F&P-Lowe's deal lifts share price

By IRENE CHAPPLE

Fisher & Paykel Appliances' share price shot to new highs yesterday after it announced a distribution deal with United States big box retailer Lowe's.

The good news was tempered with a little bad - Harvey Norman, which has stocked Fisher & Paykel products for seven years as an exclusive dealership, will end its New Zealand partnership with the brand from July.

But the market saw only good in yesterday's news, pushing the share price up 31c, or more than 7 per cent. The stock closed at a record high of $4.69.

The news comes just a few weeks after Fisher & Paykel increased its full-year profit forecast and announced a distribution deal with US giant Whirlpool.

The company, which will reveal its earnings for the year to March on May 20, increased its forecast from $73.5 million to between $80 million and $85 million.

Last year Fisher & Paykel sold 108,700 appliances in the United States, which is its third-largest market after Australia and New Zealand.

It is trying to build a market in the United States to lessen its reliance on Australia and New Zealand, which account for 76 per cent of sales.

Fisher & Paykel Appliances managing director John Bongard said the agreement with Lowe's, which has about 950 stores in 45 states, could increase distribution by 50 per cent.

Bongard said the objective of Lowe's and Fisher & Paykel was to focus on the high end of the market.

Fisher & Paykel products would eventually be stocked in all the stores, he said, although that might take some months.

In New Zealand, Harvey Norman said it would pull out of its arrangement with Fisher & Paykel because customers wanted more choice.

Fisher & Paykel's exclusive dealership arrangements - upheld by the High Court in a 1990 ruling - have burned off retailers, most notably Noel Leeming in 1996.

But Bongard said research indicated that customers visited at least three shops before buying whiteware.

"We are confident people will still go and shop ... hopefully in a Fisher & Paykel store."

The brand is stocked in 300 stores, including those of Farmers and Hill & Stewart.

Bongard said there were other retailers who wanted to join the exclusive dealership arrangement.

He declined to give any names.

The Fisher & Paykel section of Harvey Norman is believed to make up 30 to 40 per cent of the retail chain's sales.

The company, which is listed in Australia, reported New Zealand retail sales of A$263.4 million in its annual report to June last year.

Its general manager electrical, David Ackery, said the company would love to continue stocking Fisher & Paykel, but customers wanted more choice.

Harvey Norman would be stocking other brands from July and the company expected the increase in choice would attract more customers and produce "a substantial increase in revenue."

Harvey Norman would continue stocking Fisher & Paykel in other markets, including Europe and Australia, where it is not constrained by an exclusive dealership.

Ackery said that if Fisher & Paykel changed its strategy of exclusivity, Harvey Norman would restock the brand.

But Bongard said the company had no intention of rethinking the policy.