Smiths City case study

Case study: Smiths City

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This one-hundred year-old national retailer was saved from collapse through a structured buy-out with an entrepreneurial investor.

Founded in 1918, Smiths City Group Limited (Smiths City) has been a cornerstone of the retail sector in Christchurch and throughout regional New Zealand, specialising in consumer electronic products, kitchen appliances, home heating solutions, home furnishings and other household items. The Company has built a reputation for offering New Zealanders trusted advice and quality service. Smiths City also has a finance division providing payment options for customers.

Finding a way forward

The Company had not been immune to the challenges facing the retail sector and experienced several challenging years in terms of financial performance in the lead up to COVID-19, which exacerbated Smiths City’s situation due to the trading restrictions imposed during lockdown at Alert Level 4.

Smiths City reached out to PwC whose Corporate Finance and Restructuring Team acted as financial and commercial adviser to Smiths City. PwC was able to bring together a blended skill set including M&A, insolvency, financial modelling and legal expertise to manage the process and stakeholder relationships throughout a challenging time, assisting Smiths City with the sale of its business and assets to Polar Capital. This work provided confidence to banks and other stakeholders which led to an accelerated and successful transaction.

A solid result 

The sale was announced on 18 May 2020 and the business transferred to its new owner shortly thereafter. The majority of work to make this happen took place during the stringent Level 4 and 3 lockdown period which meant there were a number of practical challenges, all of which were successfully overcome using the latest technology. 

Smiths City’s new Chief Executive Tony Allison said: “The vast majority of jobs were saved and an outlet for suppliers and local service providers was retained. The agreement with Polar Capital allows Smiths City to continue to operate and grow the business while retaining 75% of its staff and 22 stores, and Smiths City remains a tenant for many landlords.”

As the country has come out of full lockdown and worked through the alert levels we have seen retail and consumer spending begin to increase and through a number of cost saving initiatives the new Smiths City is strengthening its position. During the process, Smiths City was able to achieve a managed exit out of a number of lossmaking stores and has already found a number of other locations where it can open new stores to continue to grow in regional New Zealand.

 

"The vast majority of jobs were saved and an outlet for suppliers and local service providers was retained. The agreement with Polar Capital allows Smiths City to continue to operate and grow the business while retaining 75% of its staff and 22 stores, and Smiths City remains a tenant for many landlords."

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Contact us

Malcolm Hollis

Malcolm Hollis

Partner, PwC New Zealand

Tel: +64 21 590 422

Craig Armitage

Craig Armitage

Canterbury Managing Partner, PwC New Zealand

Tel: +64 21 616 232

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