KEY POINTS:
Hellaby Holdings has cancelled the sale of its footwear division after prospective buyers looked through the finances of No 1 Shoes and Hannahs.
The sale of the footwear business was believed to be likely following shareholder dissent over the impact of the retail business on trading results. But chief executive John Williamson confirmed yesterday the company would not be selling "for the time being".
Announcing the company's disappointing annual result yesterday, Williamson revealed a $9.8 million loss with no final dividend. Profits were hit by poor performances in all of the company's divisions and a $18.8 million writedown of its BBQ Factory business.
Hellaby's earnings before interest, tax, depreciation, amortisation and one-off transactions was $34 million - 28 per cent lower than last year's $47.6 million. Hellaby shares dropped 40c to $2.65.
Williamson confirmed that during a strategic review of footwear, prospective buyers undertook due diligence on the assets but he was not prepared to discuss whether any offers were received. He said the footwear chains were no different than the other Hellaby assets, that include industrial and automotive businesses, which could all be divested sometime.
But a retailing industry source expected footwear would be back in play.
Retail analyst Jason Familton, of First NZ Capital, said Hellaby had clearly been looking at selling.
"With the review, Hellaby was obviously looking for the right price and no one was willing to meet their expectations," he said.
The shoe chains have returned to favour at Hellaby after they attracted the board of directors opprobrium for the first half result when they suffered from poor sales due to the late start to summer, as did other retailers.
Williamson estimated that the company would make $45 million earnings before interest, tax, depreciation and amortisation for the financial year to June 30, 2008. Hellaby Holdings earnings results for the full year to June 30 showed second half earnings for footwear were up 20 per cent year and same store sales were up 8 per cent.
Results showed that all of the company's divisions - and not just shoes - had had a difficult time in the first half but improved in the second.
Elsewhere, Williamson announced that Hellaby had written off the remaining brand and goodwill value for its BBQ Factory outlets after it lost $2 million for the second year in a row. Williamson said that "the $25 million Hellaby paid for BBQ Factory [in July 2004] had been too high".
BBQ Factory was still not getting traction and Hellaby was looking at making improvement to the company and selling it at a later date.
Falconer said yesterday the company was understandably disappointed in the annual result. Familton said Hellaby had indicated under recently appointed CEO Williamson it would be taking a stronger role in the operation of its investment.
"That will be welcome as will increased disclosure and communication with the investment community."
Hellaby will not pay a final dividend.
BIG DROP
Year to June 30
Hellaby Holdings
Revenue
2007 - $486.5m
2006 - $487.15m
Net profit (loss)
2007 - ($9.8m)
2006 - $23.7m
