NATIONAL: The owner of collapsed Kiwi apparel company Line 7 hopes an Australian investor could save the troubled company.
The iconic lifestyle apparel retail and licensing business fell into receivership yesterday (June 29) after a decline in sales and a weak New Zealand dollar affected the production costs of its Asia-made products.
Grant Graham and Brendon Gibson from accountancy firm KordaMentha have been appointed receivers.
The company's owner Ross Munro told Fairfax newspapers that he hoped the company could be sold to a New Zealand or Australian company as a going concern, but a wind-down was most likely.
The decision to call in the receivers was in the best interests of creditors with most of the company's debt owed to overseas suppliers.
Munro told the news organisation the collapse had been accelerated by slow payments by customers while third-party customers who sell Line 7 products through their stores had also become nervous about the state of the market.
Munro said landlords for Line 7's own retail stores had also been unsympathetic.
"It has been a tough few months and our business model has not worked."
Aptly named after 'The Line Seven' - a phrase that once referred to the seventh line of the palm of the hand whose length was reputed to signify the luck quotient of the bearer - the label was initially set up to provide wet weather clothing to sailors.
It later branched out into lifestyle apparel and launched a licensing arm which was named the official apparel supplier to the 2000 Sydney Olympic Games, among others.
Owners Munro and Marilyn Horne bought the label in 1990 and up until yesterday were responsible for the salaries of around 80 staff across both sides of the Tasman.
The brand, which exports to the UK, Antigua, Scotland, the US and Germany but also operates 11 stores, first entered the Australian market in 2001 and bought back its Australian distributor in 2002.
Colleen McSween, from Sydney PR agency The Image Bureau, was appointed to manage Australian public relations activity for Line 7's casualwear range earlier this year.
As recently as May the company appeared confident of its future when, in an interview with Ragtrader, head designer Nigel Eru said New Zealand's hosting of the 2011 Rugby World Cup offered the company its "biggest ever licensing opportunity" with the brand teaming with Canterbury of New Zealand to secure the event's multi-million dollar apparel licence.
To capitalise on the announcement the company introduced a new instore range and had plans to launch into each of the 20 nations participating in the event.
It is understood those plans have now been put on hold.
Munro told Fairfax he still hoped to "realise intellectual property from the brand" and cash from selling stock. But the receivership was more likely to involve a wind-down of the company, he said.
"If someone buys the business as a going concern, that's well and good."
New Zealand Prime Minister John Key said this morning that it would not rule out helping the high profile company but its preference was that a commercial solution be found.
"We've had no update on what the options are but, obviously, if they approached us we'd have a look at that but I couldn't make any promises. It's also an important brand and it's well recognised by New Zealanders but, at the end of the day, our preference has been to find commercial solutions to commercial problems.