Iconic Auckland department store Smith & Caughey’s says it is in talks to shuts its shop and online stores, likely early next year.

The proposal was announced to nearly 240 staff members on Wednesday morning.

The company has two stores: its flagship one in Queen St, central Auckland, and one in the suburb of Newmarket.

Both stores were closed for the rest of the day but would reopen on Thursday as usual at 10am.

The department store, which has been in business for about 144 years, said its proposal would be under consultation with staff for about five weeks.

It is considering feedback from staff, as well as any other avenues to potentially continue.

Smith & Caughey’s chairperson Tony Caughey said it was a “deeply emotional” time for customers, suppliers and staff.

“Since its founding by Marianne Smith, nee Caughey, in 1880, Smith & Caughey’s has focused on serving the people of Auckland, whilst preserving the traditions cherished by generations of discerning shoppers.

“However, over the last five years we have experienced a 40 percent decline in revenue from our physical stores from factors largely outside our control.

“As a result, the company is trading at a significant loss which is unsustainable. Sadly, we do not believe sales can be restored to levels necessary to continue to operate.”

There was a “perfect storm” of factors, including increasing competition from new malls, more luxury brand stores, and roadworks in the CBD, which contributed to the decision, Caughey said.

“In addition, the aftermath of the Covid pandemic has led to a reduction in the number of office workers in the central city on any given day, followed by the huge drop in consumer confidence and the mounting impact of the cost-of-living crises.

“While long term there will be a positive impact from the City Rail Link with Te Waihorotiu Station in mid-town, the expected upswing in foot-traffic and consumers into the city is still several years off.”

Despite the Board analysing more than a dozen options for the future of the business, no solution to deal with the associated risks in further investment were found, he said.

“Sadly, we don’t believe this is a storm to be weathered.

“In the absence of strong consumer confidence, an essential element for a prestige retail organisation, the company is concerned that it may no longer be able to sustain the impact of a continued sales drop in our physical stores compounding the impact of the past five years.

“This is an unsettling position for the staff, board and shareholders. We must be realistic and at the heart of us commencing this consultation process now, is the need to look after all Smith & Caughey’s staff as well as we can, and to operate in good faith.”

Caughey acknowledged the famous Christmas traditions at the department store, including Santa visits and colourful window displays. 

“For this reason, if the proposal proceeds, the plan would be to cease operation likely in early 2025.

“Whatever the outcome of the consultation process, our intention is still to offer our traditional experience of inspiring world class Christmas windows, Santa’s Enchanted Forest and Santa Claus himself.”

Other main city stores shut 

Smith and Caughey’s is not the first department store in a major city in New Zealand to feel hard times recently. 

The company noted other closures of big stores here and abroad in recent years due to challenges in the sector, including H&J Smith, David Jones, and Debenhams in the United Kingdom, as well as downsizing of Macy’s in the United States.

In January 2021, the H&J Smith Dunedin department store, formerly Arthur Barnett, in the Meridian Mall, closed its doors after 118 years.

Two years later in November H&J Smith closed its flagship store in Invercargill after 123 years of trading. The company also closed its stores in Queenstown, Gore, Balclutha, Te Anau and Mosgiel.

In January 2016 Wellington’s  Kirkcaldie & Stains shut up shop after more than 150 years in the business.

Ballantynes Department Store in Christchurch, established in 1854 first as Dunstable House, is continuing to trade.

– additional reporting ODT Online