Figgins shock restructure a sign of times

Deteriorating credit conditions could have been responsible for the spectacular collapse of footwear retail chain Shoobiz and upmarket player Evelyn Miles earlier this month.

As first reported on Ragtrader Online, Melbourne-headquartered footwear group Figgins Holdings, which owned and operated both businesses, planned to close 43 Shoobiz retail outlets by mid 2009 and rebrand all Evelyn Miles boutiques under its middle-market label Midas.

In addition to this, Figgins sold its domestic licence for American footwear brand Florsheim, which it held for five years, to Florsheim Australian Pty Ltd at an undisclosed sum.

The restructure meant only Midas, Mollini, Scooter and Emporio would operate under the Figgins Group banner.

General manager for sales and marketing Sue Fletcher said "all possible measures" would be taken to absorb the 220 retail employees affected by the closure of Shoobiz. She said head office and retail staff under the Florsheim brand, which has 24 retail sites in Australia, would be retained under the new ownership.

According to estimates from business information service IBISWorld, Figgins Holdings comprised around five to six per cent of the footwear retailing industry in Australia. Despite the plight of some of its key brands, industry analyst Raghu Rajakumar said a major restructuring of the domestic footwear industry was not expected.

"Shoobiz is among the cheapest in the range of Figgins brands [but] other higher end brands are also struggling, pointing to a company specific issue as opposed to an industry wide problem.

"While Figgins have been tight-lipped about their reasons for the restructure, tighter access to business credit in the market would have made any required infrastructure changes to Shoobiz unfeasible."

Stable wage costs and falling discretionary footwear purchases could have also played a role in the restructure, he said.

"The company has promised jobs to people within their own group but given the market conditions, and its direction, we'll have to see if they actually have the capability to absorb so many jobs."

IBISWorld estimated the Australian footwear retail industry would generate $2.53 billion over the 2008/2009 financial year - just one per cent up from the previous year.