Forum Archive Index - February 2002

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

Hi Chris,

Thanks for the enlightening reply.  I didn't consciously remember 
reading your column on the subject in December, but after reading the 
excerpt I am now sure that I did.
>
>
>Since then I've become aware that the new strategy, which I agree
>completely changes the risk profile of the company, is probably 
>being driven by the new CEO. The expansion itself makes sense, the 
>existing premises are not ideal - there simply isn't enough room and 
>there isn't even air conditioning. An air bridge is logical, as is 
>gradually taking over space in the Harbour City Centre as it comes 
>free. Whether they had to buy the property themselves to achieve 
>this expansion is another issue altogether.
>
>
It sounds like the Kirks building itself is in need of a good refit.  
I wonder how it stacks up against current earthquake engineering 
standards?  Perhaps the capital requirements that Kirk's have are 
greater than they are letting on?  It is unthinkable that Kirks 
would ever move from it's site.  But then again, if the building next 
door was an option?  Perhaps they will tout that as a possibility 
when they renegotiate the rent agreement for that Kirk's site?  I 
wonder when the next rent renegotiation is due?  Could the purchase 
of the old DIC building be some giant bargaining chip in a game of 
rent poker?
>
>
>I think investors are bailing primarily due to the rights issue - 
>not because of the change of direction - many are Wellingtonians 
>fiercely loyal to the company and they will be selling only because 
>they can't afford to take up the rights. Interestingly, Kirks 
>director Murray Doyle, one of the most astute and well connected 
>investors around is an underwriter of the issue.
>
>
I can't quite remember how Kirks got onto the main board.  My memory 
says they were unlisted for a while, before gaining their sharemarket 
listing, but I can't remember where all the original shareholders 
came from.  My other memory says they were resurrected from some 
shell company that almost collapsed in the late 1980s.   Such 
memories if corrected would be useful in trying to assess the risk 
profile of the shareholders that are there now.

Of course, the contrary view of 'loyal shareholder' is someone 
lacking the analytical skills to realise what is happening until it 
is too late!   And that Murray Doyle is only underwriting the rights 
issue himself because he couldn't get anyone 'outside' to do it.   It 
is good to see people backing their own horse with their own money 
like this but at the same time such people can have distorted views 
of their own abilities.   That probably sounds extra cynical, but I 
know that retailing can be a tough game.
>
> 
>For these reasons I'd see the current weakness in the price as an
>opportunity rather than a problem.
>
>
I have to admit to having a soft spot for Kirks myself.  You 
have to respect a business that has been around since 1863.  Then 
again I thought the same of 'the Southerner', and we lost that after 
124 years of servicing the Christchurch to Invercargill rail route 
last week.   But I'll be keeping an eye on Kirks I think.
SNOOPY

disclosure:  do not hold shares in KRK



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