Harris Scarfe collapse: Discount chain falls into administration
Another famous retail brand popular with Aussie households for its massive discounts has collapsed, putting more than 1800 jobs on the line.
Business
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The brutal shake-out in the nation’s retail sector has claimed another victim with the collapse of department store chain Harris Scarfe.
Accounting firm Deloitte on Wednesday announced Harris Scarfe had been put into receivership.
The move casts a new cloud over the critical Christmas trading period and adds to a horror two years in retail, during which a string of businesses have gone bust or been forced into major restructures.
These include discount retailer Dimmeys, menswear chains Roger David, Ed Harris and Rhodes & Beckett, footwear groups Shoes of Prey and Payless Shoes, and fashion retailers Marcs, David Lawrence, Herringbone, Bardot, Oroton, Esprit and Laura Ashley.
The appointment of receivers at Harris Scarfe comes less than a month after the 170-year-old business was sold to Sydney-based Allegro Funds.
The private equity group, which specialises in turning around struggling businesses, placed Harris Scarfe into voluntary administration on Wednesday, triggering the appointment of receivers.
Queensland University of Technology retail expert Gary Mortimer said Harris Scarfe had failed to differentiate itself in a competitive department-store space.
“If you’re stuck in the middle and you’re constantly discounting, all you’re doing is eroding profit and conditioning consumers to never pay full price when they walk into your store,” he said.
Harris Scarfe sells bed linen, kitchenware, homewares, electrical appliances and apparel across more than 60 stores.
There are 24 outlets in Victoria, including at the Highpoint and Fountain Gate shopping centres, Box Hill, and regional locations Geelong, Ballarat and Bendigo.
The company generates sales of $380 million a year and employs more than 1800 staff.
Deloitte Restructuring Services partners Vaughan Strawbridge said trading would continue as normal over the Christmas period and employees would continue to be paid by the receivers. Mr Strawbridge said he was confident there were sufficient assets to meet all employees’ entitlements. The receivers intended to sell the business as a going concern and save as many jobs as possible, he said.
“We will be making every effort to secure a future for the business and intend to commence an immediate sale-of-business process,” Mr Strawbridge said.
Gift cards and lay-by deposits would be honoured in full, he said.
It is the second time Harris Scarfe has collapsed. It was placed into voluntary administration in 2001 owing creditors more than $150 million.
Allegro bought Harris Scarfe from Freedom and Fantastic Furniture owner Greenlit Brands late last month in a deal that also handed the private equity firm Best & Less.
That chain is not affected by the Harris Scarfe administration but both retailers have struggled in the past decade against fast-fashion interlopers Zara, Uniqlo and Hennes and Mauritz, trading as H&M, along with a rejuvenated Kmart and the rise of online shopping. Harris Scarfe was founded in Adelaide in 1849 but now operates from a head office at Burnley, in Melbourne’s inner east.
The latest hit to retail came as research showed consumer confidence has slipped this month. According to Westpac and the Melbourne Institute’s closely-watched consumer sentiment survey, pessimists continue to outnumber optimists as concerns about job losses rise to their highest level in 2½ years.