By IRENE CHAPPLE
Pacific Retail Group's Peter Halkett gazed into the crystal ball of newly bought UK retailer Powerhouse's future and spoke to a room full of people he couldn't see.
The technology that beamed the chief executive's occasionally static image into a meeting room at Auckland's Crowne Plaza Hotel last
week could not show him his audience.
"I'm not sure who got the best end of the deal," said Halkett. "I can't see anybody, but you can see me ... but we'll just leave it at that."
It was 6.30am in Halkett's new hometown of London. But despite the hour, Halkett kept the Powerhouse pow-wow upbeat, predicting that the UK's third-largest electronic retailer, bought by PRG from receivers seven weeks ago, would be in profit by 2005.
The Powerhouse purchase, he said, was PRG's first step towards becoming a multinational retailer.
Over the next half hour Halkett detailed the plans.
He pointed the finger at Powerhouse's management and marketing tactics for creating a corporate deadbeat.
"Powerhouse has had a history of underperformance ... There has been no real marketing plans as such, so it has underperformed. Every time it strikes an issue it throws people at it. The question hasn't been how do we do this smarter, quicker, faster, it is how many people do we need to fix it?"
A database of more than a million customers had not been mined and, said Halkett, "to the best of my knowledge they have never been mailed directly ... which I find quite staggering". That would change.
Nor had the company participated in growth categories such as computers, digital cameras, camcorders, phones and faxes. "If you are not moving forward and tackling growth categories you will ultimately suffer," he said.
Powerhouse is far smaller than market leaders Comet and Dixon group and around 90 of its 222 stores were losing money before it was placed in receivership in August.
Then along came PRG. The company had outgrown the New Zealand market and was looking for buying opportunities.
It has previously eyed Powerhouse and leaped at the opportunity to buy it cheap.
The purchase, financed from money already raised, cost $47.2 million. PRG now has control of 135 profitable stores, plant and equipment worth £21 million ($58.4 million), stock worth £34 million, plus a brand and customer database.
Halkett said the leases alone had been valued around £10 million.
He said there were four steps to getting Powerhouse back on track. The business needed to be made operational, sales had to be rebuilt and the brand repositioned.
Then other opportunities could be investigated, such as adding a finance arm.
Powerhouse was expected to lose money in the March 2004 year before a turnaround the following year.
PRG's medium-term goal was for Powerhouse to reach earnings before interest and tax of 3-5 per cent on turnover of £300-£400 million.
Suppliers were also very keen to support a third market player, said Halkett.
"Suppliers want number three in the market and have rallied around us because they are sick of the other two.
"This is a case of the quick and the nimble, the smart and the savvy. The entrepreneur will win out."
By IRENE CHAPPLE
Pacific Retail Group's Peter Halkett gazed into the crystal ball of newly bought UK retailer Powerhouse's future and spoke to a room full of people he couldn't see.
The technology that beamed the chief executive's occasionally static image into a meeting room at Auckland's Crowne Plaza Hotel last
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