Postie Plus

The longstanding Arbuckles brand is about to fade into oblivion as the manchester chain's new owner, Jan Cameron, liquidates stock in preparation to close the stores.

Ms Cameron, the former Kathmandu owner, is expected to use the sites to launch a new chain of homeware stores called Dogs Breakfast Trading Company, which she has already set up in Australia.

Ms Cameron, who has a wealth of $320 million according to the 2008 National Business Review Rich List, bought Arbuckles two weeks ago for $4 million from Postie Plus Group. She took over 13 stores throughout New Zealand, bought all the stock and re-employed most of the staff. Those stores were now advertising closing down liquidation sales.

Arbuckles was founded 35 years ago by John Arbuckle, who started the chain out of a van in Christchurch. He and his wife Vicki sold it to Postie Plus in 2003 for $9.5 million.

Ms Cameron could not be reached directly, but a spokeswoman at Arbuckles' head office in Christchurch said she had told staff she did not want to comment.

Dogs Breakfast Trading Company sells furniture, homeware, crockery and premium pet food, according to the store's Australian website.

Ms Cameron owns a chain of five homeware stores in New Zealand, called Nood. It was not known if she would use some of the former Arbuckles stores to expand Nood.

Pumpkin Patch shares are continuing to surge in value after multimillionaire Kathmandu founder Jan Cameron disclosed a 6.3 per cent interest in the children's clothing retailer.

The shares are now up 12 cents, or 8.5 per cent, to $1.52 from the four-year low of $1.40 hit on Friday shortly before the reclusive Tasmanian resident Cameron disclosed her holding. Cameron is the second wealthy retail investor in a few months to disclose a holding in Pumpkin Patch. The majority shareholder in Briscoe Group, Rod Duke, has built a 10 per cent stake.

Pumpkin Patch chairman Greg Muir said today he was "comfortable" with the new investors. "It is two well placed New Zealand investors who obviously recognise that the company is undervalued at the moment." On Cameron, Muir said: "She's been building that [stake] over many months - we've known about that. We haven't had any dialogue with her at all. It is for her to discuss. We are quite comfortable. We've got no issues with it."

While the moves by both Cameron and Duke will lead to speculation that one or both may seek to assert influence on the future running of Pumpkin Patch, Muir said he believed both might be passive investors. Neither had sought a seat on the board at this stage. "They've certainly made no representations to us in that respect, but I can't answer what their intentions are."

The moves from both the investors come as Pumpkin Patch, a former sharemarket darling, has seen its share price pounded as investors worry about apparent speed wobbles the company is hitting in its US and British expansion. There is also concern about its stock levels, which have risen sharply this year and its debt levels, which may now be as high as $95 million from virtually nothing two years ago.

Cameron sold Kathmandu to private equity partners Goldman Sachs JBWere and Quadrant in 2006, reportedly for about $275 million. Subsequently she has built a 15 per cent stake in Postie Plus. She also recently bought the Arbuckle's stores from Postie Plus. In addition she has opened five homeware stores in New Zealand under the brand name Nood (New Objects of Desire).

Pumpkin Patch's shareholder register is now getting crowded. The biggest individual shareholder is still believed to be South African investor Setar Motani, with about 12 per cent - though this shareholding has reduced in the past few years. Another investor who has reduced his shares since the company floated in 2004 is managing director Maurice Prendergast, who currently owns about 6.2 per cent, down from 8 per cent a few years ago. Fisher Funds Management has recently sold down its stake to around 6 per cent as well.

Pumpkin Patch shares were listed in mid-2004 at $1.25 a share. They rose to as high as $4.95 on a wave of enthusiasm about the company's moves to become a global brand. However, in more recent times the expansion into the US and Britain has appeared to hit speed wobbles.

Market expectations had been for a profit this year of about $22 million to $23 million, down from $27.6 million. But it is likely analysts will further trim earnings forecasts after a recent Asian investor roadshow presentation by the company that talked about tough conditions in Britain and the US.

Postie Plus's board has had no communication with Jan Cameron, founder of Kathmandu retail chain, who has taken an 8.6 per cent stake in the clothing company.

Cameron cashed up her highly successful Kathmandu retail chain last year for a reported price of $275 million.

Cameron taking a stake has left shareholders wondering if this is a signal she may have a takeover bid in mind.  Postie shares were thinly traded on Friday, closing steady at 80 cents, below their 2003 100c issue price.  She is New Zealand's richest woman, according to the National Business Review Rich List, worth $300m.  Postie Plus chairman Peter van Rij said: "We have had no communication with Jan Cameron."  Van Rij said if the company had it would probably have to disclose that to the New Zealand Exchange.

Cameron was probably the single largest shareholder now because the Dellaca family, which founded the company in Westport, had sold some shares to her.

Asked if the board was expecting Cameron to call, van Rij said: "Perhaps the answer is no because if she was she probably would have spoken to us by now.  "She may talk to us but she hasn't talked to us. Maybe it's just a passive investment that she's making," he said.  Richard Dellaca said he believed Cameron had bought about 1.1 million shares from family members.  The purchases were done through a broker. 

Postie Plus has 40 million shares on issue meaning the market capitalisation is $32m.

Postie Plus Group Ltd (PPGL) lifted sales and margins in the third quarter, the clothing and homeware retailer said yesterday.

The firm reported "satisfactory" third quarter sales of $31.9 million, an increase of 9 per cent, or $2.65m, on the previous corresponding period.

It said annualised sales were currently running 11.3 per cent above last year.  Trading patterns for the current quarter indicated sales were slowing but consumer confidence remained high, chairman Peter van Rij said.

It was "gratifying" consumers were strongly supporting the group's three brands: Postie-Plus Arbuckles and Baby City.

"Importantly, where some retailers have reported higher sales but also margin compression, PPGL has improved its performance in both respects for the third quarter."

Although the company was recovering from its $488,000 half-year loss, Mr van Rij said it would be difficult for Postie Plus to top its 2006 annual result, when the company reported a 135 per cent increase in net profit.

These are tough times in the rag trade. Mainly because of poor summer weather that discouraged people from buying lightweight fashion clothes and sportswear, the bigger stores are coping with what is regarded as one of the more challenging periods seen in New Zealand retailing for many years.

Hallenstein Glasson, Postie Plus, Briscoes subsidiary Rebel Sport, The Warehouse, Pumpkin Patch and Hellaby Holdings have all seen their profit margins under pressure. Most reported sales were unexpectedly low due to the wintry weather up to Christmas. They then felt compelled to slash prices drastically in New Year sales to move unwanted and soon to be out of fashion stock.

This rush of sales and heavy discounting after Christmas was presumably the reason the Statistics Department reported a stronger than expected rise in retail sales in January, a factor that led the Reserve Bank to lift interest rates. Statistics reported that total core sales rose by 1% in January. At the time, economists said this was due to people having more money in their pockets due to full employment, lower petrol prices and savings coupons from supermarkets that cut up to 20 cents a litre from the cost of filling a car.

However, the latest crop of retail profit results suggests that few stores were actually making much money from their efforts to quit stock.

There are also signs that some consumers are feeling constrained about spending. Rising interest rates must also be starting to bite. In a March report, the ANZ Bank said Aucklanders had been spending less in the shops, a trend that extended to Wellington. In other centres, shops were benefiting from higher dairy prices and lifts in some other farm exports.

The latest round of first-half reports showed a marked change from the generally positive results reported this time last year. As an example, in March last year Hallenstein Glasson announced a stunning 29% rise in earnings. On Monday, they reported an 8.6% drop in earnings to $10m, though this was in line with earlier warnings from directors that they were finding trading difficult.

Hallenstein Glasson said revenues of $110.7m were 1% ahead of this time last year. However, there had been a drop of 7% in same store sales in Australia and New Zealand. Earnings from its Australian stores also suffered from having to cope with a high NZ-Australian dollar exchange rate.

Carolyn Holmes of ABN Amro said this result highlighted the swings and roundabouts in apparel retailing. Next year could easily swing the other way for Hallenstein Glasson. She raised her target price from $5.42 to $5.52.

Postie Plus lifted first-half sales by 12.5%, helped by new store openings. However, it recorded a small $500,000 loss, compared with a profit of $700,000 in the same period of last year. Analysts said the company cleared summer stock earlier than usual at low prices to create space for higher profit margin autumn and winter ranges.

Hellaby Holdings - owner of the BBQ Factory, Number One Shoe Warehouse and Hannahs - said trading had been very difficult due to competitive pressures caused mainly by adverse weather conditions. The group sold its Rodd & Gunn chain last July. Hellaby's other subsidiaries reported mixed fortunes - its automotive division, which includes Brake & Transmission, did well, but its industrial group was hit by strong competition. Overall, Hellaby's first-half tax-paid profit fell 70% to $2.8m, which was in line with previous profit warnings from the company.

While most shareholders now consider Pumpkin Patch a global player, it retains an important local presence, with 50 stores, including an extra four opened in the past year. First-half sales in New Zealand rose by 3.5% to $31.1m, but ABN Amro estimates that sales in the average store fell by 2.7%.

Pumpkin Patch's biggest problem was in Australia, where it encountered difficult trading conditions, and profitability was affected by costs associated with store openings. Earnings before interest and tax rose by a modest 3% to $16.3m. But the Australian wholesale division did better than expected. Pumpkin Patch's best result was in the United States, where it has opened 20 stores over the past year. First-half sales there rose 344% to $US7.1m ($9.97m), much better than analyst expectations. Results from other countries, including the United Kingdom, were in line with expectations.

UPDATED REPORT: After cutting margins to retain market share, retailer Postie Plus Group Ltd has reported a $488,000 half-year loss.  The loss compared with a profit of $735,000 for the corresponding period a year earlier.

The result for the six months to January 31 came on a 12.5 per cent increase in sales on an all stores basis to $65.2 million.  A fully imputed interim dividend of 2c per share will be paid, compared to 3c per share paid for the first half a year ago.

Chairman Peter van Rij said it would be difficult for the group to achieve an annual result at the level of 2006, when the company reported full year net profit after tax rose 135 per cent to $3.9 million.

But he did say that given continued economic uncertainty it was premature to provide specific earnings guidance.  The traditional pattern for the group was for a higher level of sales in the second half-year, he said.

An encouraging level of profitable sales was recorded in February and the company was positioned to target a good recovery in profitability in the second half under normal trading conditions.

The company's emphasis on inventory control, with a resulting clean stock position, enabling it to place fresh autumn-winter season ranges onto the sales floor significantly ahead of the usual timing, Mr van Rij said.

The significant first half sales growth was pleasing in a challenging summer season, marked by fluctuations in discretionary spending by consumers.

The group's Postie+ stores had expanded sales in a competitive market, while electing to trade away some margin to ensure the apparel division would be clean of summer stocks by the end of the season, chief executive Ron Boskell said.  That had resulted in less clearance of summer stock early in the second half.

New stores at Upper Hutt and Kaikoura took the total number of Postie Plus stores to 74 at the end of the first half.

The Arbuckle chain of 32 manchester and homeware stores had continued to benefit from new strategies, Mr Boskell said.

The Baby City chain of 14 nursery and children's apparel and equipment stores maintained and expanded its segment leadership with excellent sales growth.

The half-year loss announced today was in line with guidance provided by the company a month ago and its share price was unchanged in early trade today at 87c.

A shareholder at the Postie Plus annual meeting in Christchurch today cast doubt on the veracity of Sheffield Consulting research into fee rates for directors.  A majority of shareholders eventually agreed to the proposal to raise directors' fees by $90,000 to a total of $250,000 but several voted against it.

Chairman Peter Van Rij justified the increase by saying executive employment company Sheffield Consulting had carried out research that showed it was necessary to offer $40,000 to a new director to attract necessary skills and talent.

But the dissenting shareholder cited at least half a dozen listed companies whose share price performance had provided good to spectacular returns over the past year and where the directors of those companies were being paid fees between $20,000 to $35,000 with the chair receiving closer to $50,000.

The companies paying more modest fees included the likes of Smiths City.

The shareholder pointed out that since listing two years ago the Postie Plus share price was only just returning to the $1 listing price with the prices up 1c to 97 cents in late trading today.

He said he had a lot to recoup yet and the directors needed to earn the rise.

Another shareholder who said he had a significant stake reiterated the view that shareholders should defer the rise for another year.

Another shareholder, Ian Urquhart, asked about the directors' view of a possible takeover given the relatively muted share price and the sale of 20 per cent of the shares in the company by the Dellaca family, which founded the company and which retains 15 per cent.

In the listing prospectus the Dellaca family said they would not sell any shares for at least 15 months after listing.

Chairman Mr Van Rij said the current stakes held by the family and others would be a bulwark against share risers.

He said strong sales at the end of its 2006 financial year had continued into the current year, with sales in the October quarter up 13 per cent to $28 million.

"The benefits of new strategic initiatives are just surfacing and have the potential to unleash greater value," he said.

The recovery in sales and earnings in 2006 reflected strong growth across all core brands of the company, Mr Peter van Rij said.

After winning an end to youth rates at the country's Postie Plus shops the union has now negotiated a national collective agreement for all Postie group members.

Southern Regional Secretary and advocate Paul Watson said the national agreement is a platform for future bargaining in the Postie Plus, Baby City and Arbuckles stores.

"The company is engaging constructively but we still have more to achieve. Youth rates have gone and the new pay and progression bands lift pay by $1.00 - $2.00 per hour for members at the lower end of the scale. But those members on higher rates were offered only 3.5% on their paid rates and the union will be campaigning next year for a better wage increase for this group and others."

Louise Marsters, site delegate at New Lynn Postie Plus and negotiating team member agrees.

"Negotiations went really well but we will achieve more with more members. Getting a national agreement was really important and we can now build on this."

Paul Young "vision casts" for his staff.  It's a term that conjures up some intriguing images. Cast for a vision and is it caught? Are Young's visions ethereal or something more solid, a dream he hopes to make real?

"Vision casting", it transpires, means inspiring workers. And, at a guess, Young's visions are of the tangible variety. There's nothing ethereal about this business manager, a man of forceful political views, hardnosed opinions and a surprising laugh, a giggling hee-haw that trips conversations mid-sentence.

It's been a heady year for Young. He gathered an army of budget retail brands and turned them into the multi-headed Postie Plus Group, which bounded on to the sharemarket in September.

Postie Plus is small - market capitalisation is around $48 million - but demand for its shares, listed at $1, has seen them settle at around $1.20.

Postie Plus likes to thumb its nose at the slick, cynical corporate world.

It doesn't deny commercial reality; the products it sells are bought in bulk from China and India, but this retail company is built on self-proclaimed virtues, shot through with Christian belief. And that's how Young likes it.

The company was formerly the Dellaca Group, a family business born in Westport 92 years ago. It changed its name for the listing and is now the umbrella for four brands - Postie+, Babycity, and recent purchases Rendells and Arbuckles. Last month it bought 10 Gardner Fashions shops, which will be rebranded as Rendells stores.

None of these could be described as fashion icons. Instead, they target middle New Zealand, a market that may sound unsexy but which has a decent chunk of disposable income.

Postie Plus deals in clothing and manchester that is not too cheap but not too dear, not low quality, but not top of the line either.

This middle-of-the-road market is conservatively predicted to produce a profit for the Postie Plus Group of $4.3 million by July 31 next year.

Young says the market is 75 per cent of New Zealand, minus the top 10 per cent, the "snobs and people who buy for the sake of brands" , and the bottom 10 to 15 per cent with little discretionary income.

The Postie Plus offices in Auckland - its head office is in Christchurch - are like the company itself, basic and practical.

Young, hair slicked tidily, wears a dark suit with a mobile jutting out of his top pocket. He charges cheerfully down the narrow hallway to the nearest meeting room.

It is spacious but spartan, with little natural light. A large table is created out of an assemblage of small ones slotted together and there is a whiteboard in the corner.

Young hates having his picture taken and is delighted when publication of this story is postponed. Actually, he wouldn't be offended if we didn't run an article at all. As he comments on my departure, running a public company sure knocks your privacy.

Here he is now, answering questions about his personal beliefs. Not that he minds too much, because those same beliefs permeate the bones of the company.

Young votes to the right, with many of his views falling into National or United Future territory. He believes values have declined, both in business and the community. As evidence, he points to the increased promiscuity in movies.

Young is particularly interested in the wellbeing of young people.  "The younger drinking age, pubs ... open longer, younger driving age, more traffic, looking at legalising marijuana ... a dangerous combination. We are stacking the odds against them."

Young, a 51-year-old twin, was the youngest of five children born to Ngaire, a "natural wife and mother", and her husband, Dempsey, a general manager at the Westfield freezing works. Auckland-born, he lives in Christchurch with his wife. One of their four children lives in Whakatane. The others, the youngest aged 17, are still at home.

Family and work dominate Young's life. Sometimes he goes out for a night at the trots, but, as one friend says, even at 10pm on Saturday he is more likely to be working.

An accountant, he entered the corporate world as a "turnaround manager", first at Countrywide Bank then at United Bank.

He then moved to private family company Dixon Boana group, a stationery wholesaler, whose former director Guy Boana recalls him as "a good man to work with". Boana says Young had integrity and humour. "When things didn't seem as rosy as you might like, he put a good spin on things."

Young joined the Dellaca Group eight years ago as a troubleshooter. Initially, says the prospectus, he was there "to manage the business through a difficult financial period", but "his skills, energy and integrity became so highly valued by the other directors and shareholders that he was invited to stay on".

He is now the largest shareholder, with a 9.59 per cent stake worth about $4.7 million at the current share price. This financial year, if Postie Plus meets its prospectus forecasts, he will be paid between $220,000 and $250,000.

Young on wealth: "I am very wealthy. I love my wife and know it is returned, it is also the same with my children. I have some great special friends, work with some neat and competent people. That is my wealth."

Postie Plus is the perfect home for this deeply religious man. The chairman, Peter van Rij, is also a Christian and the Dellaca family, who retain shares and executive posts, have similar ethical views.

Postie Plus' rhetoric is reflected in a strict code that includes bans on share options, loans to directors or executives and golden parachutes for directors unless shareholder-approved.

Says Young: "We strive for a high level of ethics ... Our standards need to be higher than what is normal or common business practice as it seems generation by generation our standards become lower at a business and public level."

He vets potential staff carefully and says 95 per cent are happy or reasonably happy, according to in-house surveys.

He says the company would not hesitate to charge a worker who stole. "It dirties the family - you have to have values in business and you have to enforce them."

Postie Plus, in Young's eyes, is family. The metaphor goes beyond the people.  He describes the purchases of Rendells and Arbuckles as a way of protecting the industry's babies against the big players.

Combining several brands means the parent company can offer pay and prospects as inviting as those at, for example, industry behemoth The Warehouse.

"The idea of Postie Plus is to get similar retailers together so we can negotiate better [for such things as leases], be in a stronger position and attract personnel."

Young says consumers then get the advantage of a variety of brands, rather than one large brand dominating small towns.

Postie Plus also runs a cashback loyalty scheme for schools buying its uniforms, and returned $250,000 in the last half-year.

A business, says Young, must have a social conscience. "I think people will buy a product they feel good about. The public is supportive of business that takes a wider view than just making a dollar."