Clothing retailer Postie Plus Group said its third quarter sales are down 5 per cent on top of the 4.6 per cent decline in its first-half sales.
The announcement was made at the company's special meeting today, at which shareholders "overwhelmingly" approved the just over $4 million sale of its Babycity chain of stores to a private equity-funded company led by former L V Martin chief executive Trevor Douthett.
The company did not provide details of the voting outcome.
Douthett will take over 11 of the 18 stores, either by assignment of the lease or by sub-leasing, and has confirmed he will take up two of five optional tenancies in Dunedin and Nelson.
Of the remaining stores, the Queenstown store will be sub-leased, the Wanganui store reduced to a stand-alone Postie Plus store, the Lynnmall, Auckland store will become a clearance outlet, the Invercargill store will be used to extend the Postie Plus offering to include a range of health and beauty products and the Hastings store will close when its lease expires in late June.
When Postie Plus bought the chain in 2003, there were 24 stores.
Postie Plus will continue to supply apparel to the Babycity chain under a wholesale agreement and has signed a five-year restraint-of-trade agreement in infant hardware retailing. It expects the sale to settle in the next few days.
"This is a significant milestone and, with our shareholders' approval, we can now get on with realising Postie Plus' potential," chairman Richard Punter said.
The company is in a strong position: "We have a solid structural, operational and financial platform for managed growth with ongoing improvements in efficiencies and the cost of doing business," Punter said.
"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.
Postie Plus has not had much luck with brands other than its flagship chain. It sold its Arbuckles homewares chain to Kathmandu founder Jan Cameron, who owns 19.9 per cent of Postie Plus, in 2008 and in the couple of years after its float phased out a couple of other women's wear brands, Rendells and Gardner Fashions.
When the Babycity deal was announced, chief executive Ron Boskell acknowledged that, at $100 million a year in sales, the 81-store Postie Plus chain is "a little bit light" for a listed company.
While the company's track record with so called complementary brands hasn't been good, "we've got the experience of what not to do, which is helpful", Boskell said last month.
Today, Boskell said the retail climate is tough and third quarter sales to the end of April are down 5 per cent compared with the same three months last year.
"Expenses are continuing to be well managed to offset the current sales downturn and we are confident that momentum will pick up and we will end the fourth quarter strongly," Boskell 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 Plus shares are unchanged at 24 cents, valuing the company at $9.6 million compared with its $40 million value at the 2003 float. The shares have fallen from their year-high at 32 cents in January.