Australian chain Jeanswest goes into voluntary administration

Jeanswest joins Harris Scarfe and Bardot in collapse as victims in the nation’s $320bn retail sector keep piling up.

Administrators said Jeanswest has been challenged by current tough market conditions and pressure from online competition.

The victims of the prolonged downturn in the nation’s $320bn retail sector keep piling up, with national jeans and fashion chain Jeanswest placed into voluntary administration on Wednesday, just weeks after the collapse of department store Harris Scarfe and the demise of women’s fashion chain Bardot.

The failure of Jeanswest threatens almost 1000 jobs and kicks off what could be a round of further retail collapses in the next few months.

Brands that limped into the Christmas sales could finally fail after what may have been a disappointing holiday trading period.

KPMG’s Peter Gothard and James Stewart were appointed voluntary administrators of the Australian operations of Jeanswest Corporation

The administration does not cover the New Zealand arm of the once popular denim chain.

The iconic Australian retail brand opened its first store in Perth in 1972.

Jeanswest now employs 988 people in 146 stores across Australia. It is best known for its denim, wardrobe staples and maternity wear.

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Mr Gothard, a KPMG partner, said Jeanswest would continue to operate while the administrators analysed the business.

“The administrators will be looking at all options for the restructure or sale of this established Australian retail business and are seeking urgent expressions of interest from parties interested in acquiring or investing in the business,’’ Mr Gothard said.

James Stewart, KPMG’s retail restructuring practice leader, told The Australian he was hopeful a saviour would emerge but he admitted that amid the current retail malaise it was now a “buyer’s market”.

“It is fair to say that there are some retail assets being sold in the market and some that aren’t,’’ he said.

The denim chain, owned by the Yeung family, had encountered problems like those other Australian retailers had seen.

“Jeanswest is an iconic Australian denim brand, well known in the leisure and casual wear market place. Like many other retailers, the business has been challenged by current tough market conditions and pressure from online competition. The administration provides an opportunity for Jeanswest to restructure so as to better respond to the challenging Australian retail market.”

Parties interested in acquiring or recapitalising the business are encouraged to contact KPMG, with the first meeting of creditors of the company to be held in Melbourne on January 28.

Jeanswest has been struggling for years. The Australian operations were recently bought by local management from its parent group, the Hong Kong-listed Glorious Sun.

In 2017 the then Hong Kong-based owner of Jeans­west warned that Australians were more interested in splurging their disposable income on “lifestyle spending’’, such as travelling or a new plasma television, instead of buying a new pair of jeans, resulting in a “lethargic” and “slothful” retail environment where only discounting would shift stock.

Sales in Australia and New Zealand had dropped 12.3 per cent to $HK973.77m ($181.5m) in calendar 2016, from $HK1.1bn in 2015.

There could be further failures in the retail sector as many struggling companies that held out for the Christmas sales — which typically drive the majority of profits for the year — come up short.

Recent data collected by ANZ suggest that Christmas sales were disappointing. Peak Christmas season (December 16 until Boxing Day) was much weaker year than in the past few years. Card data shows sales down more than 5 per cent in 2019.

“Very strong Black Friday sales are likely to be behind the weaker-than usual December retail sales figures,” ANZ said.