Cult stationery chain kikki. K enters administration after ‘perfect storm’ of opposition
Cult Swedish-inspired stationery chain kikki. K is the latest retailer to enter voluntary administration, but the company says it’s not entirely to blame for its financial woes.
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Cult luxury stationery chain kikki. K have appointed voluntary administrators blaming its troubles on a “perfect storm” including Brexit, riots in Hong Kong and the move to online shopping.
This afternoon it was revealed Barry Wight and Bruno Secatore, of the national restructuring firm Cor Cordis, were appointed receivers of the Melbourne-based Swedish design and stationery products company.
The kikki. K board’s this afternoon decided to appoint voluntary administrators. kikki. K has 17 Victorian stores.
There are 65 stores, mostly in Australia but also in the United Kingdom, New Zealand, Singapore and Hong Kong. The company has 450 full-time equivalent employees and $70 million annual revenue.
Mr Wight said it would be business as usual in the stores and online “for the time being” as he sought to restructure and sell the business.
“kikki. K has unfortunately joined what has become a long list of financially distressed retailers, given softening consumer spending, high leasing costs, compounded by a disappointing December-January trading period,” Mr Wight said.
“That said, we believe kikki. K has a strong brand with a large global following, producing sales of almost $70 million a year.”
“We’re now urgently working with management in respect of a plan to restructure the business and enhance value, while also investigating a sale of the kikki. K.”
kikki. K will continue its mid-season sale with 30 per cent to 70 per cent off selected items.
Founder Kristina Karlsson said she took the action with “profound regret and sadness”.
“This business began with a young girl’s dream 20 years ago and became an international success story with customers in over 150 countries.”
Karlsson’s co-founder and partner, kikki. K CEO Paul Lacy said the company “had tried everything” to save the business in the past two years.
He said it had been very close to a partnership with a big global business that would have secured kikki. K’s future.
“But we ran out of time and had no choice but to place the company into external administration,” Mr Lacy said.
The couple said – who are the majority shareholders in kikki. K – said they were “optimistic a suitable buyer will be found to keep the kikki. K brand going”.
Mr Lacy said a number of events impacted business all at the same time.
“We’ve been caught in a perfect storm,” he said.
“We’d not long started our store rollout in the UK when Brexit hit and the economic uncertainty that came with it.”
“Then there was a huge rates overhaul in the UK which lifted rates on our stores by hundreds of thousands.”
“At the same time, we like all retailers have been dealing with the profound structural change of people moving their shopping habits to buy more online and less in physical stores – requiring strong long-term investments in digital transformation.”
“Then came the social unrest in Hong Kong which ate into our sales in Asia, and like many other retailers our Christmas sales globally were down substantially.”
“For us as a gifting business, we rely on that season to set us up for the year ahead. And, finally we’ve had the triple-whammy of soft consumer demand, the business impact of bushfires and more recently the unprecedented and profound impact of coronavirus which is hitting so many businesses and countries so hard.”
“This unprecedented line-up of external factors, particularly in recent weeks, has really taken its toll. As we looked ahead we just didn’t have the certainty we could keep going so have had to take this decision.”
Ms Karlsson said there was still opportunities for buyers.
“We launched in Melbourne in 2001 and at our peak had more than 100 stores around the world. There is still an amazing business opportunity with 3.7 million loyal customers on our data base.”
“I want to thank our incredible team members, customers, suppliers and supporters for their part in helping build the brand to what it is today, and more recently their part in trying to save the business.”
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