As Josh Goot rebuilds his brand for growth, we take an exclusive look through a creditors report to reveal the circumstances behind its collapse.
Josh Goot: Part One
The circumstances behind the administration of designer brand Josh Goot have been revealed in a creditors report obtained by Ragtrader.
The brand entered into administration in February before executing a Deed Of Company Arrangement in March.
According to the creditors report, the director of the company attributed several factors for its failure.
This included failure to meet delivery deadlines for orders from wholesale customers; costs over runs in the order of $200,000 and construction delays of approximately one year associated with the fitout of the brand’s Armadale store and; a sale or return agreement with David Jones which saw it issue a credit note of $200,000 in fiscal 2014.
Returned stock from David Jones and loss of wholesale sales resulted in warehouse sales with significant discounts to the retail price.
Josh Goot: Part Two
According to administrators, the reasons also stretched to financial mismanagement.
This included inadequate sales volumes and pricing, with high production costs necessitating the sales price to be set at significant levels.
However, sales reports demonstrated the company did not generate sufficient sales volumes at retail and wholesale margins, with some 40 per cent of any season’s stock heavily discounted at warehouse sales.
Estimated and actual margins also differed significantly with key factors including over ordering raw materials, inaccurate stock records, inaccurate costing systems and inaccurate forecasting models.
The company experienced trading losses from at least fiscal 2011 onwards.
Josh Goot: Part Three
What was the outcome of a sales of business campaign by the administrators for Josh Goot?
Due to the company’s tenuous financial position, an accelerated marketing campaign was conducted on February 17 and 18 via newspaper advertisements and an electronic mail out to the administrator’s database.
Despite initial interest from 15 separate parties, the deadline for expressions of interest expired on February 23 with no offers received.
The company was still executing a Deed Of Company Arrangement at time of press.