Harris Scarfe placed into voluntary administration by new owners Allegro Funds, which bought the retail chain last month
SA’s oldest retail chain Harris Scarfe has gone into voluntary administration, a month after it was bought by new owners.
SA Business
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170-year-old Adelaide-founded retailer Harris Scarfe survived less than a month under its new private equity owners, raising questions about the role of financiers in Australia’s retail scene.
Sydney-based Allegro Funds agreed to buy Harris Scarfe in mid-November along with fellow retail chain Best & Less.
Harris Scarfe will keep its doors open through Christmas, but the future for staff in the longer term is unclear.
Allegro did not return calls on Wednesday but ASIC documents show that it was the entity which appointed Deloitte as receivers.
There are currently no details about how much debt the Harris Scarfe chain of 66 stores, with nine in South Australia, might owe, if anything.
Deloitte restructuring services partner Vaughan Strawbridge said in a statement he was “confident there was more than sufficient assets to meet all employees’ entitlements’’.
He said gift cards and lay-by deposits will be honoured in full.
Harris Scarfe, which employs more than 1800 staff and turns over $380 million a year, will continue to trade through the vital Christmas period and Deloitte said they “intend to achieve a sale of the business as a going concern and preserve the employment of as many people as possible’’.
But Josh Peake, secretary of the Shop, Distributive and Allied Employees Association said it wasn’t the first time private equity owners had run into trouble in retail and an explanation of why the company was so quickly sold should be forthcoming.
“Obviously this is a devastating blow for workers,’’ Mr Peake said.
“We need a guarantee of all entitlements for workers, and we’re hoping that the business can be sold as a going concern.
“But it’s a very concerning development as the company was only sold to a private equity firm a number of weeks ago.’’
Mr Peake said private equity had a reputation for “stripping” businesses of their value and then selling or shutting them down and there needed to be something done to stop this from happening.
“We need to understand what’s actually happened because I don’t think it’s right that you can have private equity effectively take over employing people, only to cut them loose a few weeks later,’’ Mr Peake said.
The Advertiser is not alleging any wrongdoing by Allegro, and has attempted to speak with them twice.
The Dick Smith retail chain notoriously failed in 2016 with the closure of more than 360 stores after a disastrous share market float orchestrated by Anchorage Capital.
Hindmarsh-based Ed Harry failed in January, with the loss of more than 100 jobs in SA, while online footwear trailblazer Shoes of Prey also met its demise in March.
Harris Scarfe is SA’s oldest retail chain and was started as a hardware business in 1849.