Smith & Caughey’s has been saved - the 144-year-old retail institution will live on, at a smaller scale, at its famous Queen St property.

About 100 of the retailer’s approximate 200-plus jobs have also been saved - another 100 staff face redundancy, the company announced today.

Smith & Caughey’s Newmarket store will still close, earlier than expected, at the end of next month.

“The company has decided to implement a new reduced format beyond January 2025,” Smith & Caughey’s chairman Tony Caughey said today.

“This will see operations downsized and refined to the ground floor of the Queen St store and the online store only. Smith & Caughey’s Newmarket will close, most likely at the end of September 2024.”

Caughey acknowledged staff had been through a challenging period.

An initial proposal, presented to the company’s staff in late May, was for Smith & Caughey’s to close for good in early 2025.

Smith & Caughey's chair Tony Caughey at the flagship Queen St store in Auckland.

“They have been openly engaged throughout the consultation process which we’ve operated in good faith,” said Caughey.

“Pleasingly for our team, suppliers and customers, we’ve found a path forward to allow us to continue operating, albeit on a scaled-back footprint.

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“As a result, we expect there to be around 100 jobs retained to align with the new business size, with approximately 100 redundancies over the next six months.”

Caughey said the Queen St store would remain largely as it is until the end of January 2025.

Smith & Caughey's, Queen St.

This would allow “annual family Christmas traditions to continue as planned, including the exceptional ground floor Christmas windows and the Enchanted Forest on the sixth floor”.

“At the end of January 2025, the Queen St operations will close briefly for minor works before reopening in the new format in February 2025. Our online retail store will be refreshed to align with the new offering.”

Caughey told the Herald this afternoon he was “very pleased” with the outcome.

The board had been looking at possible future options and that - along with ideas arising from staff consultation - had led to the new solution.

“The staff consultation process threw out a lot of ideas - we put it all into the melting pot and put a fresh lens on things and we were able to make this work.

“The emotional side of this is pretty high - the good thing is we’ve been able to do it in a way that makes economic sense. We’ve been able to marry those two things together.”

Caughey said it was too early to say what the company would do with the rest of the Queen St property. It will look to lease its Newmarket store to a new tenant.

In May, Caughey had said the proposed closure of the business - including the “Grande Dame” Queen St store - had been caused by a “perfect storm” of factors.

The proposal marked a sad and heartbreaking moment for the Auckland and 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.

Marianne Caughey Smith-Preston (1851–1938) was a philanthropist as well as a businesswoman. In 1935 she was awarded an MBE. Photo / Supplied.

In an exclusive interview in May, Caughey said the company’s stores in Queen St and Newmarket had been running at a loss, with a 40% drop in revenue in the past five years.

He cited a range of factors that were largely outside 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 at the time.

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.”

The aftermath of Covid had also meant 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 crisis”.

“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.”

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.