that the administrators of Payless Shoes are in for much Christmas cheer after the chain has collapsed for the second time in three years. Ferrier Hodgson has advertised for urgent expressions of interest for the business and assets of Payless Shoes with a lodgement date of yesterday (Tuesday), less than a week after the chain’s failure was announced. The Payless Shoes brand may have some value, although its use in Australia might be constrained by the US retailer that acquired the local retailer in a deal with administrators in 2013. Payless Shoes has 130 stores throughout Australia and an online retail site but it is likely that expressions of interest would be limited to cherrypicking of certain stores rather than the entire chain. Ferrier Hodgson has yet to comment on the reasons for the financial difficulties at Payless Shoes, but accounts lodged with the Australian Securities and Investments Commission revealed losses of $10.2 million and $10.8 million respectively for FY2014 and FY2015. The US owners, Payless ShoeSource, closed around under-performing stores in Australia and revamped merchandise ranges, adding new brands such as American Eagle, Disney and Champion, but were unable to improve trading. Payless ShoeSource is owned by private equity firms, Blum Capital and Golden Gate Capital. Blum Capital was one of the private equity firms that acquired Myer from the then Coles Myer company and certainly enjoyed a more profitable and dignified exit from the department store investment than it will achieve with Payless Shoes. Payless Shoes opened its first store in 1980 in Sydney and until 2013 had no association with the Topeka, Kansas-based retailer of the same name, which has around 4,400 stores in more than 30 countries. The American retailer acquired the chain for an undisclosed price in March 2013 in a sale negotiated by Deloitte, the insolvency firm that had taken control of Payless Shoes in September 2012. Payless Shoes had 150 stores when it was sold to its US namesake and had been restructured by Deloitte. It claimed to be profitable at the time of sale. In FY2016 it had sales of $74.2 million, according to Ferrier Hodgson, the insolvency firm called in by the directors of the Australian operation last week. Headquartered in Rydalmere in Sydney, Payless Shoes is touted as one of Australia’s leading discount footwear retailers selling men’s, women’s and children’s footwear. However, the chain has struggled to achieve growth in sales with average weekly store sales of less than $11,000, allowing for store closures, and operating costs rising sharply. Ferrier Hodgson has indicated it plans to keep stores trading in the lead up to Christmas, however, it is likely that store closures will proceed at an early date, unless expressions of interest provide a genuine prospect of a trade sale for the distressed chain. It is difficult to see any suitor emerging for the Payless Shoes stores network and there was little cheer for its owners and the administrators in a KordaMentha concession that attempts to find a buyer for another distress retail chain had failed. The demise of Pumpkin Patch The publicly listed New Zealand chain, Pumpkin Patch, is now faced with liquidation with no suitor emerging and creditors pressing for a return on debts of around $76 million. Pumpkin Patch, which posted a loss of $15.5 million for FY 2016, called in administrators in October after failing to develop a recovery plan that would be acceptable to the ANZ Bank, its major creditor with an exposure of around $43 million. Established in 1990 as a mail order catalogue business, Pumpkin Patch grew to 117 stores in Australia, entering the local market with its first outlet in 1997 and 43 in New Zealand. The retailer was listed on the New Zealand Stock Exchange in 2004 and advised shareholders in October that it was significantly over-leveraged and capital constrained and its equity would be unlikely to meet its debt commitments. With no buyer emerging, KordaMentha has launched a fire sale of all remaining stock and is working on a timetable for the closure of stores and the wind-up of the retailer. The collapse of Pumpkin Patch follows the failure in December last year of a Sydney- based competitor, My Baby Warehouse. My Baby Warehouse had 11 stores and an online retail platform and the failure drew the attention of ASIC after allegations about the role of directors in the collapse. Pumpkin Patch was established as a design-driven quality baby and toddler clothing store, trading in a competitive and challenging category, which has always been dominated by discount department stores and, increasingly, online retailers. The renowned British retail chain, Mothercare, has twice attempted to secure a foothold in the Australian market, only to close up stores and retreat to an online presence. The failures of Mothercare were despite local investment support from the Gandel family first time round and the Myer family in late 2012, before the 28-store chain was placed in the hands of receivers in January 2013. One of the key problems for retailers in the baby and childrenswear categories is the reluctance of customers to pay too much for clothing that infants will grow out of very quickly. The price barrier has been exacerbated in recent years by the decline in spending power of grandmothers who have seen investment incomes reduced with prevailing low interest rates and superannuation shocks. To the detriment of Pumpkin Patch, expenditure on infant apparel and goods has been largely directed towards discount department stores and online retailers, although Baby Bunting has fared quite well to date. Established in the Melbourne suburb of Balwyn more than 30 years ago, Baby Bunting has expanded to close to 40 stores and plans to double that number with openings of between four and eight new stores a year. Baby Bunting wants to be the Bunnings of the baby market, based on a category killer big box store format, ranging more than 6,000 products for parents with children from newborn to three years of age. Unlike Pumpkin Patch and Mothercare, Baby Bunting is located in large format retail centres as a destination retailer, rather than in shopping malls and its results for FY 2016 showed promising results for that strategy. Its sales were up 31.4 per cent on FY2015 to $236.8 million, with comparable stores sales growth of 12.5 per cent. Net earnings were up 38 per cent to $8.3 million, with all metrics exceeding the forecasts the retailer issued to support its float on the Australian Stock Exchange. Baby Bunting has reported solid sales growth for the first quarter of the current financial year, but less robust growth on comparable sales, a result consistent with other retailers, who have reported a challenging start to FY2017 that has them hoping there really is a Santa Claus.