Kowhai Retail Group Ltd, the shareholder's chair: Do you put the money in?

// DRILLS / ISSUE 06 / KOWHAI · SHAREHOLDER

ISSUE 06 · 2026-09-05 · 5 MIN READ

// ONE FILE, THREE CHAIRS

// THE LENDING CHAIR · ISSUE 06

Kowhai Retail Group

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// THE MERCHANT'S CHAIR

The September Ships

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// THE SHAREHOLDER'S CHAIR

Whose Money It Is

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Whose Money It Is

KOWHAI, FROM THE SHAREHOLDER'S CHAIR

RETAIL · THE SHAREHOLDER'S CHAIR · DIFFICULTY 3/5

// THE SETUP

You own a stake in Kowhai Retail. Not the largest, and you do not run it; you invested seven years ago in fourteen stores and a founder who knows homewares, and until last Christmas it had never asked you for anything. Last Christmas did not sell. NZ$1.1m of stock is still in the distribution centre and the year's margin paid for the clearance.

The MD's email arrived on Tuesday. The bank has funded this year's season at NZ$2.6m, last year's proven peak, and declined the NZ$900k above it, calling that part of the buy a merchandising conviction that should be funded by the people who hold it. The MD holds it. He is confident the mix is fixed, the order book is up 22%, the ships leave in three weeks, and he is asking the shareholders to put in NZ$900k, pro rata, by the end of the month, so the buy stays intact. The bank, his email notes, also mentioned that confirmed pre-orders from trade customers could change its view; he considers that a slow road.

You have the bank's letter, which the MD attached. You have the FY25 accounts. Operating cash flow is down 60%. Your share of NZ$900k is real money to you.

The bank drew the line between a loan and a bet, and the MD is asking you to fund the bet. Do you put the money in?

// FY25 SNAPSHOT

SOURCE: THE MD'S EMAIL TO SHAREHOLDERS · FY25 · COMPOSITE CASE — FICTIONAL

REVENUE

NZ$31m

▲ +6% YoY

AGED STOCK

NZ$1.1m

▲ 18% of inventory

GROSS MARGIN

46%

▼ from 51% (clearance)

THIS YEAR'S BUY

+22%

▲ on an unsold year

OCF

NZ$0.4m

▼ −60% YoY

NZ seasonal retailers typically carry under 8% aged stock into the new season. Kowhai carries 18%. That is the number the bank declined to fund twice.

// YOUR JUDGMENT

Do you put the money in?

[A]Put it in — it is your company, the MD knows the categories, and a bank that funds only last year is a bank that funds no growth[B]Put it in against evidence: fund the part of the increment that pre-orders cover, and make the rest conditional on sell-through by mid-November[C]Refuse — the bank's number is the right number, and a shareholder should not be the lender the bank declined to be[D]Lend it as shareholder debt, with interest and security, so at least your money ranks somewhere if Christmas fails

This drill needs JavaScript: the options above cannot be selected without it, and the senior banker's reading stays hidden. Turn JavaScript on and reload the page to take the drill.

// THE READING

Read the bank's letter as the shareholder it was not written to, because it tells you something the MD's email does not. When a lender funds the season at last year's peak and declines the increment as a bet, it has told the shareholders whose money the increment is. Yours. That is the correct allocation: bets are what equity is for, and a bank that funded this one would be a partner in a gifting retailer on a lender's margin. The bank has not obstructed the company. It has sorted the request into the part it should carry and the part you should, and it has told you how it would be persuaded.

Why not A: putting it in because it is your company and the MD knows the categories is funding the whole conviction blind, with your money instead of the bank's, on the same file the bank declined to read as demand. The MD may be right. The file cannot show it, and you have exactly the information the bank had, plus an email that calls the evidence a slow road.

Why not C or D: C refuses outright and turns the bank's discipline into the company's paralysis; the season still ships, and a merchant with a real insight and no way to fund it is a merchant who will find worse money. D lends it as shareholder debt with security, which ranks where the bank says it ranks, behind the bank, and dresses a bet as a loan without changing whose money is at risk.

Which is why the senior banker's advice, in the shareholder's chair, is B. Put it in against evidence. The bank has already named the evidence: confirmed pre-orders from the trade customers. Fund the part of the NZ$900k that pre-orders cover, now, so the winning categories ship; make the rest conditional on sell-through by mid-November, when the stock has landed and the first weeks have spoken. You are the lender of last resort to a merchandising conviction. Ask for what any lender would: the same evidence the bank asked for, and a date.

When the bank calls it a bet, it has told you whose money it is. Yours. Ask for the same evidence the bank asked for.

// THE SAME FILE, FROM THE OTHER CHAIRS

Three people read this file in the same week. The lender's reading is the one the other two are reacting to.

// THE LENDING CHAIR · ISSUE 06

Kowhai Retail Group

Last Christmas didn't clear. This year's buy is up 22%. The seasonal uplift request is in.

Read from this chair →

// THE MERCHANT'S CHAIR

The September Ships

The bank funded last year's peak and called the rest a bet. The orders ship in September. NZ$900k of buy is now yours to fund, sell, or cut.

Read from this chair →

// HOW READERS ANSWER

The senior banker's read is [B].

[A] · 40%

[B] · 27%

[C] · 21%

[D] · 12%

The tempting answer is A. The senior banker chose B. The reading explains what the bank told you when it called the increment a bet, and why the evidence it asked for is the evidence you should ask for too.

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