Indie store update
Kemp & Denning continues to struggle
K&D is forced to tighten its belt as tough trading conditions result in $98m loss
K&D is forced to tighten its belt as tough trading conditions result in $98m loss
 
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Toowoomba Home Hardware owner says changes to retail hours will have a negative impact
HNN Sources
Competitive pressures has forced K&D to tighten its belt and changes to store hours in Queensland will not benefit independent retailers, according to Craig's Highfields Home Hardware.
Trading conditions lead to K&D's $9.8m loss

Tasmanian-based hardware retailer Kemp and Denning Limited (K&D) has made cost cutting culture a priority after recording a $9.8 million loss in 2016-17.

A competitive environment resulted in an 18% reduction in revenue from $89 million to $67 million. The after-tax loss increased from $558,846 to $9.83 million.

General manager Jason Hutton said it had been a period of particularly tough and adverse conditions for retail and trade. He wrote in his report:
Both markets have been very competitive with challenges around sales and margin retention. In response, the Board and management determined that in order to remain viable we must simplify our operations and implement an aggressive cost reduction culture.

Chairman Greg Goodman said directors had taken decisive action to restructure the company with the closure of unprofitable operations in Devonport and Glenorchy and the sale of the trade division to Clennetts Mitre 10. He told The Mercury:
The sales have significantly strengthened our balance sheet and facilitated the repayment of all outstanding debt [$6.8 million].
The board decided to sell the trade business to eliminate ongoing operating risk and ensure shareholder value was preserved. Excellent progress has been made in the reduction of operating costs and working capital.

K&D also closed its Cambridge store, despite an ongoing lease going through until March 2018. It plans to sell the land and buildings at Kingston by the end of September.

The company's annual report says K&D has a strong balance sheet, assets of $38 million compared with liabilities of $14 million, and a clear strategy to get more value out of its real estate holdings. The directors report to shareholders said:
To maximise our impact we will increasingly look for opportunities to maximise the benefit of these properties.

The report also indicates that K&D's continuing operation in Melville Street, Hobart earned $22 million revenue but contributed $4.5 million to the loss.

The discontinued operations, including Glenorchy and Devonport, earned $44 million in revenue in the year to May but lost $5.2 million.

Related:
Indie store update: K&D store closures - HNN
QLD trading hours changes: Not happy

Craig's Highfields Home Hardware owner Craig Stibbard has criticised the Queensland Government's changes to trading hours, saying it would put more pressure on small businesses.

The amendments to opening hours for hardware stores, butchers, shops at international airports and tourist areas were passed through the Queensland Government recently, after Labor secured the LNP's support through extra changes.

But Mr Stibbard said allowing all hardware stores to open at 6am every day would only benefit large chains like Bunnings. He told The Chronicle:
I think it's crazy - most of the hardware stores are already open at 7am. It's just ludicrous. The big guys are just trying to squeeze the little guys out, there won't be any small ones left.
I probably don't think it's achieved a lot - you might be able to attract people outside of the normal trading hours, (but) with your overheads, your electricity prices, labour prices, opening a door is all a cost.

Toowoomba Chamber of Commerce CEO Jo Sheppard had a mixed reaction to changes which were designed to give small businesses more flexibility with their opening hours to help attract customers.

She said it was unlikely to be the last time the state government reviewed opening hours, considering the changing nature of business in Australia. Ms Sheppard said:
A couple of points I'd make is we need flexibility for businesses to have extended trading hours. Customers' expectations are that they are wanting extended hours for those bigger regions.
Toowoomba is one of the biggest online shoppers in the country, so to compete with that side of shopping traders need to be able to open more often. I don't think any government should look at this and say that's final.

Mr Stibbard said he was also unlikely to extend his opening hours.

Related:
Indie store update: Impact from new QLD retail hours - HNN
HNN Sources


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