Harris Scarfe’s Rundle Mall store a ‘strain’

Harris Scarfe’s flagship Rundle Mall store had “created a strain on the overall business”, receivers Deloitte have revealed, as four short-listed bidders look over the remaining 44 stores.

• Harris Scarfe’s Rundle Mall store to close
• Harris Scarfe placed in voluntary administration
• How to get the most out of your Advertiser digital subscription

Closing Harris Scarfe’s flagship Rundle Mall store was the easiest decision to make because it had “created a strain on the overall business”, Deloitte says.

“While the specifics can’t be shared, since the change at the store in 2013-14, from what I have seen, the store has never really performed,” Deloitte Restructuring partner Vaughan Strawbridge told The Advertiser yesterday.

Harris Scarfe, which was placed in receivership last month, was founded on Hindley St, city, in 1849 before moving to Grenfell St in 1877.

The company’s former Rundle Mall site was sold and the store demolished, with a new outlet reopening within Rundle Place in 2013.

“From discussions with (former) management, that business was very profitable before the change,” Mr Strawbridge said.

“The store (now) has a large footprint and the business had been looking for other tenants to come in, but couldn’t find any viable alternatives.

“It was the one store where the decision to close was easiest.”

Mr Strawbridge was of the view that Rundle Place owner Blackstone Group had been aware of Harris Scarfe looking for alternative tenants to make the space more viable.

Josh Peake, secretary of the Shop, Distributive and Allied Employees Association, has previously described the redevelopment as “an unmitigated disaster for Harris Scarfe”.

Blackstone Group declined to comment.

Westfield shopping centres owner Scentre Group is taking a hard line against Harris Scarfe’s new parent company Allegro Funds, which put landlords off-side when it tipped the chain into administration on December 11, less than a month into its ownership.

Allegro Funds is now a secured creditor, having taken over $70 million in debt when it bought Harris Scarfe, so will be paid back before unsecured creditors from any money raised during the restructuring and sales process.

Unsecured creditors, including suppliers and landlords, are owed $98 million.

Mr Strawbridge said the closure had created issues for landlords, but his job was to “get the best value for creditors”.

“This is not a fire sale. We have reduced the store network to create a profitable business.”

Deloitte has short-listed four local buyers with ‘high-calibre’ indicative offers to buy the “profitable core” at the heart of the Harris Scarfe business, comprising 44 stores, including the remaining 8 in SA.

It is hoping to get final offers in by February 14.

The remaining 21 stores, including the Rundle Mall outlet, will close by February 2, resulting in the loss of 400 jobs. Majority of these were loss-making stores.

The key metrics underpinning the decision to close the stores included sales per sqm, on-costs of keeping the store open and the performance of the centres.

Harris Scarfe was previously in trouble in 2001, when it was placed in receivership with debts of more than $140 million.

Greenlit Brands (formerly Steinhoff) sold Harris Scarfe to Allegro, along with Best & Less and women’s fashion chain Postie, late last year.