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H&J Smith Group says it is considering closing stores in the South as it tries to secure its long-term future due to to Covid-19.

The company said tonight under the proposal, H&J Smith department stores in Dunedin, Mosgiel, Balclutha and Te Anau would close and the store in Gore would reduce in size.

The Armoury Store in Dunedin and Outdoor World at Remarkables Park, Queenstown, owned by the H&J Smith Group, would also close. About 175 staff would be affected.

Invercargill and Queenstown's H&J stores would stay open, while the Take Note store in Gore would relocate.

H&J Smith Group said the impact of Covid-19 had led to the proposed changes.

The Dunedin store is an anchor tenant at the Meridian Mall. It had delayed its reopening by a week when shopping restrictions were relaxed under Covid-19 Alert Level 2. That reopening might now be short-lived.

H&J Smith Group said reducing the size of its retail division was proposed, to secure its long-term future.

Managing director Jason Smith said the company had been significantly affected by the Covid-19 pandemic and now needed to consider options for managing its business through what was anticipated to be a long and slow economic recovery.

“Our retail division has been grappling with increasing wage and compliance costs, issues around store size and scale, difficulties securing supply, new entrants to the New Zealand market and the increasing dominance of multinational chains," he said today.

“We also have an ageing store network in need of capital expenditure to upgrade and modernise to meet future customer needs, which isn’t prudent given the ongoing uncertainty post-Covid.

“It’s against this backdrop, and a firm desire to continue to operate sustainably well into the future, that we are proposing to close or reduce in size all but our flagship H&J Smith department store in Invercargill, including Paper Plus and Outdoor Invercargill, and our H&J Smith department store at Remarkables Park in Queenstown."

H&J Smith has been in operation for 120 years, he said, but "to be here for 120 more, it’s now very clear we need a long-term view."

Consolidating operations back to the Invercargill home base should secure a viable future for the company, Mr Smith believed.

“Our lease commitments mean there will need to be a programme of change occurring over a period of time. During this period, there may need to be further adjustments to our strategy."

The closures could occur from August this year through to February 2021. Staff would be kept fully informed of the company's plans, he said.

“I want to acknowledge all our staff, customers and suppliers who are impacted by this proposal.

“It’s been a particularly difficult couple of months for our staff with the challenges of Covid-19 affecting how we deliver service to our customers.

“We’ve held face-to-face meetings in every store to present our staff with a summary of where we find ourselves and to outline the proposed changes we feel are required to reset our business for the future,” Mr Smith said.

The proposal was now under consideration and a final decision would be made in early June.

Other businesses operated by the H&J Smith Group - Mitre 10 Mega in Invercargill and Queenstown and Laser Electrical in Invercargill - were not included in this proposal.