‘The model was broken’: Hilton Seskin blames Topshop franchisor for the brand’s demise in Australia

THE man who brought Topshop to Australia has slammed the party he thinks is to blame for the brand’s $35 million collapse, saying: “the model was broken”.

Topshop went into voluntary administration owing $35 million to creditors. Picture: Hollie Adams

HE WAS hailed as a retail god after bringing Topshop to Australia six years ago, but things didn’t go to plan.

Now Hilton Seskin has spoken out for the first time since the retailer last month entered voluntary administration with debts of $35 million, revealing what he says went wrong.

“Unfortunately, you make some mistakes in life,” Mr Seskin said during a panel discussion at a Australia-Israel Chamber of Commerce lunch in Sydney on Thursday, adding that his biggest regret was “getting into a franchise arrangement where the franchisor has basically had no responsibility”.

He went on to outline how the stock being sent to Topshop’s Australian stores was made up of outdated clothing items, left over from its British operation.

The retail veteran, who brought UK chain JD Sports to Melbourne in April, said he had purposely stayed out of the press in the aftermath of Topshop’s collapse, but said there were “a lot of conversations to be had” about what went on behind the scenes.

He described a disastrous system in which Topshop Australia was sent tired old stock from overseas.

Hilton Seskin blames Topshop’s British franchisor for its Australian demise. Picture: John Appleyard

“We had absolutely, well I’m going to say very, very little control over what inventory came into the market,” Mr Seskin said.

“Products that were made in Asia were shipped to the UK, put through a recycling plant, as you call it, a warehouse facility in the UK, converted from US dollars to GBP [British Pounds], flying it out to Australia. So, the model was just broken.”

Retail experts have blamed “substandard” product quality for Topshop’s demise.

Mr Seskin said his team had “tried to change the model for many years”, noting that the business was “exceptionally successful” at the beginning.

“When we launched Topshop we broke every record in the book for an opening day of Topshop. It was amazing,” he said.

“I still believe it’s a great business that touches the hearts of the millennial customer ... As I said, things will be discussed at a later date. Right now I’m trying to protect as many jobs as I can, try and keep the business alive, and that’s my sole focus right now.”

Mr Seskin handed the holding company for the franchise license in Australia over to administrators Ferrier Hodgson last month.

Since then, the administrators have been working with the UK-based franchisor to secure a future for Topshop Australia, negotiating a deal in which it would take a controlling interest in the venture.

Crowds lined the pavement waiting to get into Sydney’s first Topshop in 2012. Picture: Tim Marsden

Mr Seskin said the retail environment in Australia was “exceptionally tough” and that heavy discounting was hurting margins.

“I’ve never seen it this tough,” Mr Seskin said.

But he vowed not to repeat past mistakes, sounding an optimistic note on JD Sport’s prospects here.

“It is a real partnership, not a franchise deal,” he said, adding that 450 people had queued up for the inaugural store opening in Melbourne.

“We broke the record with highest taking for a JD opening ever,” Mr Seskin said.

“And that was with no discounts, no promotions or giveaways. It was to get your hands on products you can’t get anywhere else in the world.”

Minutes of Topshop’s first creditors meeting, lodged with the corporate regulator this week, showed that Austradia Pty Ltd, the company controlled by Mr Seskin which owns the franchise rights in Australia, owed at least $35 million to creditors when it went into voluntary administration last month. Myer owns a 20 per cent share of the business.

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