Watson pushes FlyingPig shuffle

By KARYN SCHERER

New Zealand's largest appliance retailer, the Pacific Retail Group, is considering boosting its investment in fledgling internet store FlyingPig.

The move is being promoted by the company's main shareholder, Eric Watson, as a way of allowing another of his investments, technology company Advantage Group, to quit its stake in the e-tailer.

Pacific Retail, which owns the Noel Leeming, Bond & Bond and Computer City chains, already owns 39 per cent of FlyingPig.

It revealed in June that it had lost just over $1 million on the venture to the end of March, and has tried to allay shareholder concerns about the investment by emphasising it has taken steps to reduce its losses.

Mr Watson confirmed yesterday that he was keen to see Advantage quit its stake, saying it had served its purpose by providing the technology and building the FlyingPig website.

But he defended his investment in the country's highest-profile e-tailer, saying he was convinced it had a long-term future.

His comments come as FlyingPig is looking for a new investor to pour more money into the business.

Documents distributed to potential investors show it is churning through around $200,000 a month, and does not expect to begin making money for at least another 18 months.

Mr Watson maintained that "a number of corporates" were showing interest in taking a stake in the company.

However, he also indicated that he was keen to see Pacific Retail boost its holding.

At present, most of FlyingPig's sales are books, which it sells through a licensing agreement with Whitcoulls.

FlyingPig co-founder Stefan Preston is a former head of Whitcoulls, and also happens to be Pacific Retail's managing director.

Mr Watson said yesterday that the investment was a logical one for the retail company.

As well as having retail expertise, it had a large customer base and links with one of the country's largest finance companies.

He also stressed that he was keen to see FlyingPig eventually branch out into products, and boost its sales of computers and software.

The move comes as Pacific Retail's former managing director, Greg Lancaster, is promoting his own online appliance store, Applianceshop.

Mr Lancaster launched the online store in May, together with another former Pacific Retail executive, John Hunter.

The pair claim the store is able to sell appliances around 10 per cent cheaper than their normal advertised price and are keen eventually to branch out into other durable goods.



Mr Watson played down the possibility that he will get out of FlyingPig altogether.

Documents distributed to potential investors last month indicated that bids would be considered for all or part of the company.

A Cullen Investments executive handling the deal, Phil Newland, told the Business Herald last week that the company was "open-minded" about either option.

Mr Watson said yesterday that it was unlikely he would consider selling the entire company "although, like any asset we own, if someone rolled up and paid a significant premium over what we thought it was worth we would consider selling any of our assets."