Yesterday Smiths City announced that it had entered into a conditional agreement to purchase the business and assets of Panmure Furniture City 1983 (aka Furniture City) and its logistics operation Lucky Dragon.
Auckland-based Furniture City has two stores in Auckland and one in Whangarei, plus an online presence and an Auckland fulfilment facility. It is 100% New Zealand owned and has been operating for some 30 years in the Auckland market.
Smiths City will spend $5.85 million on the purchase. The due diligence deadline is 29 February and the proposed possession/settlement date 1 April 2016.
This move fits in with CEO Roy Campbell's previously stated desire to expand nationally:
“Clearly we need to have a national presence and the sales we achieve out of Auckland without having a physical presence indicate quite strongly that the Auckland customer is looking for a credible trusted alternative in the marketplace – which fits with our stated desire to make sure that our footprint expands through the whole of New Zealand."
Over the last 24 hours, CEO Roy Campbell has updated us with the following Q&A:
Wares: Will the Furniture City stores be rebranded Smiths City?
Roy Campbell: Smiths City have consistently indicated that our Smiths City brand is the one we’ll focus on and develop. You’ve already seen this with the rebranding of LV Martin to Smiths City in Wellington and the rebranding of Powerstore in Christchurch. With the acquisition of Furniture City, it is therefore reasonable to anticipate that at a point in the future (as yet to be defined), the Furniture City livery will be rebranded to reflect our strategic direction.
Wares: Will the product offering expand to be broadly comparable with the other Smiths City stores?
Roy Campbell: At this stage, we are intent on operating Furniture City as it currently presents to the Auckland market; it is a highly successful business and it would be disingenuous of us to alter such a successful formula without first gaining deep knowledge of how it interacts with the Auckland customer base. That said, I’m confident that we will review the current product mix against that of Smiths City with a view to identifying where opportunities may lie to improve and enhance the current offer.
Wares: What is the timeline for any of the above?
Roy Campbell: Smiths City are currently conducting via Colmar Brunton, in-depth research into the habits and preferences of the New Zealand shopper. When finalised, this research will provide one of the strategic drivers of our strategy going forward and will influence the look, feel and range of our market offering. We expect to see the results from this research in the 1st quarter of 2016.