the company believes these businesses are worth substantially more than the backstop purchase offer price, the relative certainty of this arrangement provides the company with valuable flexibility to pursue strategic alternatives. The company has retained the right, in its sole discretion, to forego the sale of these assets or to require Pershing Square to consummate the transaction. Pershing Square has no right of first refusal or other pre-emptive right over the sale of these businesses to other parties”14.7 million warrants to be issued to Pershing Square to buy Borders common stock at $US7/share for 7½ years, representing warrants over 19.99% of the fully diluted shares of the company on a pro forma basis. 

Mr Jones said: "This will be a challenging year for retailers due to continued uncertainty in the economic environment. Looking forward to 2008 & beyond, the company determined that additional capital was required to execute our operating plan, and as a result we began to explore various financing options. The current credit environment has made many of these alternatives prohibitively expensive or entirely unavailable.

 

“We are pleased to have the confidence & backing of our largest shareholder, Pershing Square, which has agreed to provide funding that gives us adequate opportunity to implement our plans this year and pursue a range of longer-term solutions through the strategic alternatives review process. We believe that consummation of the transactions under the commitment will make us fully funded for 2008 where, absent these measures, liquidity issues may otherwise have arisen in the next few months. Furthermore, we believe that resolving our 2008 funding needs and positioning Borders to perform the way we believe it can, puts our company in a position to succeed in future years."

 

Borders also reported results for its fourth quarter & full year to 2 February (the quarter running for 13 weeks compared to 14 the previous year, the year running for 52 weeks compared to 53 the previous year).

 

Fourth-quarter operating income from continuing operations was $US84.7 million ($US1.44/share), down $US3 million (US1c/share) from the previous year. For the year, excluding the impact of the extra week in the previous year’s accounts, Borders increased total consolidated sales from continuing operations by 4.2% to $US3.8 billion.

 

Excluding non-operating charges, consolidated gross margin from continuing operations as a percent of sales fell 0.8% to 26.4% for the full year and expenses rose 0.4% to 25%.

 

International sales increased by 34.6% to $US138.5 million (excluding the extra week the previous year, including the benefit of forex translations). For the year, that increase was by 37.2% to $US364.8 million. International same-store sales rose 9.3% for the quarter, 7.9% for the year.

 

Borders will report its first quarter 2008 results on Tuesday 27 May.

 

Earlier stories:

21 December 2007: Commission gives reasons for clearing Borders acquisition

23 November 2007: Borders paints a brighter picture, at least in its international business

21 November 2007: Whitcoulls cleared to buy Borders

28 March 2007: Borders reports loss, seeks “strategic alternatives” for international portfolio

24 April 2007: Pacific Equity Partners of Sydney buys Whitcoulls

 

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Attribution: Borders releases, Whitcoulls release, story written by Bob Dey for The Bob Dey Property Report.

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EziBuy buys Max

Published 11 December 2007

Apparel & home décor retailer EziBuy Ltd has bought the 39-store fashion chain Max for an undisclosed price from Direct Capital Ltd, former managing director David Wright & other senior executives.

 

Max began with 5 stores in 1985 and grew into a leading women’s fashion retailer with turnover of $60 million.

 

EziBuy, established in Palmerston North in 1978 by brothers Peter & Gerard Gillespie, expanded to Australia in 1992 and says it’s the largest fashion clothing & home décor multi-channel retailer in Australasia. Its business was founded on mail-order sales, it has turnover of $190 million and more than 700 staff.

 

EziBuy chief executive Mary Devine said today Max had the potential for significant growth both in New Zealand & Australia.

 

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Attribution: Company statement, story written by Bob Dey for this website.

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Borders paints a brighter picture, at least in its international business

Published 23 November 2007Borders Group Inc says it’s getting healthier, but still has its international bookselling businesses on the market. And it still made an operating loss.

The Michigan-based company reported third-quarter earnings this week that showed total consolidated sales from continuing operations up 5.3% to $US805 million, while same-store sales increased in all business segments for the second consecutive quarter. Asia-Pacific same-store sales rose 7.8%.

Sales from continuing international operations rose 38.4% to $US79.7 million. Excluding the impact of foreign currency translation, total international sales would have increased by 25.9%.

But part of the gain may be illusory. Domestically, it cranked same-store sales at its superstores up by 1.1% – but added that it had done this by further leveraging its Borders Rewards database, which has 22 million members.

The company said that excluding non-operating charges, consolidated gross margin from continuing operations as a percent of sales fell from 22.7% to 22%, primarily due to increased redemption of discount offers by the much larger Borders Rewards member base this year compared to last year, as well as the impact of shrink in the DVD & café categories at Borders superstores.

Chief executive George Jones said: "We are pleased with the progress we are making toward a turnaround of this company. Many of our initiatives are clearly working, as we have reversed previous negative trends and are now consistently increasing traffic & same-store sales, both of which had been steadily declining prior to the implementation of our strategic plan."

The consolidated net loss from continuing operations was $US39.1 million, up from a $US32.9 million loss for the 2006 third quarter. The operating-basis net loss excludes non-operating charges & discontinued operations. On a GAAP basis, the third-quarter net loss was $US161.1 million, including a one-time $US116.5 million after-tax loss related to the sale of the UK & Ireland bookstore operations and $US2.6 million of after-tax non-operating charges.

Earlier stories:21 November 2007: Whitcoulls cleared to buy Borders28 March 2007: Borders reports loss, seeks “strategic alternatives” for international portfolio

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Attribution: Company release, story written by Bob Dey for this website.

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Borders reports loss, seeks “strategic alternatives” for international portfolio

Published 28 March 2007


Michigan-based bookstore operator Borders Group Inc announced a “refocus” long-term strategic plan after reporting a fourth-quarter & full-year loss on 22 March, just as it was about to open its latest New Zealand business, a 2-storey bookstore in stage 3 of Kiwi Income Property Trust’s Sylvia Park retail complex.


Borders says it isn’t about to close down internationally. It wants to pull back to focus on its domestic operations, start a web booksite next year and seek “strategic alternatives” (franchising the most likely) for its international portfolio.


It’s hired KPMG Corporate Finance to look at options for its Australian & New Zealand businesses.


Borders Group chief executive George Jones said at last Thursday’s release of the new plan it would “revitalise, refocus and ultimately reinvent the company to achieve its mission to be a headquarters for knowledge & entertainment”.


Its aims include:

revitalising the domestic Borders superstore business to achieve, by 2009, consolidated ebit margins of 5-6% compared to 1.8% in 2006, driven by sustained same-store sales growth in the low-to mid-single digits at domestic superstores, and improved inventory turns of 2 times compared to 1.6 times in 2006
refocusing investments toward transforming domestic superstores while significantly reducing investment in segments that haven’t provided a satisfactory return, including the international & Waldenbooks specialty retail segments
exploring strategic alternatives for the majority of its international segment, including its UK, Ireland, Australia & New Zealand superstores and Books etc business, and looking toward its successful franchise model for future international expansion in new markets
highly aggressive efforts, which began in the fourth quarter of 2006, to right-size the Waldenbooks specialty retail segment will continue in 2007 with the goal of reducing the number of Waldenbooks stores from 564 at the close of 2006 to about 300 by the end of 2008
reinventing the company by leveraging innovation, technology & strategic alliances to differentiate Borders in the marketplace, including the debut of a new proprietary e-commerce site in early 2008.

Mr Jones said: “Our company’s performance has fallen short in an industry that is increasingly competitive, technology-driven & price-sensitive. We recognise the urgent need to go on the offensive and drive significant change. We have begun to take decisive steps to once again put Borders on a path to profitable growth, and believe that we have an opportunity within our domestic superstore business to build on our key assets – a powerful brand, a strong network of store locations, knowledgeable employees and nearly 17 million loyal members of our Borders Rewards programme who love our superstores – to unlock profits through improved same-store sales.


“Our energy & resources are focused on this core business segment because the superstore is the foundation of our brand: it’s how we grew into the respected name we are today and we believe it is the key to our future.”


On the international business’ future, he said: “We’ve seen solid performance in our Asia-Pacific stores and improving trends in the UK & Ireland. These are excellent businesses with dedicated employees & a talented management team. Still, for us to be successful in reaching the goals we have for the domestic superstore business, we must significantly reduce investment in the international segment and explore strategic alternatives.


 “We are pleased with the franchise agreements we have in Malaysia & the UAE because they have proven to be successful. The franchise model requires little capital investment from Borders Group but yields high profit & growth opportunities. We believe the Borders brand has great global potential and long-term we will look toward the franchise model for growth in new markets overseas.”


Borders increased sales by 2.9% to $US1.5 billion in the fourth quarter, to 3 February, but turned round from a $US119 million the previous year to a $US74 million loss this time. For the whole year, it increased sales by 0.8% to just over $US4 billion, but went from a $US101 million profit to a $US153 million loss.


The company said gross margin as a percent of sales, on a GAAP basis, declined from 33.6% to 30.6% in the fourth quarter, due primarily to increased promotional discounts related in part to customer redemption of Borders Rewards benefits, de-leveraging of fixed occupancy costs and non-operating charges.


Website: Borders


 


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Attribution: Company statement, story written by Bob Dey for this website.

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