Two more retailers insolvent

HerringboneThe number of Australian retailers to move into voluntary administration over the last week has come to five, with men’s formalwear brands Herringbone and Rhodes & Beckett appointing administrators on Tuesday evening.

The retailers, who are the licensees of their namesake brands in Australia, have a combined 29 stores across the country, many of which are slated to close in the coming weeks as insolvency firm Cor Cordis prepares the companies for potential buyers.

“We’ve got some underperforming stores so the last day and a half we’ve been working on those to determine which ones we keep,” administrator Bruno Secatore told Inside Retail.

Cor Cordis will continue to operate both businesses while assessments are made, supported by German-based retailer Van Laack, who is a majority shareholder in both companies.

The retailers now join the likes of David Lawrence, Marcs and Allphones in the search for buyers, only a few months after both Payless Shoes and Pumpkin Patch failed to find a saviour.

However, Secatore says that they’ve already fielded a number of initial phone calls in the last 36 hours, saying that it’s likely a buyer will be found in the next three-to-four weeks.

Secatore said a marketing campaign will begin today to gauge interest.

“We’re offering both businesses to one group or individual businesses so it’s up to the potential purchaser.”

According to Secatore, Van Laack made the decision to appoint administrators after struggling with a variety of problems that are representative of a “general trend” in retail.

“The business suffered from change in consumer sentiment, high overheads, unfavourable leases, online shopping,” Secatore said.

Commenting on the news, Australian Retailers’ Association (ARA) chief Russell Zimmerman said that the scene has become far too common in the industry, outlining concern for the combined 140 employees at the companies.

“There are some inherent issues in the industry and we need to make sure that moving forward we sort those out,” he told Inside Retail.

Pointing to unsustainable rent provisions and the high cost of employment, Zimmerman said that while ABS figures indicated growth for footwear and clothing in excess of six per cent year-on-year, there is still pain to go around.

“There are far more players in that area locally, internationally and online,” Zimmerman said. “For a few retailers the international brands have walked right into their market share and if someone does that then you have to be prepared to step up to the plate.”

Inside Retail understands that Van Laack will be surrendering its position as majority shareholder in any prospective sale, but Secatore confirmed that it will retain an “interest” in both companies.

Administrators did not rule out accepting a deal that would see the retailers dismantled for parts, saying that they will look at all deals that stand to benefit shareholders.

 

Comments

5 comments

  1. Avatar

    Megan posted on February 8, 2017

    Hard to make money in Menswear reply

  2. Avatar

    Peter posted on February 8, 2017

    There is a bigger picture to this than just the problems pointed out in the article, most categories in retail are saturated especially in the clothing industry, how many shops do we actually need. Also constant discounting by retailers doesn't achieve anything but lowering margins and decreases the value of the brand in the shoppers eyes, discounting has given the mentality of the shopper not to pay full retail price. Retailers need healthy margins to survive but this discounting has been going on for 10 years now and the internet only compounds the problem. The retail landscape has changed forever however the old mentality is still there, everyone needs to change with it. There will need to be some major changes coming from everyone including landlords, unions, employees, governments, retailers and anyone else that that has an influencing factor, it's not going to be a matter of financial support or handouts there will need to be compromises, a long term plan that creates stability, if not more stores will fall, more jobs will go and empty shops will remain. reply

  3. Avatar

    Paul posted on February 8, 2017

    Peter, that is a brilliant summation. Consumers are very cautious with their money so you do indeed need healthy margins on the sales you do get. A thinning out of each market is where we are headed that's for sure. reply

  4. Avatar

    ian kirk posted on February 8, 2017

    Very well summarised Peter - you've basically put the points for Russell Z & the ARA to call a quorum with heads of those groups, then to lobby the government with a unified approach from all sectors of the industry. Retailers also cannot keep blaming the Ïnternational & Online Retailers, they have to make themselves more relevant & attractive to their customers while maintaining margin - not easy is it ! reply

  5. Avatar

    SAP Thangal posted on February 9, 2017

    Askew playing fields; too many players; too few balls; all playing havoc with the Business Life Cycle?! reply

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