Ragtrader touched base with independent retailers affected by New Zealand’s earthquakes in the last edition. Here, Nadia Stennett checks on the majors.
Around 20,000 earthquakes are recorded in New Zealand every year. Located in the highly active Pacific Ring of Fire, New Zealand is amoung the most vulnerable countries in the world to geological activity. The overwhelming majority of quakes are so minor they are usually not able to be felt, but on February 22 at 12:51 NZST in Christchurch, there was no denying a quake had hit.
Registering 6.3 on the Richter Scale, the earthquake that struck the capital of New Zealand’s South Island claimed 182 lives and destroyed over $15 billion worth of property in around 25 seconds. But the destruction hadn’t finished. Just three months later, on June 13, a large aftershock followed, crippling efforts to move on from the devastation of February 22.
Now, as Christchurch attempts to pick up the pieces once more, Australian retailers operating in the market have found a light at the end of a tough trading tunnel. Kmart Shirley store manager Dennis Wilson sheds light on the process.
“It was quite an unusual experience to go through,” Wilson says. “The store went black for a few seconds until the emergency lights came on. We had staff and customers being thrown around...there was stock everywhere, water flowing through the store and we were getting aftershocks.”
The Kmart store in the popular Shirley shopping mall, The Palms, was one of the hardest hit stores in the complex, suffering structural damage to weight-bearing columns and intensive liquefaction. It is also one of 110 stores located in the centre still forced to remain shut as major structural repairs and rebuilding continue well beyond their initial timeline. The Palms mall, which had originally forecast it would reopen in late June, posted a new statement on it’s website after the June aftershock, saying it would have to prolong the period until trading could recommence.
In a statement on the mall’s site, owners AMP Capital Investments stated: “We have had a team of the country’s leading structural engineers check the building thoroughly and the necessary repairs have been underway since the 22 February earthquake and subsequent 13 June earthquake. AMP takes the welfare and safety of customers and retailers seriously and remains committed to re-establishing normal operations as soon as is practical to do so.”
However, ongoing aftershocks continue to hamper rebuilding efforts, prolonging revenue injury.
Kmart’s total sales for the quarter fell by 2.5 per cent, echoing the impact of catastrophe events on the store’s business – while Westfarmers reported its insurance business would affect the investment group’s 2011 earnings by a further $40 million – and although insurance will cover the cost of loss and damage, Kmart New Zealand manager Sue Smith says: “The excess is going to impact us quite hard financially. We haven’t been paid yet, so we’ll really have to wait and see how hard that affects us.”
After the second quake on June 13, New Zealand stocks fell to their lowest level in months, with the NZX 50 dropping 13.94 points. Even those retailers that had fortunately escaped significant physical damage to their business were not immune from more insidious financial injury. Despite strong performance from its Australian stores, Hallenstein Glasson Holdings reported its group sales were down 3.7 per cent for the season in March, sighting the February 22 earthquake as a reason for the the decline. At the same time, Billabong International revised its net profit forecast for 2010/11 to a two to six per cent drop in NPAT on the prior year in constant currency terms.
