Smiths City Dunedin, which moved to Crawford St this year, was among nine stores that temporarily closed yesterday after the company was placed into voluntary administration.
Property investor Jason La Hood, who is also a director of the city’s Golden Centre mall, said the announcement was “very unfortunate” for staff.
“If you are in a low-margin business with increasing fixed costs and your competitor is an Australian heavyweight such as Harvey Norman with immense buying power and a strong balance sheet then it doesn’t take much of a downturn for the dam to break.”
There was still strong demand for big-box retailing sites in Dunedin and the announcement would not affect this, Mr La Hood said.
Administrators BDO New Zealand said in a statement yesterday Smiths City had faced “increasing financial pressures in a challenging economic environment”.
“Despite closures of some stores and further downsizing measures, declining sales meant the director of the company took the decision that trading could no longer continue.
“The voluntary administration process aims to achieve the best outcome for all stakeholders.
“This may include selling the business and assets to interested parties.”
Founded in Christchurch in 1918, the home appliances and furniture retailer operates nine stores across the country and employs more than 110 staff.
As well as Dunedin, it has stores in Oamaru, Alexandra, Gore and Invercargill.
Downsizing was announced last month and included the closure of its Wānaka store.
After meeting staff yesterday, all Smiths City stores and its online shop were “temporarily closed” as administrators undertook an urgent assessment of the company’s finances, BDO said.
“The aim is to reopen stores later this week.”
Smiths City Dunedin opened its new store in Crawford St, opposite Big Save Furniture, earlier this year.
It announced the move in August last year, after its lease in the top floor of Meridian Mall expired.
Smiths City did not respond to a request for comment before deadline.
tim.scott@odt.co.nz
