Smith & Caughey's targeted in cyber attack on same day as shock closure announcement

Smith & Caughey's is closed to in-person customers after the iconic department store was targeted in a cyber attack on Wednesday - the same day the store announced a proposal to close in 2025. 

"On the same day the company began consultations with staff regarding the potential closure of its retail operations, the business was confronted with a significant cyber security incident," the company told Newshub in a statement, calling it an "unprecedented challenge". 

"This is a live incident, and the business has activated a response plan and is working to restore the systems. The company has assembled a dedicated team of experts to manage this response." 

Smith & Caughey's remains open for business on its online website, however its retail stores in Auckland's Queen St and Newmarket are closed to customers. 

Chairman Tony Caughey told AM on Thursday the cyber attack meant some stakeholders in the business didn't get a heads-up about the proposal to close.

"This came out of the blue yesterday, it's been significant enough that we can't operate our physical stores today," he said.

"The other thing is it did restrict our ability to be able to communicate with some of our key stakeholders yesterday about the big news, so with our suppliers some of them didn't hear from us because of this and we do apologise that the communication system didn't work as it should've worked."

On Wednesday, he said the company had begun a consultation process with its 240 staff about the potential closure of its retail operations in Queen St and Newmarket, and online retail stores, likely in early 2025. 

The proposal will be under consultation for about five weeks. 

"Presenting this proposal has been a deeply emotional time for the people connected to this historic establishment. We are acutely mindful of the impact to staff, customers and suppliers by the proposal," Caughey said. 

Caughey said the business had operated as a cornerstone of retail excellence on Queen St for 144 years. No decision has been made yet on what they'll do with the iconic building if the proposal goes ahead.

The company was founded by Marianne Smith in 1880 who was joined soon after by her husband William Smith and brother Andrew Caughey. 

"However, over the last five years we have experienced a 40 percent decline in revenue from our physical stores from factors largely outside our control. As a result, the company is trading at a significant loss which is unsustainable," Tony Caughey said. 

"Sadly, we do not believe sales can be restored to levels necessary to continue to operate." 

Heart of the City chief executive Viv Beck, also on AM on Thursday, said the possible closure was "incredibly sad".

"It truly is an icon and there was an outpouring of emotion yesterday and I think people have very precious memories, they acknowledge the tremendous contribution that this store has had and really feel for everybody impacted - the Caughey family, the staff - you know, it's major."

If the closure goes ahead, Beck said it would have "a significant impact" on Auckland's central city.

But she described a "perfect storm" that led to this decision, including construction on Auckland's city rail link (CRL) in the CBD and changes in retail patterns.

She added, though, that the delayed CRL would bring "a brighter future" to the CBD, saying it would be "very, very sad" if the department store closed before its opening.

"It's just been incredibly hard for the best of businesses to trade through years of multiple impacts here."