K&D forced to renovate business in wake of chief executive’s departure and ‘disappointing’ annual results

EMBATTLED Tasmanian hardware chain Kemp & Denning Limited has lost its chief executive amid a series of property sales and a reconstruction of its business model.

EMBATTLED Tasmanian hardware chain Kemp & Denning Limited has lost its chief executive amid a series of property sales and a reconstruction of its business model.

CEO Nick Fazzolari is understood to have returned to Melbourne and a replacement is yet to be appointed.

K&D is selling its Glenorchy site to developer Errol Stewart for $6 million and has announced the closure of its Devonport K&D Warehouse.

Chairman Greg Goodman said it was business as usual at the Hobart, Cambridge and Kingston sites, adding the Melville St store was not for sale.

The moves come amid a tough operating environment for the 115-year-old company, which recorded an “extremely disappointing” result last year.

Kemp & Denning Limited’s most recent annual report revealed an after-tax loss of $558,846, compared with a $242,738 loss the year before.

The company suffered a 10 per cent fall in revenue from $90.08 million to $81.93 million, according to the report lodged with the Australian Securities and Investments Commission.

Former chairman Ray Brown’s director’s report said competitors had opened a 90 per cent increase in retail trade space.

“Directors have constantly focused on dealing with the changes, the sheer weight of the increased competition has rendered our current business model unsustainable,” the report said.

“The board has decided to transform our business model so that it is predominantly trade focused. During the transformation to trade any assets that are not delivering a satisfactory return will be realised and excess capital returned to shareholders.”

Mr Fazzolari’s report at the time said: “Our business will continue to focus on core segments and activities we can defend and grow while we manage in an orderly manner the existing of non-performing segments.”

The poor results and outlook have devastated the company’s apparent value.

K&D is a public unlisted company with 2,683,635 issued shares overwhelmingly owned by the Kemp family.

In 2014, trading in the shares was between $13 and $13.50 indicating a company value of $36 million. The most recent trade of 3600 shares at $3.26 on February 16 indicated a value of $8.7 million.

As at May 31, the company owned freehold land worth $15.7 million, buildings worth $10.7 million and net assets of $35 million.

In 2012, a Woolworths-owned subsidiary John Danks and Son made a non-binding indicative offer of $68 million for K&D but was rebuffed.

Two years later, the company called for expressions of interest but did not accept any of the three approaches.