Ann: ASSET: KRK: Kirkcaldie & Stains to become a David Jones store

• Release Date: 04/06/15 15:47
• Summary: ASSET: KRK: Kirkcaldie & Stains to become a David Jones store
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					KRK
04/06/2015 15:47
ASSET
PRICE SENSITIVE
REL: 1547 HRS Kirkcaldie & Stains Limited

ASSET: KRK: Kirkcaldie & Stains to become a David Jones store

The board of Kirkcaldie & Stains announces that today the Company has signed
an agreement with Australian retailer David Jones which will result in David
Jones establishing its first department store in New Zealand, operating out
of Kirkcaldie & Stains Lambton Quay premises from mid-2016.

Under the transaction, David Jones will take assignment of the Lambton Quay
main store lease and will pay AUD400,000 cash for the name Kirkcaldie &
Stains.  David Jones will also have the option to acquire the fixed assets of
the retail business for a further NZD500,000. If this option is not
exercised, Kirkcaldie & Stains will be free to dispose of the fixed assets as
it sees fit. This will happen on 1 February 2016 following the full Christmas
trading period.

The transaction is conditional on:
o the approval of Kirkcaldie & Stains' shareholders within eight weeks
o consent of the landlord of the Lambton Quay store premises within four
weeks
o necessary consent required by the purchaser from the Overseas Investment
Office being obtained by 30 November 2015
o the purchaser obtaining a detailed seismic assessment report satisfactory
to it within two weeks.

A shareholders' meeting to consider the transaction will be held by the end
of July. A formal notice of meeting will be issued in about five weeks. In
respect of the seismic report condition, a detailed report has been delivered
to David Jones for its consideration.

David Jones has also expressed the intention to offer employment to the
majority of Kirkcaldie & Stains staff. The store will continue to trade under
its current name through until late January 2016. Stock is not included in
the sale and will be carefully managed down to completion, after which
Kirkcaldie & Stains will continue to operate from its Thorndon Quay store for
some months. This will facilitate the disposal of stock remaining from the
Lambton Quay store after Christmas.

"The end of Kirkcaldie & Stains as a much loved Wellington department store
has been a very difficult decision to make, but the Board believes it is in
the best interests of the company, the staff, our customers, and Wellington"
announced Kirkcaldie & Stains Chairman, Falcon Clouston.

A new David Jones store will open in mid-2016, after an extensive store
refurbishment program, which will preserve the heritage-listed frontage
whilst completely renovating the interior. This will be the first David Jones
branded store outside of Australia and the company states it aims to create a
modern shopping environment with the quality finishing and latest retail
technology that shoppers expect from a premium department store.

"We have worked hard to minimise the impact of closure on our staff. The
intent of David Jones to offer employment to the majority of our staff is
positive. But notwithstanding this, we anticipate the employment contracts of
all our permanent and casual staff will come to an end in the gradual
wind-down of the business," says Clouston. "I am hopeful that as many staff
as possible will transition to David Jones."
This transaction reflects Kirkcaldie & Stains' previously announced strategic
review of its retail operations following the sale of the Harbour City Centre
last year.

The options outlined at the 2015 annual meeting of shareholders were:
o committing to significant new investment in refurbishment
o downsizing and refining the retail offering to a more limited range
o divestment of the business.

These options were considered in the context of the current retail
environment, which has changed radically over the past decade, and in which
Kirkcaldie & Stains has sustained trading losses from its retail operation
for the last seven years.
"As a single large format store we lack the buying power and scale needed to
compete with multi store regional and global operators. Those operators have
the ability to create their own brands, extract competitive pricing from
suppliers, and establish platforms for on-line offerings which a single store
such as Kirkcaldies simply cannot cost effectively do. This has been
reflected in the retail operations struggling to make money for several
years," says Clouston.

"While we received substantial funds from the sale of the Harbour City
Centre, the Board did not see how investing those proceeds in the retail
business could be justified when we are faced with the much greater competing
pressures from multi-store operators.

"At the same time, simply narrowing our retail offering had no assurance of
success when there were many other specialist retailers seeking the same
retail dollar."
The present transaction provides:
o the Company with the opportunity to realise, for the benefit of
shareholders, the cash resources built up from the proceeds of the sale of
the Harbour City Centre and any other funds remaining, after the costs of
winding up the company
o the majority of employees with the opportunity to receive offers of
employment in a leading department store
o our customers and Wellington with an outstanding destination retail
environment.

Following completion, the Board will look to make an early and substantial
distribution to shareholders from its available cash. At that time the
Company's total liquid net assets are expected to exceed the current market
capitalisation of the Company. Further detail will be provided in the
materials accompanying the notice of meeting. At this stage shareholders are
expected to receive distributions which will exceed the recent market value
of their shares, but the precise amount will depend on a number of factors.
As a result of the sale of the Harbour City building, the company presently
holds cash deposits of $18m with a further $4.75m receivable in October. The
sale of the brand name is for A$400,000 and the fixed assets may produce up
to $500,000. The current value of Stock as at 31 May 2015 was approximately
$8.3 million before provisions.

Further information will be set out in the materials accompanying the Notice
of Meeting to approve the transaction which will be issued in the next five
weeks.

Falcon Clouston
Chairman

ENDS

For further information:
Falcon Clouston
P O Box 1494
Wellington 6140
End CA:00265230 For:KRK    Type:ASSET      Time:2015-06-04 15:47:31