Yarra Trail owner hits the wall

Tough retail conditions have claimed another victim with fashion retailer PAS Group placed into voluntary administration.

Tough retail conditions that have persisted for years and accelerated during the coronavirus pandemic have claimed another victim with fashion retailer PAS Group placed into voluntary administration.

The ASX-listed PAS Group owns a portfolio of brands including Black Pepper, Review and Yarra Trail as well as operating a stable of fashion and merchandise brand licences such as Hello Kitty, Slazenger, Everlast, Russell Athletic, Star Wars and Disney.

But on Friday it joined the growing list of retailers to enter the corporate morgue as administrators were appointed to the company.

The collapse will deal a blow to its majority shareholder, US hedge fund Coliseum Capital Management, which five years ago launched an $86m takeover for PAS Group and has been perched since with a 64.98 per cent stake in the company.

When that takeover was launched major shareholder and entrepreneur Larry Kestelman, the founder of internet company Dodo and owner of the National Basketball League, refused to sell into the bid and remains on the register as PAS’s second biggest shareholder with a 10.6 per cent stake.

In a statement to the ASX the retail group said its board of directors had appointed PwC partners Stephen Longley, David McEvoy, and Martin Ford as voluntary administrators.

“While the board is of the view that the company is solvent, given the issues as a result of unfavourable financial market conditions, the COVID-19 crisis and the challenges of restructuring in that environment, it felt that admin­istration was the best way to effect change while protecting all stakeholders,” the company said.

The administrators will undertake a preliminary assessment of the group’s operations.

“PAS Group enters voluntary administration with the strong desire to restructure the group and allow it to continue operating strongly and sustainably into the future.”

PAS stores will continue to trade in line with virus restrictions across Australia and New Zealand. All store credits and vouchers would be honoured, the statement said.

PAS chief executive Eric Morris said that while the decision was difficult, it was made with the long-term interests of the group, shareholders, and employees in mind.

“The Australian retail sector was already facing significant challenges prior to the COVID-19 pandemic,” Mr Morris said.

“Against the backdrop of many retailers closing their doors, we have taken proactive action to put PAS Group in the best possible position to navigate through the pandemic and subsequent economic challenges.”

Mr Morris said the group would be transparent with employees throughout the process.

“We know this is a challenging time for our employees and their wellbeing will continue to be at the front of our minds throughout the voluntary administration process,” said Mr Morris.