National fashion chain Jeanswest has been placed into voluntary administration, blaming high rents as it becomes the fourth victim of Australia’s languishing retail market since the start of the year.
KPMG’s Peter Gothard and James Stewart were appointed administrators of the chain on Wednesday afternoon, saying the company was seeking to urgently restructure its 146 stores across the country.
Speaking to The Age and The Sydney Morning Herald, Mr Stewart said the business had been placed into administration after a long period of disappointing trading and unsustainable rents.
“Considering the rental level with landlords, management considered that they were in a circumstance whereby the business couldn’t continue in its current structure,” he said.
Jeanswest was founded in 1972 and currently employs 988 people across its stores. In 1994 it was bought by Chinese fashion retailer Glorious Sun, which then sold the company to a Hong-Kong-based family in 2017.
The company had revenue of about $100 million in the last financial year. It also operates stores in New Zealand and Hong Kong, which are not affected by the administration.
I’ve been working in the retail restructuring area for 20 years, and [retail is] about as difficult as I’ve seen it.Administrator James Stewart
Mr Stewart also flagged pressure from online competition as a contributing factor to the company’s demise, but broadly said global retail conditions were some of the worse he had seen.
“I’ve been working in the retail restructuring area for 20 years, and [retail is] about as difficult as I’ve seen it,” he said. “There is no doubt that that globally, certain categories of retail are being challenged.”
Jeanswest’s collapse marks the fourth major blow to the retail sector since the start of the year, with fellow fashion chain Bardot announcing the closure of 58 stores last week.
Similarly, video games retailer EB Games announced it would shutter 19 unprofitable stores, and Co-Op Bookshop, owner of science stores Curious Planet, said on Monday it would close 63 stores after administrators were unable to find a buyer.
Despite a resurgence of spending in November for the Black Friday/Cyber Monday weekend, investors are concerned spending in the key December period may be muted.
Analysis of credit card transactions by big four bank ANZ showed spending for the last two weeks of December was down 5 per cent as consumers remain reluctant to spend despite three interest rate cuts and a tax rebate.
Additionally, market-watchers are concerned the ongoing bushfire crisis may dampen spending habits, with Noni B-owned Mosaic telling investors yesterday its sales for the first half of the financial year are down 8 per cent, largely due to the bushfires.
With a number of other collapsed retailers in the market for a buyer, including department store Harris Scarfe, Mr Stewart admits it’s a “crowded market” but remains confident the business’ 50-year history and three million-strong user database will see it find a buyer.
Source: Thanks smh.com