Forum Archive Index - February 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

I always have a question mark over small emerging companies, but 
Kirks isn't exactly the new boy on the block.  It's a Wellington icon 
that has been around for years and is one of the few retail outfits 
that seemingly hasn't been drastically impacted by the rise and rise 
of "the Warehouse". 

I haven't been 'shopping' at Kirks for years (not living in 
Wellington being my excuse), but I do know people in Wellington who 
if they want quality clothing  will automatically go there.  I guess 
despite the era of cheap imports, Kirks still has a name that counts!

I did however, have a brief wander through Kirks in the weeks leading 
up to Christmas.  Stock piled high and people scrambling everywhere 
to buy it was my impression!   Kirks have sold their own building and 
are concentrating on their skills as a retailer, turning over stock 
at good margins.   I think the market likes this.  When a company 
'swims against the tide' it makes me sit up and take notice.  I 
remember the demise of rival traditional department stores, the DIC 
and James Smiths, but it doesn't look like Kirks will be going the 
same way.   Also catching my contrarian eye as the retail wave has 
been sweeping the country is that Kirks is one company that, in share 
price terms, hasn't caught it.

I suspect the cash issue is the answer as to why Kirks is going in 
the other direction.   But one thing I don't understand is this. 
 
Having got out of property by selling their own building, why are 
they getting back into it again by buying what was the DIC next door? 
  I understand Kirks are short of space, so are they going to kick 
out some of those boutique shops next door and build an aerial 
walkway between the two buildings to try and link the two stores?   
That would make sense but in the interim they risk being judged not 
as the retail company they were, but a property company.   The 
dividend is almost certain to be slashed as they fund buying the 
building next door.  Who is it they are buying that DIC building 
from, and why couldn't they just lease the space they needed?  We 
know that property companies generally trade near or just below asset 
backing, so what does this say for the direction of the Kirks share 
price?   As yield investors bail out my instinct says the Kirk's 
share price is heading south, but then I am not a Wellingtonian on 
the spot.   In the light of my comments do you have anything to add 
on this 'penny dreadful' ;-) Chris?  SNOOPY




 
---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
----------------------------------
"Sometimes to see the wood from the trees, 
you have to cut down all the trees."



----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/