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Struggling Renaissance suffers again

15 Jul 2013

Following the closure of four Yoobee retail stores in New Zealand, things have gone from bad to worse with Renaissance forecasting another "disappointing" financial year.

Announced early today on Techday, further details of plans to close 40% of Yoobee stores have been revealed, through a statement by chairman Colin Giffney on behalf of the board.

Under the heading 'Retail', the embattled company, already reeling from a tough twelve months including a 33% shares drop and a $3m loss, announced:

"After discussions with Apple Inc. the last party to examine Retail pulled out on 28 June.

"Consequently the board and management have moved to right size the Retail division. Today, four of its nine retail stores were closed.

"Today management closed the Albany, Britomart, Sylvia Park and Dunedin stores.

"The remaining stores - Newmarket, Hamilton, Wellington, and Christchurch - are all full service stores.

"In those stores we will continue to develop the in-store Guru support and the full service functions."

Renaissance claims these differentiate "us from the competition and have been well received," claiming "the remaining stores are the best performing and give us the best chance of returning to profitability."

Special meeting

On July 6 2012, the statement says Renaissance held a "special meeting" to approve the sale of its traditional distribution activities, and at about the same time a company approached the board wishing to have discussions, focusing on Education activities.

"The board had been discussing the viability of the trimmed down company as a public listed entity after the sale of distribution," the statement reads.

"On 30 August the board accepted a proposal from Grant Samuel to test the market for a sale of the two divisions. The board has referred to this process euphemistically as the "strategic review".

"Following some exploratory discussions the board signed a non-disclosure agreement with a party interested in our Education subsidiary. That NDA was executed on 31 July 2012, two weeks short of a year ago. Due diligence commenced. Discussions have continued on and off since that date."

Renaissance went on to say that they started in one form but from early in 2013 quite a different proposal was considered.

"On 13 May the party sought a period of exclusivity to complete even more detailed due diligence," the statement reads.

"Late on Friday 12 July we received a proposal and the board is working through the details.

"Despite this process being bruising, costly and distracting, the board and senior management team have remained focused on the school's goals, launching two new programmes, Masterclasses, an online learning platform and a degree course in recent months.

"It is imperative that management is allowed to focus back on the business."

Concluding the statement, Renassiance says the year to September 2013 is going to be "another disappointing result", following financial troubles at the start of the year also.

"This is totally attributable to Retail's poor performance," the company says.

"The Education division has been performing well and may record a result slightly less than the target indicated at the 31 March AGM.

"However, in the first instance we have to get Retail back to break-even.

"We do not underestimate the difficulty of that task but management has a plan and part of that plan was implemented today with the closure of four stores."