NATIONAL: Australian footwear retailers are bracing for a tumultuous financial year, with three major players crushed in the last month – and speculation more casualties could follow.
Listed fashion group Pacific Brands has axed iconic shoe brands Pierre Fontaine and Sachi from its portfolio, part of a radical restructure aimed at divesting the company of over 200 fashion labels. Its footwear department took a battering over fiscal 2009 as earnings plunged 23 per cent and sales by seven per cent to $251.9 million.
Pacific Brands spokesperson Matthew Horan said more labels would face the chopping block as the group shifted its focus to “power performers” but declined to name further cuts to the department.
“There have been 150 divestments across the board and 50 or so more brands to go,” Horan confirmed, with Hot Chilli, Hunks, Hang Ten and Lightening Bolt making up the most recent apparel casualties.
Distribution group Michael Le Lievre Marketing, which has represented Pierre Fontaine in the New South Wales market for more than 22 years and Sachi in more recent times, said it was unsurprised by Pacific Brands’ decision to offload the brands. A spokesperson for the company, who did not wish to be named, said it was now focused on upmarket shoe imports as competition between high street players intensified.
Michael Le Lievre Marketing specialises in European brands such as Arch and Toni Pons Espadrilles.
“There are just too many businesses that occupy that [high street] space in Australia,” the spokesperson said. “Pierre Fontaine was hugely strong a few years ago but it became less and less commercially acceptable and wasn’t selling at the huge quantities required for a business [like Pacific Brands]. It was the same with Sachi – the heels got too high, too trendy and they took their eye off the ball, off the main consumer.”
Pacific Brands’ recent profit announcement indicated everyday brands such as Clarks, Dunlop Volley and Hush Puppies were among stronger performers in the category. Pierre Fontaine stockists included Myer, Shoe Box and Williams The Shoeman, while Sachi retailed across key shoe chains such as Wanted and Zu.
The divestment came as administrators for retail chain Steve Madden Australia, which operated 35 stores nationally and boasted an annual turnover of more than $17 million, was forced to wind up the company after no interested parties proceeded beyond the due diligence process.
Melbourne-based footwear group Figgins Holdings was forced to shut 43 Shoo Biz stores and rebrand its upmarket Evelyn Miles boutiques earlier this year due to increased costs and falling sales. The business was now focused on its Midas brand, which was positioned at the mid-market consumer.
According to business information firm IBISWorld, footwear revenue for 2008/09 fell by 2.9 per cent from 2007/08 to $2.48 billion. Analyst Raghu Rajakumar predicted revenue for 2009/10 would fall again by 1.4 per cent as consumers reigned in discretionary spending.
“The challenge for Australian footwear retailers is to keep the proverbial foot in the door and maintain a viable share of the market,” he said. “This is proving a difficult thing to do because the change in consumer mindsets combined with tighter access to business funding is seeing many struggle to maintain working capital levels. A lack of working capital was one of the major problems Steve Madden faced.”