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‘Deeply emotional’: Smith & Caughey’s set to close, loss of almost 250 jobs

Author
Shayne Currie,
Publish Date
Wed, 29 May 2024, 12:40pm
Smith & Caughey's says a "perfect storm" of factors has led to the proposal to close the retail institution. Photo / Michael Craig
Smith & Caughey's says a "perfect storm" of factors has led to the proposal to close the retail institution. Photo / Michael Craig

‘Deeply emotional’: Smith & Caughey’s set to close, loss of almost 250 jobs

Author
Shayne Currie,
Publish Date
Wed, 29 May 2024, 12:40pm

* Auckland’s flagship department store set to close in early 2025 

* Nearly 250 staff were briefed today on the closure proposal after 144 years in business 

* The upmarket department store has battled a 40 per cent drop in revenue in past 5 years 

Smith & Caughey’s will close for good in early 2025, under a proposal presented to its almost 250 staff today. 

The proposed closure of the 144-year-old business – including its prestigious and historic “Grande Dame” Queen St store – has been caused by a “perfect storm” of factors, say its owners, and marks a sad and heartbreaking day for the Auckland and wider New Zealand retail landscape. 

Smith & Caughey’s – famous for its upmarket brands, customer service and globally acclaimed Christmas window displays – has been a landmark, physically and culturally, in the city since Marianne Smith (nee Caughey) established a drapers and millinery shop in the city in 1880. 

Smith & Caughey’s stores in Queen St and Newmarket have been running at a loss, with a 40 per cent drop in revenue in the past five years, chairman Tony Caughey told the NZ Herald in an exclusive interview. 

The heritage Smith & Caughey's buildings have been a dominant feature of the Queen St retail landscape. Photo / Steven McNichollThe heritage Smith & Caughey's buildings have been a dominant feature of the Queen St retail landscape. Photo / Steven McNicholl 

He cited a range of factors that were largely outside of the company’s control, including the economic downturn and a big drop in consumer confidence; the rise of shopping malls; upmarket brands building their own retail stores; Auckland CBD traffic, crime and safety issues and a drop in pedestrians with many people still working from home. 

“The company is trading at a significant loss which is unsustainable. Sadly, we do not believe sales can be restored to levels necessary to continue to operate,” Caughey said in a statement. 

The presentation of the proposal today was “deeply emotional”, he said. 

“We are acutely mindful of the impact to staff, customers and suppliers by the proposal.” 

The announcement comes on the eve of the coalition Government’s first Budget and will be a visceral blow to a city and region struggling to emerge from a period of low consumer confidence. 

Smith & Caughey's has been a famous landmark on Queen St in Auckland for more than 140 years.Smith & Caughey's has been a famous landmark on Queen St in Auckland for more than 140 years. 

It also follows the closure of a number of department stores worldwide and locally. The likes of Macy’s and Nordstrom in North America are contracting, while Southland’s H&J Smith shut up shop last year and Wellington’s Kirkcaldie & Stains in 2016. 

The proposal to close the stores was presented to workers at an all-staff meeting in Smith & Caughey’s Queen St building on Wednesday morning. 

Caughey was at pains to say it was a proposal – “this is not a done deal” – and that staff would be consulted over the next five weeks. 

The company would consider and evaluate staff feedback on the proposal and any other options for the retail business that might emerge. 

But it will take a Herculean effort to save the business. 

Smith & Caughey chair Tony Caughey.Smith & Caughey chair Tony Caughey. 

In an interview with the Herald, Caughey revealed around a dozen options had been considered by the owners to retain the business, including the possibility of closing one of the two stores, or moving to smaller shops. 

He said there was no single factor that had forced the company to consider the proposal. 

“In recent years, the retail landscape has undergone a significant transformation. This includes the growth of increased competition from new shopping malls, and the rise of retail stores for luxury and prestige brands that has reshaped consumer preference and impacted the appeal of prestige department stores.” 

Fewer people are coming into the city, compared with pre-Covid days. Photo / Michael CraigFewer people are coming into the city, compared with pre-Covid days. Photo / Michael Craig 

The aftermath of Covid had also seen fewer people coming into the city for work. 

That was followed by a “huge drop in consumer confidence and the mounting impact of the cost-of-living crises”. 

“The impacts of the ongoing roadworks and development activity in the area have been disruptive to the traditional shopper who is coming into the city centre less frequently.” 

An early photo of the Smith & Caughey's department store in Queen St.An early photo of the Smith & Caughey's department store in Queen St. 

While the opening of the City Rail Link – and the nearby Te Waihorotiu station – would have a positive impact on mid-town Auckland, this was still several years off. 

“We can’t see a way we can hang in there and when it does open, it won’t be enough to compensate all of these other factors,” Caughey told the Herald. 

He said professional advisers had been engaged to look at a range of potential options before today’s proposal was considered. 

“But in the current climate there appears to be no appetite for the risks associated with further investment in retail. We have been unable to find a solution to deal with the significant headwinds we face... Sadly, we don’t believe this is a storm to be weathered. In the absence of strong consumer confidence, an essential element for a prestige retail organisation, the company is concerned that it may no longer be able to sustain the impact of a continued sales drop in our physical stores compounding the impact of the past five years. 

Smith & Caughey's dominant Queen St facade. Photo / Michael CraigSmith & Caughey's dominant Queen St facade. Photo / Michael Craig 

“This is an unsettling position for the staff, board and shareholders. We must be realistic and at the heart of us commencing this consultation process now, is the need to look after all Smith & Caughey’s staff as well as we can, and to operate in good faith.” 

Caughey said the company was mindful of the company’s role in family traditions “and understood the gap the annual Christmas experience would leave”. 

“For this reason, if the proposal proceeds, the plan would be to cease operation likely in early 2025. Whatever the outcome of the consultation process, our intention is still to offer our traditional experience of inspiring world-class Christmas windows, Santa’s Enchanted Forest and Santa Claus himself.” 

Smith & Caughey’s stores would remain closed for the rest of today but reopen tomorrow, as usual, at 10am. 

Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor. 

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