Department store Harris Scarfe has been placed into voluntary administration, less than a month after an announcement that it was being sold to a fund manager and investor by Greenlit Brands (which is rebranded name of the Asia Pacific arm of the bankrupt South African retail chain, Steinhoff International).
It comes two weeks after a small mostly Victorian chain, Dimmey’s (with a similar range of goods) failed.
The retailer’s collapse is the latest in a growing number of retailing casualties as consumers downsize and cut back their spending – despite receiving extra in tax refunds this year from the Tax Office.
The failure could also be a warning bell for other retailers, especially among the shrinking number of department store chains like Kmart, Myer, Big W, David Jones, and Target.
Retail sales growth has slowed to just over 2% annual from more than 3% a year ago and the month to month growth has been marginal – in October sales didn’t grow at all as consumers saved more and spent less.
Sluggish wages growth and weak income from other sources such as bank interest has seen sales by a string of sectors slow – but car retailing is doing it tough with close on 20 months of consecutive falls – the latest being a 9.8% slump in November.
Sales revenue and earnings for big retailers such as David Jones, Myer, Target and Kmart are weakening or falling and it’s only electronics retailers like JB Hi-Fi and Harvey Norman that seem to be surviving – but for how long is the question if consumer spending continues at current low levels.
Harris Scarfe competes with the likes of Kmart, Target and Big W and a bit further down the ladder, the Reject Shop which has been wobbling in the past two years with weak sales profits and management changes.
Kmart and Target have lost momentum for owners Wesfarmers and Big W is still in the recovery ward at Woolworths. Now Harris Scarfe has failed with its variety of products, including bed linen, kitchenware, homewares, electrical appliances, and apparel.
Could that be a warning about the current trading conditions for Kmart, Target and Big W and their owners?
The sale of Harris Scarfe to Allegro Funds came on November 18 also said Best and Less Postie and Debenhams Australia were also sold. The latter closes its only Australian store next year. There was no mention of any strains at Harris Scarfe.
Harris Scarfe was one of the better-known names in the sale (along with Best and Less) and the chain had sales of close to $400 million a year from 66 outlets across the country (especially in South Australia and Victoria) and employs 1,600 people.
Trading will continue as normal over the Christmas period and employees will be paid by the receivers, according to the appointed administrators Deloitte Restructuring Services (DRS).
“Harris Scarfe is a longstanding retail institution,” DRS partner Vaughan Strawbridge said yesterday in a statement. “We will be making every effort to secure a future for the business and intend to commence an immediate sale of the business process.” He said lay-buys and gift cards would be honoured.
Harris Scarfe joins a growing list of bricks and mortar and online retail that have failed this year.
AAP reported yesterday these failures include:
- In January, menswear retailer Ed Harry went into administration while local sportswear group Skins was reported to be on the brink of failure after applying for bankruptcy in a Swiss court.
- At the end of the same month, the Napoleon Peredis beauty products chain said it would close its 56 Australian stores for a stocktake. Administrators were then appointed, and many of the stores have since failed.
- Online footwear retailer, Birds of Prey failed in March while UK fashion group, Karen Miller revealed in September w it would be closing its Australian outlets.
- Debenhams said it would be closing its local store next year and retreating back to the UK where it is under pressure.
- In October, Melbourne burger chain Benny Burger went into administration followed by Seven Red Rooster outlets in Queensland. Active wear group, Stylerunner went into administration as well but was quickly sold to Accent Group.
- Last month furniture and homewares company Zanui collapse after entering voluntary administration. Fitness chain, Muscle Coach went into voluntary administration as well, Critini restaurant with 13 outlets also failed as did Victorian-based retailer, Dimmeys and the Co-op Bookshop. fashin group Bardot was another failure last month.
